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Congress Has Allowed Most Previous Medicare Cuts to Take Effect, New Study Shows
Date:12/4/2009

Contradicts Claim That Health Reform Bills Will Increase Deficit

WASHINGTON, Dec. 4 /PRNewswire-USNewswire/ -- Despite claims that the pending health reform bills aren't really paid for because Congress never lets Medicare savings take effect, Congress has allowed the vast majority of Medicare cuts that it enacted in the past two decades to take effect and produce significant savings, a new study from the Center on Budget and Policy Priorities shows.

The analysis, by James Horney and Paul Van de Water, former senior CBO officials now at the Center, examines the history of every significant Medicare cut that Congress has enacted in the past 20 years - specifically, cuts included in deficit reduction legislation enacted in 1990, 1993, 1997, and 2005.

The authors found that virtually 100 percent of the 1990 savings survived; virtually 100 percent of the 1993 savings survived; virtually 100 percent of the 2005 savings survived; and nearly 80 percent of the 1997 savings survived.

"Today's conventional wisdom is wrong," said Horney. "Medicare savings have been a big part of all major deficit-reduction packages that Congress has enacted since 1990, and lawmakers have allowed the vast majority of those cuts to take effect. Given that history, there is every reason to believe that Congress will allow the Medicare savings in the pending bills to take effect as well."

Main "Example" of Failure to Implement Cuts Rests on Misunderstanding

In arguing that large Medicare cuts never "stick," many critics focus on Congress' repeated refusal to let the reductions in doctor reimbursement rates under Medicare's "Sustainable Growth Rate" (SGR) mechanism to take full effect.

But, as the report explains, Congress didn't intend the SGR to produce large savings. In fact, the SGR represented only 3 percent of the total ten-year Medicare savings in the 1997 deficit-reduction bill - only
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SOURCE Center on Budget and Policy Priorities
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