Here is a link to the article.
The Sustainable Growth Rate (SRG) came about from the Deficit Reduction Act of 1997. DRA is responsible for the mandated cuts in the Physician’s Fee Schedule. The CY 2009 fix to the Physician’s Fee Schedule is what brought about the Medicare Improvements for Patients and Providers Act of 2008 or MIPPA. DRA mandated a cut and Congress granted a small increase in the Physician’s Fee Schedule.
In 2010, there is a mandated 21% cut in the Physician’s Fee Schedule which, if history serves as a guide, will be legislated away again.
Further, the House bill proposes scrapping the SRG going forward in favor of some other system.
Note about midway down in the article the following: “By cutting payments to Medicare Advantage plans, the government could save $150 billion a year, according to Peter Orszag, director of the Office of Management and Budget.”
This is obviously a misprint or a mis-statement by Mr. Orszag (not sure which). In order to save $150 billion/year on 11 million Medicare Advantage members, the government would need to save $13,636/member which would mean saving more that than the total amount the government pays for the care.
I think they meant to say over 10 years, which is another fallacy, in my opinion, as approximatly 90% of the $150 Billion in cost savings would be borne by Medicare Beneficiaries in the form of higher Medicare Advantage Premiums, reduced benefits or both (about 10% would be borne by the Insurance Companies). To prove this, one need only go to the Medicare.gov website and see the cost savings which Medicare Beneficiaries can achieve through Medicare Advantage as opposed to Original Medicare. These numbers are calculated via the Medicare plan finder. I’ve never found a senario where original medicare will result in the lowest cost for a Medicare Beneficiary, as the plan finder calculates costs.
I would argue that the Medicare Beneficiaries would likely demand some (or all) of the $135 Billion they are losing back in the form of some other sort of subsidy (direct or indirect, perhaps by eliminating the doughnut hole, expanding Medicaid, increasing SSI or some combination). Thus the $150 Billion in savings which is designated as a down payment on covering 50 million uninsured Americans would likely be spent more than one time. I guess time will tell. . .
