Perspective               

Medicare Reform Unlikely to Save Government Much Money

According to a new study from Emory University's Rollins School of Public Health, proposed reforms of Medicare's privatized health care program, Medicare+Choice, are not likely to save the government much money unless President Bush and Congress expect older and disabled people with Medicare to spend even more for their health care than they do today.

Over the past several years Congress has been struggling to deal with low Medicare HMO enrollment and HMO withdrawals. Critics have blamed the current payment system, and there are several proposals in Congress that support privatizing Medicare and replacing the current system for paying HMOs with one based on competitive bidding by plans.

Researchers studied three model plans, similar to the ones proposed by Congress, and found that a privatized program proposed by the Bush administration with a competitive pricing system is not likely to increase enrollment in Medicare+Choice plans and it is also not likely to lower government spending for the Medicare program. The only way for President Bush and Congress to lower government spending in this new payment system, in fact, would be to greatly increase the amount they require people with Medicare to pay in health care premiums, copays, and deductibles.

The study also notes that a key difference between Congressional proposals is their effect on geographic areas. Some proposals would keep the current Medicare payment system's spending distributions to private plans, which have resulted in inequities in benefits between different geographic areas, while other proposals would not. So although the payment reforms' effect on the nation as a whole may be minor, some people in specific areas may see particularly large increases in their health care costs.

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