Medicare is the nearly forgotten stepchild of health care reform. Political attention has focused on the problems of the private insurance system, with little regard to the structural defects of Medicare that are pushing the program toward a fiscal crisis within the next decade. Under the major reform proposals before Congress, Medicare's price controls would be tightened to pay for expanded health coverage for people under age sixty-five. In contrast, a switch to competitive pricing methods could produce greater budget savings, improve program efficiency, and make Medicare more sustainable into the future.

In a forthcoming book from AEI Press, Robert Coulam, Bryan Dowd, and Roger Feldman argue for replacing Medicare’s complex pricing formulas with a truly competitive pricing system. Modeled after a competitive pricing experiment they helped design for Medicare in the 1990s, their proposal would require private Medicare Advantage (MA) plans and the traditional fee-for-service Medicare to bid against each other without setting artificial benchmarks that favor one type of plan over another. Full competitive bidding would yield substantially greater savings than the Obama administration's proposal to increase competition solely among MA plans, which would cut program outlays by $177 billion over the next decade.

Could fully competitive pricing work in Medicare? Could Congress consider adding such a proposal to the contentious health care reform struggle? Following presentations by the authors, Robert Berenson (who previously directed Medicare's payment policy and contracting with Medicare's private plans), Jeff Lemieux (who served as the principal analyst for the National Bipartisan Commission on the Future of Medicare), and Bill Thomas (who cochaired the Bipartisan Commission while a member of Congress) will offer comments. AEI's Joseph Antos will moderate.

This forthcoming book is a part of an AEI book series entitled AEI Studies on Medicare Reform.