Actually, the Federal Government is doing something about the long-term fiscal imbalance in Medicare and Medicaid. The creation of Medicare Advantage plans has introduced real market forces into a 1960s government price control program. These plans bid for enrollees and offer integrated coverage to beneficiaries. This is crucial since academic evidence indicates that the high cost individuals in the program have a multitude of health problems. These plans are seeking out "the sick" since the premiums for enrollees are "risk-adjusted". Vigorous competition between these private plans has produced value for enrollees in the range of $1000 per year. And the innovation that this real market produces will lower the programs long run inflation rate.

The same is true in Medicaid where waivers from DC are allowing states to reform their actuarially bankrupt plans. Florida has completed a year of reform in its plan in Broward and Duval Counties. Beneficiaries receive risk-adjusted premiums to buy from competing private health plans. In Broward there are 15 choices and Duval there 6 plans. All the HMOs have offered additional benefits to enrollees and after three quarters of reform not one grievance has been filed. Initial estimates show that the reform is under its projected budget and the demonstration has been increased to another 3 counties. As with Medicare Advantage innovation among competing provider plans will lower the programs long-run inflation rate. It is certainly true that America faces long-run fiscal challenges but it is not true that no action has been taken to deal with those issues.

• posted by Mike Bond
• August 11, 2007 @ 12:51 pm
• Permalink

nor should it, for it will not make one bit of difference in the long-term fiscal outlook -- which is dismal. while the current deficit is lower, it's still a deficit, and the federal government is not doing anything to plan for the huge increase in entitlement spending that will come with the retirement of the baby boomers. Social Security and Medicare are about to explode and the federal government is just sitting back and waiting for the crisis to hit. Learn more at FacingUp.org -- the web site of the initiative Facing Up to the Nation's Finances.

• posted by Remaley
• August 10, 2007 @ 8:47 am
• Permalink

Post Your Comment Here

Name		*
E-mail		*
Response		*
Enter the characters as they appear in the box to the right		*
		* = Required field