On Reforming Medicare

Policy Backgrounders | Health

No. 151
Friday, February 04, 2000
by John Hoff


Overall, the Breaux-Frist proposal would provide Medicare beneficiaries with control over their health benefits as well as an updated benefit package reflecting advancements in medicine and prescription drug coverage. They could choose the plan they want, a choice that would benefit each beneficiary and make the system more efficient. Because beneficiaries would have a pre-determined amount of assistance, they would be more price sensitive and plans would be more competitive. Because beneficiaries would be able to choose, they would force plans to provide quality care in an efficient way. The savings would provide higher benefit levels or lower taxes.

The commission estimated that its proposal, including the added benefits and changes in eligibility to be consistent with eligibility for Social Security benefits, would reduce the growth rate in Medicare by 12 percent. Whether additional funding would be required can be considered after the changes make the system more efficient.

"Medicare beneficiaries will have more control over their health care, and the government less, if the board does what it is supposed to do."

If the Medicare Board is not so powerful it overwhelms individual choice, government control over the delivery of health care will lessen. Medicare beneficiaries will be able to choose how their health care is provided, and government will have less control of providers and beneficiaries. Health plans will exercise control, but beneficiaries will be able to decide which rules they are willing to accept, balancing the relative costs and benefits of the various plans.

Breaux-Frist thus takes a large step toward modernizing and improving the structure, as well as the benefits, of Medicare. 

NOTE: Nothing written here should be construed as necessarily reflecting the views of the National Center for Policy Analysis or as an attempt to aid or hinder the passage of any bill before Congress.

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