Max Baucus , one of the key players in health reform, has suggested building in automatic Medicare cuts as a way to control health-care costs while reducing the number of people without health insurance. One possibility would be a 1.5% annual reduction in projected spending, which would kick in automatically if other efforts to control costs fail, this morning’s WSJ reports . Including the planned cuts in legislation would make health reform’s fiscal impact seem more manageable in the eyes of the all-important Congressional Budget Office. But whether the cuts would actually come to pass or not is a different story. Consider the case of the sustainable growth rate, or SGR . It was created by Congress in 1997, in an effort to control the growth of Medicare spending. SGR said, basically, that the amount Medicare pays

doctors for the average Medicare patient can’t grow faster than the economy as a whole. If costs per patient increased sharply, then Medicare payments for each unit of service provided by doctors were supposed to decline. This hasn’t happened. Costs per patient have indeed increased sharply. But rather than allowing the pay cuts to kick in, Congress has intervened year after year to block the cuts. As of last year (the last time Congress swooped in with a last-minute intervention), payments to doctors were about 40% higher than where they were supposed to be under SGR. That’s a reminder that, even if Medicare spending cuts are baked into this year’s health-reform bill, they may be tough to stick to over time.

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Health Reform: Medicare Cuts Are Tough to Make Stick