Can Consumers Save Medicare?

Medicare spending is on autopilot, and it is coming in for a crash landing. Costs are projected to double to $900 billion over the next decade, and there is increasing evidence that Medicare does not provide good value for the money spent--paying too much or too little for necessary services, or paying for inappropriate and ineffective ones. Is it time to give beneficiaries a stronger voice in choosing the insurance plans and health services they receive through Medicare?

In two recently released studies in AEI's Studies on Medicare Reform series from the AEI Press, Mark V. Pauly of the Wharton School and Roger Feldman of the University of Minnesota argue that consumers can make sensible decisions if they are given the opportunity and means to do so. In Markets Without Magic: How Competition Might Save Medicare, Pauly addresses the unsustainable financial burden Medicare will place on taxpayers over the next few years and beyond. Rather than relying on tighter bureaucratic rules to limit program spending by controlling the use of health services, he suggests replacing Medicare's open-ended entitlement with a market-based credit that preserves the purchasing power of seniors but does not provide a blank check.

In How to Fix Medicare: Let's Pay Patients, Not Physicians, Feldman proposes to replace the current system of administered prices for physician services with medical indemnities--giving Medicare beneficiaries money to cover the cost of their treatments but allowing them to shop for the combinations of services, providers, and prices that most closely meet their needs.

Following Pauly's and Feldman's presentations, Paul Ginsburg, president of the Center for Studying Health System Change, and Michael Morrisey, director of the Lister Hill Center for Health Policy at the University of Alabama at Birmingham will discuss the role of consumer empowerment in Medicare. AEI visiting fellow Bill Thomas--former chairman of the House Ways and Means Committee, cochairman of the National Bipartisan Commission on the Future of Medicare, and chief architect of the Medicare Modernization Act--will give a keynote speech on the political and practical challenges of reforming Medicare.

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About the Author

 

Joseph
Antos
  • Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute (AEI), where his research focuses on the economics of health policy — including the Affordable Care Act, Medicare, the uninsured, and the overall reform of the health care system and its financing. He also studies the impact of health care expenditures on federal budget policy.

    Before joining AEI, Antos was assistant director for health and human resources at the Congressional Budget Office (CBO). He has also held senior positions in the US Department of Health and Human Services, the Office of Management and Budget, and the President’s Council of Economic Advisers. He recently completed a seven-year term as health adviser to CBO, and two terms as a commissioner of the Maryland Health Services Cost Review Commission. In 2013, he was also named adjunct associate professor of emergency medicine at George Washington University.

    Antos has a Ph.D. and an M.A. in economics from the University of Rochester and a B.A. in mathematics from Cornell University.



    Follow Joseph Antos on Twitter.

  • Phone: 202-862-5938
    Email: jantos@aei.org
  • Assistant Info

    Name: Neil McCray
    Phone: 2028625826
    Email: Neil.McCray@aei.org

 

Bill
Thomas
  • Bill Thomas, a former chairman of the House Ways and Means Committee, served in the U.S. House of Representatives from 1978 to 2007. During his six-year chairmanship, he guided the enactment of $2 trillion in tax relief, including the Economic Growth and Tax Reconciliation Act of 2001, which reduced all ordinary income tax rates; the Jobs and Growth Tax Reconciliation Act of 2003, which reduced the tax rate on dividends and capital gains; and the Job Creation Act of 2004, which provided significant reforms for corporate tax policy.
  • Phone: 2028625830
    Email: bill.thomas@aei.org

 

Mark V.
Pauly

  • Mark V. Pauly is the Bendheim Professor in the Department of Health Care Management;  professor of health care management, insurance and risk management, and business and public policy at the Wharton School; codirector of the Roy and Diana Vagelos Life Sciences and Management Program; and professor of economics in the School of Arts and Sciences at the University of Pennsylvania. A former commissioner on the Physician Payment Review Commission, Mr. Pauly has served on the advisory committee to the Agency for Health Care Research and Quality and on the Medicare Technical Advisory Panel. He currently serves on the National Advisory Council for the National Institutes of Health National Center for Research Resources, the National Academy of Sciences' Committee to Study the Veterinary Workforce, and its Committee on the Biomedical Workforce. He has been a consultant to the Congressional Budget Office, the Office of the Secretary of the US Department of Health and Human Services (which supported some of his work on individual health insurance), and health trade associations. Mr. Pauly is a coeditor-in-chief of the International Journal of Health Care Finance and Economics and an associate editor of the Journal of Risk and Uncertainty.  


  • Phone: 2158986861
    Email: pauly@wharton.upenn.edu

 

Michael A.
Morrisey

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