Medicare, the huge government health program that serves 66 million senior and disabled citizens, is at a crossroads.
With huge demographic and fiscal challenges straight ahead, there are two dominant approaches at hand.
One focuses on improving and modernizing the program by building on the best features of Medicare’s popular system of competing private health plans, harnessing the benefits of personal choice and market competition. The other focuses on building up the powerful Medicare bureaucracy and doubling down on its complex system of central planning and price controls.
The Medicare trustees reported last year that the trends in Medicare administrative payment and price controls, governing both hospital and physician payment, already threaten seniors’ future access to quality care.
With the enactment of President Joe Biden’s absurdly named Inflation Reduction Act, supplanting private market negotiation with government price-fixing, Americans can expect a slowing of investment in research and development and consequently a reduction in the number of new medications and breakthrough drugs, especially cancer drugs.
The only debate between analysts of the Congressional Budget Office and private sector economists is the severity of the coming shortfalls.
The House Republican Study Committee clearly “gets it” and grasps the urgency of this moment. The proof is its fiscal year 2025 budget proposal, “Fiscal Sanity to Save America.”
The committee’s budget proposal is a refreshing exception to the prevailing Beltway wisdom. Its prescriptions align with what seniors have well demonstrated what they know and like; namely, the advantages of personally chosen and more flexible benefit options that can be delivered through more intense market competition.
In substance, the Republican Study Committee proposal would build on the success of choice and competition that characterizes Medicare Advantage. Today, an estimated 52% of all Medicare beneficiaries are enrolled in Medicare Advantage, the robust system of competing private health plans that is the alternative to traditional Medicare.
Enrollment in these private health plans is growing a lot faster than ever predicted. For example, as recently as 2022, the Medicare trustees estimated that private plan enrollment........