Proposed SGR deal would advance GOP goal of privatizing Medicare

By Harris Meyer
Modern Healthcare, March 18, 2015

The proposed bipartisan House deal to repeal and replace Medicare's hated sustainable growth-rate physician-payment system offers Republicans a chance to make two significant benefit changes they've long sought. Now it remains to be seen if they can accept and lock in that victory. 

It also raises the question of what Democrats, if they help enact the SGR bill, would have left to offer when Republicans come back the next time—probably quite soon—with more and bigger demands to revamp and reduce Medicare spending.

The deal crafted by House Speaker John Boehner and House Minority Leader Nancy Pelosi would pay for a $70 billion portion of the SGR overhaul partly by increasing Part B premiums for higher-income beneficiaries and requiring those with Medigap supplemental coverage to spend at least $250 out of pocket before coverage kicks in, according to Modern Healthcare's Paul Demko, who first reported the details last week. 

Even though President Barack Obama previously proposed similar Medigap changes in his 2016 budget, senior advocacy group AARP expressed “very serious concerns” about those changes and the increased means-testing of premiums. Some Senate Democrats also voiced reservations. 

The Center for American Progress (PDF) has cautioned that revising Medicare supplemental coverage rules to impose higher costs on seniors would hurt lower-income beneficiaries. It urged that any such changes be applied using means-testing, sparing beneficiaries at lower income levels. Beyond that, AARP and other groups that support Medicare fear that too much means-testing could erode political support for the program among middle- and upper-middle-class Americans.

But Boehner and the conservative Americans for Tax Reform see the measures as an important first step toward dramatically restructuring Medicare. Meanwhile,House Republicans separately unveiled their 2016 budget proposal that would transform Medicare into a defined-contribution voucher program (which they call premium support), convert Medicaid into a capped state block-grant program, and repeal the Affordable Care Act.

The increased beneficiary cost-sharing included in the SGR reform proposal could work hand-in-hand with the larger House GOP Medicare plan by prodding seniors to choose the lower-cost private Medicare plans envisioned under the budget blueprint. That would advance their long-held goal of turning Medicare into a privatized, means-tested welfare program and getting the government out of the health insurance business.

Some conservatives clearly were thrilled at the prospect of advancing their Medicare overhaul goals through the SGR bill, and urged other conservatives to accept the added 10-year costs to the federal budget and pass it. “I could care less about the 10 years,” Ryan Ellis, tax policy director of Americans for Tax Reform (which is headed by conservative stalwart Grover Norquist), told the National Journal. “You would never measure entitlement reform in a 10-year window."

Follow Harris Meyer on Twitter: @MHHmeyer

Harris Meyer oversees news and feature coverage for the magazine. Meyer has covered healthcare and law since 1983, most recently as a freelance writer for Health Affairs, Kaiser Health News, the Oregonian, Medscape and other publications. He previously served as law editor at the Daily Business Review in Miami; a staff writer at the New Times alternative weekly in Fort Lauderdale, Fla.; senior writer at Hospitals & Health Networks; national correspondent at American Medical News; and health unit researcher at WMAQ-TV News in Chicago. Meyer has a bachelor’s degree in communications from Northwestern University. In 2000 he was a winner of the Gerald Loeb Award for Distinguished Business and Financial Journalism. He joined Modern Healthcare in 2013.