Ross Perot has a knack for identifying those issues that are important
to voters. Just a week after congressional leaders said that Medicare reform
would be the biggest policy issue this fall, his book on Medicare hit the
stands. Intensive Care is a book about the crisis facing Medicare and Medicaid,
the federal and federal/state health insurance programs for the elderly
and poor.
Medicare and Medicaid have evolved into enormous, wasteful and inefficient
government programs that must be reformed before they financially break
the country. How big is the problem? Mr. Perot points out that Medicare
and Medicaid will take up 17.4 percent of the federal budget in 1995, or
about 35 percent of all entitlement spending. According to Medicare's board
of trustees, without fundamental change the program will go bankrupt by
2002.
Something has to be done, and it has to be done soon. But as Mr. Perot points
out, historically Congress has been reluctant to resolve the federal government's
penchant for excessive spending. "Our elected leaders have ignored
the clear signals that the greatest nation in the history of man has been
spending itself toward bankruptcy."
Medicare is probably the only large health insurance plan in the country
that has not undergone fundamental change over the past decade. Many employers
have increased deductibles and copayments - requiring employees to manage
more of their own health care dollars. More frequently, employers have begun
directing their employees to lower-cost doctors and actively managing health
care costs.
Medicare has moved in the opposite direction. In recent years the deductible
for Part A (hospital insurance) has not changed in real terms, and the deductible
for Part B (other medical expenses) has actually decreased in real terms.
While there has been some experimentation with managed care, in most places
Medicare is still a wide-open, fee-for-service plan in which patients can
see almost any doctor for any service.
Reforming Medicare and Medicaid and balancing the federal budget will force
us to make some tough choices, and when there are tough choices to be made
Ross Perot hears his entry cue. He believes that "we should view the
coming debate over Medicare and Medicaid as an opportunity rather than a
dilemma." It's an "opportunity for creative minds to update old
systems that have served their purpose, but are now in need of an overhaul
to function properly in the next century."
What direction should reform take? "A properly designed system based
on market principles will do more to initiate positive change than any government
rules and regulations that attempt to monitor the profits of the health
care industry," Mr. Perot tells us.
As mentioned earlier, many employers are actively managing their employees'
health care costs or are moving them into managed care plans. Mr. Perot
discusses this solution and points out that Congress is already moving in
this direction for Medicare. Current law allows some Medicare beneficiaries
to withdraw from Medicare and join a health maintenance organization (HMO)
instead. While seniors should be free to remain in Medicare, we should build
on this precedent and allow Medicare beneficiaries to withdraw from Medicare
Parts A and B and choose any alternative private plan.
Perhaps a more attractive option than managed care is also discussed by
Mr. Perot: Medical Savings Accounts (MSAs). This option would permit Medicare
recipients to use their Medicare funds to purchase a catastrophic policy
coupled with a Medical Savings Account. For example, private insurance might
cover all health expenses over a $3,000 deductible, and place any premium
savings in an MSA. MSA funds would then be used to pay for expenses below
$3,000. In case a gap remained between the MSA deposit and the catastrophic
deductible, retirees could top up their MSA by contributing amounts they
otherwise would have used to purchase private, Medigap insurance or pay
out-of-pocket expenses.
Of course, to hear Democrats and liberals complain about MSAs, you'd think
it was positively un-American to let people keep some of the money they
are now giving to insurance companies. It's that same mentality we've seen
from Washington for years: "Heaven help us if we let taxpayers keep
some of their own money. They might not spend it like we bureaucrats would
like."
Ross Perot has always believed in the ability of the American people to
respond properly when adequately informed - and that's what this book is
meant to do. While his book will not be the last word on Medicare, Intensive
Care has succeeded as a sound analytical beginning.
The National Center for Policy Analysis is a public policy research institute
founded in 1983 and internationally known for its studies on public policy
issues. The NCPA is headquartered in Dallas, Texas, with an office in Washington,
D.C.