HIRP Research Brief

No. 4

Medicare in a Consumer-Choice Environment: Competitor or Residual Program?
January 1996

Author

Lynn Etheredge

Summary

The Medicare provisions of the reconciliation bill and President Clinton's proposals would both allow many new health plans to compete for Medicare enrollees and structure a competitive, consumer-choice system. Medicare will enter this new environment with serious shortcomings. The logic of market competition will call for upgrading many aspects of Medicare if it is to be successful. Among Medicare's feature that need to be reconsidered are benefits, consumer focus, premium financing, payment policies, provider arrangements, performance accountability, management systems, risk adjustment and market strategies, social mission responsibilities, and research and development.

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