Free-market Medicare idea is panned

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Free-market Medicare idea is panned

By Mark Sherman, The Associated Press via the Salt Lake Tribune
November 4, 2003

A new study concludes that forcing traditional Medicare to compete with private insurance plans could make it unaffordable to lower-income seniors, highlighting the thorniest issue facing lawmakers who are trying to craft a Medicare prescription drug benefit.

Price competition in some parts of the country "could sink the traditional fee-for-service plan" that is the bulwark of the 38-year-old government health care program for older and disabled Americans, said Mark Schlesinger, co-author of the report released Monday by the nonpartisan National Academy of Social Science.

The academy said the government should maintain traditional Medicare as an affordable option -- with its stability and choice of doctors -- for a sizable segment of seniors who are too ill or easily confused by change.

The report endorsed pilot price competition among private insurers, and said the future of health care for seniors should include a mix of original Medicare and private insurance plans.

But it recommended excluding traditional Medicare from the competition.

Tom Scully, the administrator of the federal agency that runs Medicare, criticized the report as being "precooked by people with a certain ideology." He said the administration intends to maintain a fee-for-service option in Medicare.

Scully has been taking part in the lengthy congressional negotiations to fashion a $400 billion prescription drug benefit and generally overhaul the Great Society-era program. But Scully said the Bush administration has not taken a position on "premium support," the term used to describe a competition scheme.

Senate Majority Leader Bill Frist, R-Tenn., said the issue would be the "sticking point" that could doom the negotiations.

Republicans are demanding that traditional Medicare be required to compete directly with private plans as the price to pay for the drug benefit.

Democrats generally oppose the idea, saying seniors who remained in traditional Medicare would face huge increases in their insurance premiums.

Their fear is that healthier seniors would migrate to less expensive private plans, leaving less healthy beneficiaries in traditional Medicare, a viewed shared by the majority of the 12 academics and health care experts who worked on the report.

But in a dissenting view, a few of the 12 experts said shielding traditional Medicare from competition "is logically and practically inconsistent with the desire to make choices available to beneficiaries."