NCPA - National Center for Policy Analysis

Medicare Commission Members Support Market-Based Reform

February 19, 1999

President Clinton wants to inject 15 percent of the $4.4 trillion projected budget surplus into the Medicare program through 2014. That $660 billion boost would keep the Medicare alive until 2020. But analysts say it would not make needed changes to the program, either to restrain costs or eliminate the bureaucracy.

Critics of the president's proposal say some members of the National Bipartisan Commission on the Future of Medicare -- which is due to report on March 1, 1999 -- have a better idea. Commission cochairmen Sen. John Breaux (D-La.) and Rep. Bill Thomas (R-Calif.) are proposing an alternative to the current mostly fee-for-service program, in which the bureaucracy reimburses health care providers according to complex rules.

  • The Breaux-Thomas plan would have the federal government provide fixed payments to seniors equal to about 88 percent of the cost of private health insurance premiums, allowing them to purchase their own health insurance from competing companies.
  • The proposal is based on the Federal Employee Health Benefits Program, which allows some nine million working and retired participants to choose from between nine and 20 different private health plans -- depending on where they live.
  • Under FEHBP, the government pays 75 percent of premium costs.
  • According to the commission staff, the growth in per capita Medicare spending averaging 6.6 percent annually between 1993 and 1998, while FEHBP spending rose only 2.7 percent a year and private health plan spending rose just 2.1 percent.

Another Democrat on the commission, Sen. Bob Kerrey (D-Neb.), and seven Republican members, support this market-based alternative; however at least one more member will have to support the plan for the commission to recommend it.

Source: Deroy Murdock (senior fellow, Atlas Economic Research Foundation), Dallas Morning News, February 18, 1999.

 

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