The History of Medicare and
The Current Debate
The Birth of Medicare
The Heritage Foundation Media Campaign
Leading Market-Driven Legislative Proposal
Instability in the Medicare HMO Marketplace
The New Medicare Law: A Victory for the Proponents of Privatization
Growing Power of Extremist Think Tanks
MRC's Media Education Campaign
Leading Market-Driven Legislative Proposal
In 1999, the idea of a market-driven Medicare program was again pushed to the forefront of the Medicare debate in Congress by Senators John Breaux and Bill Frist, and Congressman Bill Thomas. At the time, they were serving on the National Bipartisan Commission on the Future of Medicare, which had been established by the Balanced Budget Act. Although the Commission was charged with examining the Medicare program and making recommendations by March 1999 to strengthen and improve it, the Commission disbanded without issuing a report or recommendations. While the Commission members were unable to muster the required number of votes–it was the first commission in recent Washington memory to conclude without issuing a final report–Breaux, who co-chaired the Commission with Thomas and Frist, nonetheless introduced their own legislative proposal for a "competitive" Medicare premium system.
Senators Breaux and Frist proposed the creation of a premium support program modeled after FEHBP. Under this proposed system, private managed care plans and the Original fee-for-service plan would compete to offer health insurance coverage to people with Medicare. Managed care organizations would offer "standard option" as well as "high option" plans, and for most older Americans premium support would be set at 88 percent of the standard plan–a cost ultimately determined by the market. The people with Medicare who would be able to afford it would be able to purchase more benefits. Given that people with Medicare consume three and a half times more health care services than the working population, individual premiums for people with Medicare were estimated to be over $6,500 a year by 2025 under this model.1
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1 Moon, M., "Restructuring Medicare: Impacts on Beneficiaries," Urban Institute, January 1999.