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Class Warfare – New and Improved

By Dr. Nilesh Kalyanaraman

We have another doc-fix! And this one fleeces the middle class to pay for it.

For those of you who do not keep up with Medicare physician compensation news, the doc-fix is the long running joke of fiscal responsibility. The doc-fix, or Medicare sustainable growth rate (SGR), was put into place in 1997 to keep Medicare costs down by preventing physician compensation from going over a certain level each year. In 2001 physician costs exceeded the SGR limit and so physician pay was about to be cut by 5% to stay under the cap. Physicians protested and said such a cut would force them to stop taking Medicare patients. Congress intervened and kept physician pay where it was. Since then every time the SGR was to kick in the same story has played out. As the years went on the cut that would go into effect grew larger due to the escalating costs of care. Currently, if the SGR goes into effect on January 1st as scheduled, Medicare compensation would be cut by 25%.

Usually the doc-fix is passed at the last possible moment and this iteration was shaping up the same way. Then, in a twist, reports came out that Republicans wanted to offset the cost of the fix by eliminating the Prevention and Public Health Fund that was a part of the new health care law. This would have been short sighted since prevention is not just good for health and wellness, it’s good for the economic bottom line. Luckily this didn’t go through. Instead the deal that is now being reported between the Republicans and Democrats is that the offset is going to come from the pockets of people fortunate enough to get off of unemployment and get a job.

 A little background is in order. Starting in 2014, the new health care law gives a subsidy to people who make between 133 and 400 percent of the federal poverty level to help pay for health insurance. If they misstate their income there will be a penalty of $250 for an individual and $400 for a couple. Strangely, this penalty will also apply to anyone whose income changed enough during the year such that they would be eligible for a lesser subsidy. This means that anyone who comes off of unemployment and gets a job or gets a substantial raise would have to pay the penalty. The new SGR compromise will significantly increase these penalties to generate enough revenue to offset the doc fix for one year.

That's right, get a job and get penalized. A family that needs a health insurance subsidy has bills that they have to pay off and slapping them with retroactive penalties for getting a job or a raise is the wrong thing to do. We should be happy that these families would need less of a subsidy and will be paying a greater portion of their health insurance premium. Instead, Congress is telling people that they have one of two choices. One is that your doctors’ Medicare reimbursement is cut which causes him to drop Medicare patients and makes it impossible for your parents to find a doctor. The other option is that if you come off of unemployment and get a job, you’re going to be penalized and have to pay back your subsidies. It’s a lose-lose proposition for the middle class.

 This is what passes for serious policy these days, soak the middle class and tell them it’s for their own good. It’s an insidious form of class warfare that pits doctors against their middle class patients and it bodes poorly for hard working Americans that Congress holds them in such contempt.

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