The Kaiser Family Foundation (KFF) recently released a report examining the likely cost to people with Medicare of permanently replacing the Sustainable Growth Rate (SGR) formula, otherwise known as the “doc fix.” Enacted in 1997, the SGR places a cap on Medicare payments to health care providers. Since then, Congress has been forced to enact 17 temporary legislative patches to avoid drastic cuts in physician payments. Once again, due to the SGR, Medicare providers are facing a significant pay cut—21 percent unless Congress acts before the April 1st deadline.
Temporary actions by Congress have only delayed SGR. Last year, members of Congress reached consensus on a bipartisan, long-term alternative for setting Medicare provider payments through a value-based system. Yet, lawmakers have yet to come to an agreement on how to pay for this change.
According to the KFF report, beneficiaries wouldautomatically contribute to the cost of repealing and replacing the SGR, through higher Part B premiums and cost sharing. KFF estimates that Medicare beneficiaries would pay $58 billion in higher Part B premiums over ten years if last year’s bipartisan package to permanently fix the SGR were adopted. Despite this automatic increase, some lawmakers continue to support proposals to additionally increase Medicare beneficiaries’ premiums, deductibles and cost sharing as a way to pay for a permanent SGR fix.
Yet, most people with Medicare simply cannot afford to pay more for health care. Half of all people with Medicare—more than 25 million seniors and people with disabilities—live on annual incomes of $23,500 or less, and already contribute a sizable share of their income towards out-of-pocket health care costs. In fact, the average Medicare household spends nearly three times what the average non-Medicare household spends on health care expenses.