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The Congressional Budget Office's estimates that Medicare spending will grow to almost $1.079 trillion by 2023 cast doubt on the sustainability of the program for current and future beneficiaries. At an AEI event on Tuesday morning, four authors of a series of AEI studies analyzing market-based approaches to reforming Medicare discussed some of their proposed reforms.
James Capretta of AEI and the Ethics and Public Policy Center explained that Medicare's fee-for-service structure, combined with a lack of cost-sharing among beneficiaries, encourages high spending among patients and physicians. Capretta asserted that because of Medicare's dominant size in the marketplace, the program's perverse incentives drive high spending in the entire health system.
Roger Feldman of the University of Minnesota argued that competitive bidding provides the most promising solution to Medicare's cost growth because it allows the government to discover — and pay — the true cost of providing the Medicare benefit. Robert Coulam of Simmons College noted that traditional Medicare enjoys some advantages — such as universal availability — over private plans, and stressed the importance of preserving the traditional program within a competitive bidding system. Joseph Antos of AEI highlighted additional reforms to the traditional program that would modernize the benefit and enable it to compete with private plans.
Paul Ginsburg of the Center for Studying Health System Change concluded that the authors have put forward reasoned and analytical market-based proposals, though the versions of premium support advanced by politicians have made the concept politically toxic.
Medicare is a $600 billion program that will double in size over the next decade. Attempts to reduce costs by cutting the prices paid to doctors and hospitals do nothing to change what is driving up costs. Even worse, the powerful incentives in Medicare have far-reaching effects on the broader health system, which is also suffering from a cost explosion. Realistic Medicare reform, not more price controls, is needed to save American health care.
In a series of forthcoming AEI studies on market-based approaches to Medicare reform, James Capretta, Joseph Antos, Roger Coulam, Bryan Dowd, and Roger Feldman argue that sustainable reform is only possible by changing the program’s financial incentives. At this event, four of the authors will stress that consumer choice of competing health plans and structural reforms of traditional Medicare are essential to making health care affordable and saving Medicare for future generations. Paul Ginsburg of the Center for Studying Health System Change will discuss the implications of these reports for Medicare reform.
This project was developed with support from the Robert Wood Johnson Foundation.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
Registration and Breakfast
Joseph Antos, AEI
James C. Capretta, Ethics and Public Policy Center and AEI
Robert Coulam, Simmons College
Roger Feldman, University of Minnesota
Paul Ginsburg, Center for Studying Health System Change
Robert B. Helms, AEI
For more information, please contact Catherine Griffin at firstname.lastname@example.org, 202.862.5920.
For media inquiries, please contact MediaServices@aei.org, 202.862.5829.
Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at AEI. He also is a member of the Panel of Health Advisers for the Congressional Budget Office and recently completed two terms as a commissioner of the Maryland Health Services Cost Review Commission. His research focuses on the economics of health policy, including Medicare and broader health system reform, health care financing and the budget, health insurance regulation, and the uninsured.
James C. Capretta is a visiting fellow at AEI. As an associate director at the White House Office of Management and Budget from 2001 to 2004, he was responsible for all health care, Social Security, and welfare issues. Earlier, he served as a senior health policy analyst at the US Senate Budget Committee and at the US House Committee on Ways and Means. Capretta is also a senior fellow at the Ethics and Public Policy Center. At AEI, he researches how to replace the Patient Protection and Affordable Care Act with a less expensive and more effective reform plan.
Robert Coulam is senior lecturer and director of the Center for Health Policy Research at the Simmons College School of Management. He was formerly a principal associate at Abt Associates, where he managed large-scale research and evaluation projects on Medicare and Medicaid policy issues. Coulam led the technical support team for Medicare’s demonstration of competitive pricing for health plans in the late 1990s; he also led the early Centers for Medicare & Medicaid Services efforts to design a competitive pricing demonstration for durable medical equipment and has been active in research efforts supporting recent federal initiatives to reform the Medicaid and Medicare programs. His most recent publications focus on the technical, legal, and political problems of applying competitive pricing to Medicare.
Roger Feldman is the Blue Cross Professor of Health Insurance and Professor of Economics at the University of Minnesota. His experience in health care policy includes serving on the senior staff of the President’s Council of Economic Advisers, where he was the lead author of a chapter in the 1985 “Economic Report of the President.” From 1988 to 1992, he directed one of the four national research centers sponsored by the Centers for Medicare & Medicaid Services. He is on the Panel of Health Advisers for the Congressional Budget Office and consults for various federal and state agencies on health care–related matters.
Paul Ginsburg is the president of the Center for Studying Health System Change (HSC). He is a founding member of the National Academy of Social Insurance, a public trustee of the American Academy of Ophthalmology, and served two elected terms on the board of AcademyHealth. Before founding HSC, Ginsburg was the executive director of the Physician Payment Review Commission, created by the US Congress to provide nonpartisan advice about Medicare and Medicaid payment issues. Ginsburg previously worked for the RAND Corporation and the Congressional Budget Office.
Robert B. Helms is a resident scholar at AEI. He has served as a member of the Medicaid Commission as well as assistant secretary for planning and evaluation and deputy assistant secretary for health policy at the Department of Health and Human Services. He currently participates in the Health Policy Consensus Group, an informal task force that is developing consumer-driven health reforms. He is the author or editor of several AEI Press books on health policy, including “Medicare in the Twenty-First Century: Seeking Fair and Efficient Reform” (1999) and “Competitive Strategies in the Pharmaceutical Industry” (1996).
Preserving Medicare for future generations: Market-based approaches to reform
Plan competition and consumer choice in Medicare: The case for premium support
The role of Medicare fee-for-service in inefficient health care delivery
A competitive bidding approach to Medicare reform
Feldman, Coulam powerpoint