These recommendations include encouraging more HMOs to get into the Medicare business and more patients to select managed care plans, combining Parts A and B to simplify financing and administration of the program, and federalizing Medicaid's supplemental acute-care coverage for Medicare beneficiaries. In the other camp are some leading Republicans and several historically conservative think tanks, including the Heritage Foundation. These people have recently taken up the banner for managed care and managed competition. Stuart M. Butler, PhD, of the Heritage Foundation argues that Medicare should be modeled to operate like the Federal Employees Health Benefits Program, in which the government contributes an amount of money per employee based on the average cost of premiums for the largest participating health plans. The program then markets a number of qualifying health plans to employees.
Employees choose the one they want, paying more for more expensive plans.
Republicans like that. The trust fund is financed with payroll taxes, and at various times in its 30-year history has been projected to be running out of money. In the past, Congress has always stepped in to prop it up by enacting some combination of tax increase, provider cuts and special allocation of funds. And, as appealing as the idea of encouraging managed care enrollment for Medicare beneficiaries may be, there is little serious sense that it would save the nation a significant amount of money. Actually, the program is in better shape now than in the past few years.