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Leading policy-makers and scholars explain how market forces, deregulation, and consumer choice can work to improve health care for all Americans.

Commentary

Medicare: Yesterday and Tomorrow
Joseph R. Antos, Ph.D., American Enterprise Institute, 8-2-05

Antos notes that America’s one-size-fits-all Medicare program ended in 2003 with the Medicare Modernization Act, which, “[for the first time provided] greater assistance with health costs to the less fortunate, rather than uniform subsidies for all regardless of need,” along with “a system of bids to foster cost saving competition among plans and ensure that federal payments reflect actual market conditions.” Still, Antos says,

Greater reforms are necessary if Medicare is to meet the demands of the baby boomers, who are poised to double the program’s enrollment over the next few decades. We can no longer afford to give Medicare beneficiaries the illusion that health care is a virtually free good. Instead, beneficiaries should be offered health plan choices reflecting the realistic costs of providing care. All health plans in Medicare, including the traditional program, should compete on an equal footing for enrollees. Subsidies should be structured to ensure that those with the greatest needs (in terms of both income and health status) get the greatest help.
Pricing should be as transparent and free of government controls as possible. Consumers (and their doctors) can hardly be expected to purchase wisely if they do not know the price. Similarly, if the price structure reflects political calculation rather than the combined judgments of millions of consumers and providers, policy-induced shortages and other market distortions will develop, and health care resources will be wasted.


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