The latest congressional leadership proposal for a "demonstrationproject" to test Medicare reform continues a tiresome pattern ofbad federal health policy that undercuts the effectiveness ofmarket-based health care reforms. Serious Medicare reform means onething: creating a premium support financing system modeled on theFederal Employees Health Benefits Program.
Senator John Kerry's health care plan would expand coverage butwould fall short in transforming health insurance markets andmaking patients the key decision makers in the system. In effect,it would reinforce the status quo, with (according to one estimate)nine of every 10 dollars spent going to employers, insurancecompanies, and state governments, not to individuals.
Whatever merits one may ascribe to the recently enacted Medicarelaw, it has aggravated, not controlled, rapidly rising Medicarecosts. Its major feature is a massive entitlement expansion, but italso embodies some bad health care policy: There is no need for thefederal government to displace existing drug coverage, pre-empt newprivate-sector options, or accelerate the loss of employer-baseddrug coverage.
The House-Senate conference committee outline agreement this weekguts any serious long-term reform of the troubled Medicare programwhile proposing the single largest entitlement expansion in theprogram's history. Instead of enacting real reform at a datecertain and in time to accommodate the retirement of the massivebaby-boom generation, key congressional leaders are insteadproposing a limited "demonstration project" to test seriousMedicare reform, confined to a few areas of the country.