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Modernizing Medicare: An important first step
(By - Douglas Holtz-Eakin)
The Medicare program is at a crucial juncture: it is responsible for 25 percent of all federal outstanding debt this century, and the total continues to grow. Every day, 10,000 newly eligible seniors enter a Medicare health insurance program whose budget needs are already escalating out of control. This path is simply unsustainable.
Just as troubling is the fact that all those Medicare dollars are not delivering the top-quality health care that senior citizens deserve. A quick look at how Medicare pays for care makes plain why this is so. Under its antiquated “fee-for-service” approach, Medicare pays for services delivered, rather than for outcomes achieved. We know that prevention and care coordination are essential, for instance, but the current payment system does little to encourage or reward this. Since Medicare is the largest payer of medical bills in the United States, the poor incentives embedded in its fee-for-service approach set a subpar standard for care throughout the American health care system.
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