A cheaper, fairer Medicare system

Published: Thursday, December 1, 2005 at 6:01 a.m.
Last Modified: Wednesday, November 30, 2005 at 2:24 p.m.
Pretend for a moment that you run a neighborhood hardware store, and one day the federal government decides that Americans need help to buy more tools and building supplies. Congress creates a special kitty to subsidize new regional hardware chains - only your store isn't eligible.
That sounds unfair, and it is unfair, and it's one of many defects in the big new Medicare prescription drug law, which subsidizes some insurance companies - but not others - that offer drug coverage to senior citizens. Congress has a chance to level this uneven playing field - and save a bundle of money for taxpayers - as it wraps up the federal budget process this fall.f-z The 2003 Medicare Modernization Act brought prescription drug coverage into Medicare for the first time, and it relies mainly on private insurance companies to offer the benefit through preferred provider organizations (PPOs).
But Congress feared that big national insurance companies would balk at entering the Medicare market - especially in sparsely populated regions like the Upper Midwest - so it created a ''PPO stabilization fund'' to offer financial incentives.
That fear was legitimate in 2003, but it now appears unfounded. Last summer MedPAC, the nonpartisan professional panel that advises Congress on Medicare, said the government already offers generous incentives to private plans that serve Medicare patients.
But the fund isn't just wasteful, it's unfair. Many incumbent health plans that already serve Medicare patients, such as HealthPartners in Minnesota, won't be eligible for the stabilization payments.
That puts them at a competitive disadvantage relative to big national insurance companies in an effort to attract and serve older customers. That's a bad use of taxpayer money.
This fall Congress has been battling over plans to trim $35 billion to $50 billion from projected federal spending, with nasty struggles over student loans, food stamps, Medicaid and other items. The Senate Finance Committee finally embraced the MedPAC saving proposal. The rest of Congress should too - it won't find easier or fairer savings.

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