Who really wants price competition in Medicare managed care?

There is much policy talk about making Medicare more competitive, like private markets. But when reform proposals near implementation, local opponents of competition are often able to stop reform experiments. This paper reports on one recent example, the Competitive Pricing Advisory Committee, created by the 1997 Balanced Budget Act (BBA) to bring competitive bidding to Medicare + Choice plans. After design and site-selection choices were announced, members representing local interests were able to delay and perhaps kill competitive bidding before it could start, once again. A public report of this story may save future market-based Medicare reforms from a similar fate.

The Medicare reform debate: what is the next step?

Medicare costs are rising faster than projected revenues. Action to close the emerging deficit is inescapable. We propose converting Medicare from a "service reimbursement" system to a "premium support" system. These changes would resemble many that are now reshaping private employer-based insurance. Our reform would encompass not just the "public" Medicare program but also the "real" Medicare, which includes the supplemental plans to which most Medicare beneficiaries have access. Approved plans would have to offer stipulated services. We review numerous technical issues in moving to a new system that cannot be solved quickly and that preclude quick budget savings.