Over at e21 I have a column on the Medicare reforms that Republicans should pursue during the fiscal cliff negotiations, given the unwillingness of the Obama administration to consider any kind of premium support model.
But if premium support can’t be secured in this round of negotiation because of Democratic opposition, are there other reforms that are still worth fighting for?
The answer is yes, but to determine what they are requires a proper understanding of what is driving the cost problem in Medicare in the first place.
The most pressing problem in Medicare is the dominant and poorly designed fee-for-service (FFS) insurance model. Seventy-five percent of the beneficiaries are enrolled in FFS, with the other 25 percent enrolled in private plans (called Medicare Advantage). The FFS program is essentially a claims-paying machine. If a licensed provider renders a medical service to a beneficiary, the Medicare FFS program generally pays for the service, no questions asked. In that sense, it’s an FFS program modeled on the private insurance plans prevalent in 1965, when Medicare was created.
For those interested in reading more, you can find the rest of the article here.