Paying for SGR fix with mandate delay would add millions to uninsured, CBO says

A House GOP plan to pay for a permanent repeal of Medicare's physician-payment formula by delaying financial penalties for those without health insurance coverage by five years would increase the number of Americans without health insurance by about 13 million in 2018, the nonpartisan Congressional Budget Office reports.

The House of Representatives is scheduled to vote Friday on the SGR Repeal and Medicare Provider Payment Modernization Act of 2014 (PDF), a bipartisan, bicameral bill to eliminate Medicare's unpopular sustainable growth-rate formula used to pay doctors who participate in the program. While eliminating SGR has bipartisan support, finding a way to pay for the repeal has been problematic.

House Republicans' answer to the payment dilemma has been to consider an amendment to the bill from House Ways and Means Committee Chairman Dave Camp (R-Mich.) that would delay for five years the financial penalties for people who don't buy health insurance starting in 2014.

The CBO and the nonpartisan Joint Committee on Taxation estimate (PDF) that the cost to repeal the SGR is about $138.4 billion over 10 years, while Camp's amendment would save the government about $169.5 billion over a decade.

Camp's provision would retain the Patient Protection and Affordable Care Act's individual mandate to purchase insurance starting this year, but there would be no payment penalty for those who don't comply with the requirement before 2019.

Both the CBO and the JCT estimate that this change would increase the number of people without health insurance coverage in 2018 by 13 million, which would result in a total of about 43 million uninsured individuals for that year. That breaks down to about 5 million fewer people with coverage from Medicaid or the Children's Health Insurance Program; about 1 million fewer individuals with employment-based coverage; and about 7 million fewer people with coverage purchased in the individual market—either in the exchanges or directly from insurers in the nongroup market.

The CBO and JCT also expect that premiums for policies in the individual market in 2018 would increase by 10% to 20% relative to current law.

But even should the House pass this legislation with Camp's amendment, it's unlikely to garner sufficient support to pass in the Senate, meaning another temporary SGR patch could become more likely as a March 31 deadline approaches.

Follow Jessica Zigmond on Twitter: @MHjzigmond