Thursday, December 8, 2011

The Case for Reforming Medicare with Premium Support 

Over at economics21, I have a new paper on how Medicare can be reformed with a concept known as “premium support”:

To see the value of premium support as a reform concept, it is necessary to understand how Medicare works today, and especially the role that Medicare plays in today’s inefficient arrangements for delivering health care services.... The primary problem is that health care in this country is highly fragmented and uncoordinated. In the main, physicians, hospitals, clinics, labs, and pharmacies are autonomous, financially independent units. They bill separately for the services they render to patients, with very little need to coordinate with anyone else in the system. The result is an incredible level of duplication and waste, overemphasis on procedure-based medicine, as well as burdensome paperwork, excessive bureaucracy, and a lack of accountability for the all-too-frequent cases of low quality care....

Premium support provides a ... vision for how to bring about “delivery system reform.” Instead of relying on the government’s capacity to re-engineer how doctors and hospitals are organized and provide care, premium support relies on a decentralized process of consumer choice and vigorous price and quality competition among the plans providing coverage as well as among those providing services directly to patients. The idea is to give the program’s participants strong financial incentives to gravitate toward arrangements that can deliver high quality care at the lowest possible premium.

You can read the full paper here.

posted by James C. Capretta | 11:11 am
Tags: Medicare, premium support
File As: Health Care