Congress enacted the Sustainable Growth Rate (SGR) in 1997 to control Medicare spending on physician services. According to Marilyn Moon, director of the Center on Aging at AIR, “the intent of the SGR was to provide discipline to the rapid growth in physician payments, but it has never helped with that issue.” In testimony before the U.S. House of Representatives’ Subcommittee on Health, Moon called SGR limiting physician costs “poor public policy” but cautioned that any revisions need to avoid imposing unfair burdens on beneficiaries.

“It is too broadly conceived—penalizing all physicians for growth in physician spending, for example," Moon said. "And other technical problems with the formula penalize physicians for events well beyond their control … (SGR) needs to be replaced with a better mechanism for holding providers of services accountable.”

Moon, a former public trustee for the Social Security and Medicare trustfunds and an Institute Fellow at AIR, told lawmakers the “Sustainable Growth Rate is poor public policy and ought to be fixed. But beneficiaries should not be penalized for the poor policy making that occurred fifteen years ago. The SGR should not be used as a rationale for reducing valuable benefits to our most vulnerable citizens.”