Via Health Care for America Now: The American Medical Association just sent a letter to House Ways and Means Chairman Charles Rangel, endorsing the health reform proposal put forward by three House committees.

This is unexpected. Or, at least, I wasn't expecting it. Recent signals from the AMA suggested they were reluctant to embrace reform, in no small part because they believed a public insurance option would underpay them. But the AMA letter contains no caveats. It is a straightforward endorsement.

And that makes it a pretty big deal. No, the AMA is not as powerful, nor as representative of the medical community, as it once was. But an unqualified endorsement for the most liberal plan out there has large symbolic value, given the role AMA played in killing health care reform for most of the 20th Century.

So what's in it for the docs? The medical community came into this debate with two big concerns. One is the financial and emotional burden of malpractice lawsuits. The other is the annually scheduled reduction in Medicare payments, known as the Sustainable Growth Rate (SGR) formula, that the AMA and other physicians lobbies end up fighting every summer when it's about to take effect.

SGR, at least, has very much been on the table, as readers of this blog may recall:

Over the past few weeks, according to sources, House committee staff have been involved in serious negotiations with representatives of various physician groups, attempting to win their overt support not just for reform but for a public plan option specifically. As an enticement, they've been promising to fix permanently the SGR problem--that is, the annually scheduled adjustment to the "sustainable growth rate" in Medicare, which threaten increasingly large cuts in physician payments before Congress inevitably postpones changes for a year. Reformers, including President Obama, have already talked about doing this; apparently, the offer the House Dems are making is to follow through on this and to make it a good, solid fix.

And, sure enough, the AMA talks about the SGR fix in its letter, endorsing reform that:

Recognizes that fundamental Medicare reforms, including repeal of the sustainable growth rate formula, are essential to the success of broader health system reforms; 

(Emphasis mine.) Changing the SGR is expensive, probaby $200 to $300 billion over the course of ten years, depending on the details. And that's on top of the cost of expanding insurance coverage. But, to be clear, the SGR adjustments were becoming a farce. If they are part of a package that includes payment reforms designed to improve quality and reduce health care costs over the long run, it'd be money well spent.


--Jonathan Cohn