The following graph describes the difference between the yearly sustainable growth rate (SGR) temporary patches and the throw physicians a bone increases compared with the Congressional mandated decreases from 2007 through 2013. As you know, every year, and sometimes twice a year, Congress has passed a patch that prevented Medicare payments to doctors from plummeting. Instead, they provided minuscule increases that have been far below inflationary forces. The combination of inadequate increases in Medicare compensation plus the constant threat of catastrophic SGR formula effects threaten the ability of physicians to accept new Medicare patients while staying solvent as a business. Sorry Baby Boomers. You'll have to go to the ER and wait in line behind the Medicaid patients. They were there first and they know how to play the EMTALA game very well.
The SGR economics were created by Congress in the 1990s as a way of trying to slow the rate of physician health care spending by attempting to define a magical pot of money that would only increase yearly based on failed assumptions. This colossal failure has left us with the results of bad public policy made worse by more bad public policy. In 2013, unless further action is taken by Congress, across the board Medicare payments to physicians will be cut by approximately 27.5%. What would happen to physicians if that was allowed to happen? The guy flipping burgers at Burger King would earn more than your physician. At this point becoming a physician or continuing to practice as a physician doesn't make economic sense unless they decide to make a practice without Medicare work for them. For many physicians, better economic opportunities would be had as leaders in industry instead of guiding patients through their disease and wellness process. Hospitalists are the exception. Their economics have left The Medicare National Bank.
Here's a graph of this yearly game in action. Every year it gets worse. Every year it becomes harder to fix. For the states that refuse to be blackmailed into expanding Medicaid, I applaud them. We must take a stand against failed government programs. Medicaid economics are worse then Medicare economics. Medicaid is bankrupt. Expanding a failed program only makes the failure worse and the fix harder. Where is the money going to come from to permanently fix the failed SGR policies? Great question. A trillion dollars a year in debt spending already gets us only 1.5% GDP, a decimated interest rate environment for our fixed income seniors and other savers and an unstated promise that the Federal Reserve can never raise rates again. Perhaps we could ask the Greeks, the Irish and the Spaniards for some advice on how to navigate these dangerous waters.