SGR Repeal Faces a New Threat: Politics

House Republicans may tie passing a permanent repeal of the sustainable growth rate (SGR) formula to delaying the Patient Protection and Affordable Care Act (ACA) individual mandate on buying health insurance, report the Congressional newspapers The Hill and Politico.

Ending the mandated use of the SGR formula that cuts physician reimbursement in order to keep Medicare “sustainable” is popular with both parties in Congress. Legislators are tired of having to pass fixes year after year to prevent the cuts from going into place. In addition, everyone agrees that the cumulative cost of the short-term fixes far outpaces the cost of reforming the Medicare physician payment system in order to scrap the SGR formula once and for all.

However, as often happens in politics, a desirable outcome can quickly become a tool for forcing compromise on something more controversial, and this appears to be the fate of the SGR fix as it nears a vote in Congress.

According to The Hill, House GOP leaders may merge the SGR Repeal and Medicare Provider Payment Modernization Act (H.R. 4015) with a longer delay to the implementation of the ACA mandate that individuals purchase insurance or face a penalty. The House already passed the SIMPLE Fairness Act (H.R. 4118), which created a one-year delay. However, H.R. 4118 has almost no chance of being taken up and voted on by the Democratically controlled Senate.

Mandating that people must purchase health insurance is a key part of the ACA because without it, younger and healthier Americans may opt out and the remaining risk pool of older and sicker people would force insurers to raise rates. This in turn would encourage even more low-risk people to opt out prompting another rate increase and leading to a cycle that is sometimes referred to as the insurance death spiral. 

ACA supporters know this, and that is why the Democratic leadership is strongly opposed to enacting delays to the mandate, even though a delay would save the government an estimated $9 billion a year.

Meanwhile, conservatives opposed to the ACA know that with the outright repeal of the law out of grasp, chipping away at provisions crucial in making the law work is their best bet for ensuring it is never fully implemented.

The GOP plan is to propose the savings from a delay of the individual mandate of several years, but not more than 10 years, as the pay-for necessary to cover the cost of implementing a repeal of the SGR, an unnamed House Republican aide told The Hill.

Risking the SGR repeal in order to force a vote on the individual mandate is dangerous warned House Minority Whip Steny Hoyer (D-Md.). If the House GOP has misjudged the strength of Democratic opposition to delaying the individual mandate, it could cause the SGR repeal to be voted down in the Senate and leave little time to enact another temporary fix to replace it.

The SGR’s more than 24 percent cut to physician reimbursement must be applied starting on April 1 when the current fix expires.