Competition, Not Price-Controls, Will Save Medicare

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October 8, 2009

Competition, Not Price-Controls, Will Save Medicare

“I just want to be clear, again: Seniors who are listening here, this does not affect your benefits. This is not money going to you to pay for your benefits; this is money that is subsidizing folks who don’t need it.” Or so President Barack Obama promised our nation’s seniors earlier this year. Problem is, as we have pointed out many times, this is simply not true: Obamacare will absolutely cause reduced Medicare benefits for Seniors. Congressional Budget Office Director Douglas Elmendorf told Congress that and even the New York Times has grudgingly admitted as much.

Specifically, every version of Obamacare waiting to be merged into one bill on Capitol Hill cuts billions of dollars from the Medicare Advantage program. One of the dirty little secrets about Medicare is that it actually only covers slightly more than half of all health care costs for seniors and disabled citizens. Medicare recipients buy the balance of their health care coverage through private supplemental insurance or Medigap coverage. Most seniors, therefore, actually have at least two health insurance providers, the federal government through Medicare, and a private supplemental insurer. Medicare Advantage allows seniors to pay a single premium and receive a much broader range of health care services than just government-run Medicare provides, including prescription drug coverage, preventive-care services, routine physical examinations, and coordinated care for chronic conditions.

The Baucus bill, which will be voted on in the Senate Finance Committee later this week, is the least offensive Medicare reform plan currently being included in Obamacare. However, the Baucus bill fails to achieve true reform in two ways: First, it takes all ’savings’ from Medicare reform and immediately plows them into a new deficit exploding entitlement. Second, and more importantly, it preserves the old fee-for-service Medicare program which is based on central planning and price controls.

The better option would be to move Medicare towards a true “premium support” system where the government would make direct contributions to all beneficiaries who could then control how to spend their own health care dollars. This would be the same model as the Federal Employees Health Benefits Program (FEHBP) which provides health insurance to Members of Congress. Heritage fellow Bob Moffit explains:

With modifications, Congress could adopt a premium support system broadly similar to the FEHBP and secure the same positive results in intense competition, patient choice, high quality care, and patient satisfaction. Without such modifications, there is no real reform but just more of the same.

Instead of breaking the President’s promises, and raising health care costs for America’s seniors, Congress should hit the reset button and start over with real competition and state based reform that lowers costs and improves care.

Tags: Max Baucus, Medicare Advantage, Obama Health Care Plan

Comments Author: Conn Carroll

Karen

jacklohman , Where did you get this info of 17%. If that were the case, you would see many more Medicare Advantage Insurers available. There are just a handful of them in California and they are all "sun setting" their programs. Yes, there are lobbyists and special interests and they are costing our country plenty of money. Insurance companies provide the competition, not the government.

jacklohman

That Advantage costs taxpayers 17% more is a fact not even Advantage providers reject. Yes, some are getting out because there is not enough profit to offset their high executive salaries, bonuses, broker commissions, and political costs, none of which burden their Medicare competitor. Oh, and the 17% subsidy is being eliminated by congress.

And Karen, if insurers are left to provide the competition, they'll do it by cutting payments and increasing denials long before they cut executive salaries, bonuses and etc.

Karen

As an agent selling Medicare supplement policies and Medicare Advantage policies, there are many gaps in traditional Medicare coverage that can be filled for additional costs. Medicare Advantage policies, offered by private insurers, provide better coverage by including stop gap measures without purchasing a Medicare supplement and do it for less cost than traditional supplements. In California, insurers that are willing to offer Medicare Advantage policies and willing to abide by all the government rules of the Center for Medicare & Medicaid Services (CMS) compete in the marketplace with reduce premiums and offer extra coverages not even remotely covered by traditional Medicare. The government doesn’t like this at all which is one reason they want to cut Medicare fraud. This is what real competition does! How on earth so we get the DEMS in Congress to hit the reset button and start over with real reform? No one can answer this because our lawmakers are bent on their own agenda--another government bureaucracy that will bankrupt America just a Medicare on its current course, will be bankrupt in 8 years! Let's get back to the goal of broadening access to quality healthcare for the 30 Million legal residents’ uninsured while making policies affordable to all. This can only be done by making people more responsible, providing tax credits individually to those that pay for their own coverage, tort reform and by legislating that if an insurance company offers a policy they must join a pool to provide insurance for those who are uninsurable due to preexisting conditions.

jacklohman

>>> "The government doesn’t like this at all "

No, they don't like paying an extra 17% for Advantage plans. Private is supposed to be MORE efficient than public, not LESS.

Get the insurance industry bribes out of the system and these guys will fix the health care system in the best interest of the nation.

Jack Lohman
http://MoneyedPoliticians.net