No True Harm

I am certain that there are some beneficiaries who will see any cut in government support (and, thus, the expected reduction in benefits or access; notwithstanding that much of the savings may just come out of the economic profit) as true harm. Knowing however, that the existing fee-for-service Medicare is there to greet them, I am confident that the greater good will still be served.

The history of managed care in the Medicare population has been a lengthy one with lots of ups and downs. Both Democrats and Republicans have embraced it, at one point or another, as a means of 1) holding down health care costs, 2) better integrating care for our nation's elderly and disabled, 3) offering expanded services in exchange for a more limited choice of providers (and therefore better negotiation over reimbursement rates), and/or 4) the ideological goal of moving the system toward capitated subsidies or vouchers. The most recent iteration, "Medicare Advantage" has been explicitly supported with additional subsidies (above and beyond the expected cost of the benefits and the "load factor"), in an effort to gain sufficient traction in all areas of the country: no one would expect a health plan to move into a region without the promise of profit; and the long history of government involvement in this sector meant a greater degree of skepticism (and, thus, a greater demand for a profitable opportunity) before entering and developing the necessary infrastructure. But, that has long since arrived and grown: with nearly 22 percent (10.2 million) now enrolled, varying across states with a low of 1 percent in Alaska to 42 percent penetration in Oregon.

If one believes, on ideological grounds, that Medicare Advantage is part of the solution to what ails our Medicare program, then continuing the pattern of subsidies (at least in the lower penetration states) may make sense. If, on the other hand, one believes that the gross overpayment is too high a price to pay for an experiment with uncertain results, we must cease or curtail.

By Howard Forman  |  September 28, 2009; 4:27 PM ET  | Category:  Medicare
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