Bring Market Prices to Medicare
Essential Reform at a Time of Fiscal Crisis

  • Title:

    Bring Market Prices to Medicare
  • Format:

    Paperback
  • Paperback Price:

    20.00
  • Paperback ISBN:

    978-0-8447-4321-9
  • Paperback Dimensions:

    6" x 9"
  • 150 Paperback pages
  • Buy the Book

Click here to view the full book as an Adobe PDF.

Medicare is quickly approaching insolvency, in part because the program pays too much for the services it provides. In Bring Market Prices to Medicare, Robert F. Coulam, Roger Feldman, and Bryan E. Dowd propose a groundbreaking solution: Use market-based arrangements to set prices for Medicare plans. The authors contend that the federal government should pay only the cost of the most economical health plan in each market area. To accomplish this, both traditional fee-for-service (FFS) Medicare and private Medicare Advantage (MA) would submit bids for the government's business; the federal contribution to premiums would be set to equal the lowest bid in each market area. This competitive pricing system would penalize plans that bid too high--their beneficiaries would pay higher premiums--providing an incentive for plans to offer their best prices. Meanwhile, low-bidding plans would be rewarded with increased enrollment. Such an approach would reduce Medicare spending by 8 percent, shoring up the program's finances while empowering consumers to make sensible choices about their health care.

Establishing a competitive pricing system for Medicare will have drawbacks as well: Beneficiaries in some markets would have to pay more to stay in the FFS Medicare plan, while others would lose generous supplementary benefits currently offered by private MA plans in areas where these plans are overpaid. Coulam, Feldman, and Dowd contend that the best way to address public and political opposition to this crucial reform is not to downplay its challenges but rather to consider carefully the needs and expectations of beneficiaries and establish a gradual transition that would alleviate most of the disruption beneficiaries might otherwise experience.

Bringing market prices to Medicare is not merely a matter of political strategy or tactics; it will require a fundamental shift in Americans' attitudes toward health care, starting with the realization that Medicare's current payment methods cannot be sustained. A competitive pricing system alone cannot cure all of Medicare's financial problems, but it is a significant step in the right direction. It is the only solution that preserves Medicare's entitlement benefit while also substantially improving the program's finances.

Robert F. Coulam is a research professor and director of the Center for Health Policy Research at the Simmons School of Health Sciences in Boston.

Roger Feldman is Blue Cross Professor of Health Insurance and professor of economics in the Division of Health Policy and Management in the School of Public Health, University of Minnesota.

Bryan E. Dowd is a professor in the Division of Health Policy and Management in the School of Public Health, University of Minnesota.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Roger
Feldman
  • American Enterprise Institute (AEI) adjunct scholar Roger Feldman is the Blue Cross Professor of Health Insurance and Professor of Economics at the University of Minnesota, where he specializes in applying economic theory to health services research. He is currently a member of the Congressional Budget Office’s Panel of Health Advisers and consults for various federal and state agencies on health care–related matters.

    Previously, he served on the senior staff of the President’s Council of Economic Advisers. From 1988 to 1992, he directed one of the four national research centers sponsored by the Centers for Medicare and Medicaid Services (CMS) and has advised CMS on the design of a demonstration of competitive bidding for Medicare health plans. At AEI, Feldman’s research focuses on Medicare reform, competition in health care, and health insurance markets.

    Feldman holds a Ph.D. in economics from the University of Rochester. He obtained an M.S. in economics at the London School of Economics, where he was a Marshall Scholar, and a B.S. from the University of Wisconsin-Madison.

  • Phone: (612) 624-5669
    Email: feldm002@umn.edu

 

Bryan E.
Dowd
  • American Enterprise Institute (AEI) adjunct scholar Bryan Dowd is the Mayo Professor of Public Health and the director of graduate programs in health services research and policy at the School of Public Health at the University of Minnesota. His work at AEI focuses on the economics of health care policy, Medicare reform, and health insurance markets.

    A health economist with a Ph.D. in public policy analysis from the University of Pennsylvania, Dowd also has an M.S. in urban administration from Georgia State and a B.A. in architecture from the Georgia Institute of Technology.

  • Phone: (612) 624-5468
    Email: dowdx001@umn.edu

What's new on AEI

image The money in banking: Comparing salaries of bank and bank regulatory employees
image What Obama should say about China in Japan
image A key to college success: Involved dads
image China takes the fight to space
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Wednesday, April 23, 2014 | 12:00 p.m. – 1:30 p.m.
Graduation day: How dads’ involvement impacts higher education success

Join a diverse group of panelists — including sociologists, education experts, and students — for a discussion of how public policy and culture can help families lay a firmer foundation for their children’s educational success, and of how the effects of paternal involvement vary by socioeconomic background.

Event Registration is Closed
Thursday, April 24, 2014 | 12:00 p.m. – 1:30 p.m.
Getting it right: A better strategy to defeat al Qaeda

This event will coincide with the release of a new report by AEI’s Mary Habeck, which analyzes why current national security policy is failing to stop the advancement of al Qaeda and its affiliates and what the US can do to develop a successful strategy to defeat this enemy.

Friday, April 25, 2014 | 9:15 a.m. – 1:15 p.m.
Obamacare’s rocky start and uncertain future

During this event, experts with many different views on the ACA will offer their predictions for the future.   

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.