Competitive bidding thus is a proven method for bringing efficient prices to Medicare. Unfortunately, the BPC’s proposals for competitive bidding are critically flawed.
Competitive bidding, as a vehicle for determining prices for Medicare health plans, holds the promise of substantial cost savings while protecting the health care needs of beneficiaries, regardless of the political question of determining the size of the entitlement.
The Robert Wood Johnson Foundation asked scholars at the American Enterprise Institute to consider various approaches to reforming this “800-pound gorilla of American health care.” The resulting series, “Preserving Medicare for future generations: market based approaches to reform,” includes three papers, each of which addresses a key question in Medicare reform.
When you have to force people to buy something as obviously valuable as protection against becoming uninsurable or paying astronomical premiums, it means you have some serious design flaws in your product.
Our research shows that competitive bidding—a key feature of the Wyden-Ryan plan—could save Medicare $339 billion over ten years while maintaining basic benefits and without raising taxes. Crucially, the elderly would not be exposed to the risk of higher health care costs, as in approaches that would set fixed voucher payments toward the purchase of medical insurance.
How could one prominent healthcare voice be so wide of the mark?
There is a way to fix the Medicare program without raising taxes: use market-like arrangements to set prices for both the traditional fee-for-service (FFS) program and for private Medicare Advantage (MA) plans. A fully implemented competitive pricing system for Medicare would save $550 billion over 10 years.
Medicare is quickly approaching insolvency, in part because the program pays too much for the services it provides. This volume proposes a groundbreaking solution: Use market-based arrangements to set prices for Medicare plans.
Medicare should use competitive pricing to set the government contribution to the traditional fee-for-service Medicare plan and private Medicare Advantage plans.
The president should pursue reformthat encourages health insurance and preserves progressive tax treatment.