Alice Rivlin says Medicare could make more use of market forces to control costs than it already does.
The current Medicare Advantage program does let private insurers compete for Medicare enrollees’ business, but the program does not give the insurers enough incentives to reduce costs and improve quality, Rivlin testified today at a House Ways and Means health subcommittee hearing.
The subcommittee organized the hearing to look at what Rivlin, a former vice chairman of the Federal Reserve Board who is now a senior fellow at the Brookings Institution, and a colleague, Pete Domenici, a Republican who represented New Mexico in the Senate, are calling a Medicare “premium support” proposal.
The proposal calls for Medicare to continue to make the traditional fee-for-service Medicare program the default option. Medicare also would let enrollees use regional exchanges to choose from menus that would include the traditional fee-for-service (FFS) Medicare program along with guaranteed-issue private plans with the same actuarial value as the traditional Medicare coverage.
Plans would get risk-adjusted annual payments based on the age and health status of the enrollees.