Medicare overhaul could mean higher costs for everyone

A bipartisan effort to fix longstanding problems with Medicare passed the Senate on Tuesday with a hefty price tag attached. Though the changes will permanently fix a hole in the Medicare payment system that Congress has patched annually for the past 17 years, the so-called “doc fix” leaves in place the gap between the pay physicians want and what the country can afford.

Republican leaders said the bill demonstrated their party’s ability to lead Congress to important breakthroughs.

“It’s another reminder of a new Republican Congress that’s back to work,” Senate Majority Leader Mitch McConnell, R-Ky., said. The bill passed the Senate with a vote of 92-8, with presidential candidates Sens. Ted Cruz, R-Texas, and Marco Rubio, R-Fla., among the dissenters.

“Any deal should be fully paid for and include significant and structural reforms to Medicare that provide seniors more power and control over their health care,” Cruz said in a statement. The bill’s total price comes to $214 billion, and it provides for only about $72 billion in funding. That cash will come from higher expenses for beneficiaries and cuts in hospital payments. The rest will get tacked on to the federal deficit.

The problem the bill was designed to fix is called the Sustainable Growth Rate formula (SGR). Congress instituted the SGR in 1997 because Medicare costs were rising faster than the nation could afford. The government sets a target amount for Medicare spending. If the actual spending in a given year exceeds that target, Medicare payments are supposed to be cut the following year to help make up for it.

But physicians have lobbied year after year against SGR cuts, saying they cannot afford to keep treating Medicare patients if they go into effect. So Congress has repeatedly delayed or decreased the cuts. This year, physician payments would have been slashed by 21 percent to meet SGR requirements.

The bill approved Tuesday permanently does away with the SGR formula, instead instituting incentives for physicians to provide less expensive care. Physicians were relieved after years of the SGR’s annual threat to their bottom lines.

“This may have taken more than a decade, but all of our efforts on Capitol Hill have resulted in a resounding triumph,” wrote Robert Wergin, president of the American Academy of Family Physicians.

Though physician payments won’t face steep cuts on an annual basis, the doc fix might not be popular for long. The Wall Street Journal reported an analysis by Medicare’s non-partisan actuary determined the bill will severely limit doctor’s payment increases in the coming years.

“While [the House-passed bill] addresses the near-term concerns of the SGR system, the issues of inadequate physician payment rates are ultimately greater,” the actuary wrote.

The bill passed the House last month and now heads to President Barack Obama, who is expected to sign it.

The bill left intact language that restricts funds from paying for abortions. Though Democrats questioned the so-called Hyde Amendment language on other legislation this session, they let it stay in the doc-fix bill. McConnell praised the move in a statement, saying, “The overwhelming majority of Americans who support the principles of Hyde should welcome the strong Democratic show of support.”

The Associated Press contributed to this report.