A course correction

April 27, 2007

A report this week that Medicare will be broke by 2019 drew a huge ho-hum - and even a few comments that, "Hey, coulda been worse." Last year, the projected insolvency date was 2018.

That reaction reflects the realization that a long-term fix for Medicare would require an overhaul of the nation's entire health care insurance system to ensure that everyone has coverage - a task considered too big to be tackled until the next president takes office.

But there is a modest course correction for Medicare within reach this year that Congress should embrace and President Bush should endorse: ending a subsidy for private Medicare coverage that rewards inefficiency and offers no guarantee of quality.

The federal health insurance program for the elderly faces the same pressures affecting the entire medical insurance industry. Costs are rising faster than revenues, in part because providing emergency care to the 46 million uninsured is extremely expensive and borne by all paying customers - public and private. Trimming benefits, raising premiums for higher-income beneficiaries and other steps may also be necessary to rescue Medicare, but can't do the job alone.

Meanwhile, equalizing Medicare payments for traditional fee-for-service coverage and private Medicare Advantage plans can curb the growth in costs and halt a trend away from the managed care approach that originally made such plans attractive.

HMOs and other forms of managed care that provide preventive screenings, disease management and a comprehensive package of benefits can offer higher-quality service at lower prices by eliminating the duplication and inefficiency of the traditional system of simply paying whatever bills are submitted by Medicare providers.

But private insurers are now offering their own fee-for-service plans - the fastest-growing segment of the private Medicare market - that offer nothing beyond the traditional Medicare coverage yet collect subsidies from taxpayers and beneficiary premiums. Medicare now pays an average of 12 percent more for beneficiaries who choose private plans instead of traditional coverage.

That disparity is projected to balloon over the next few years, benefiting only the insurance industry. Congress should quickly end the subsidy and force the private plans to compete according to the quality of their care.

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