Commentary: Medicare subsidy costs are indefensible

The Fresno BeeOctober 8, 2009 

How to pay for it all? That remains a vexing challenge for Congress in expanding health care coverage to all Americans.

A large part of the solution must involve wringing savings from within the existing system. Some cost savings must come from hospitals, since they should see fewer uninsured people in their emergency rooms if everybody is required to carry insurance. Getting treatment for a minor issue prevents that problem from escalating into a costly emergency. Hospitals had $56 billion in uncompensated care for the uninsured in 2008.

Some savings should also come from insurance companies, since they would benefit from an influx of millions of younger, healthier people who today have the highest rates of being uninsured.

And some cost savings can come from Medicare, the public insurance program for those over age 65. One fruitful area is to provide a level playing field between traditional Medicare and private plans that have participated in Medicare since 1985.

Historically, the idea of public-private competition in Medicare was to improve quality and reduce spending. Few individuals chose private plans, however, so Congress in 2003 authorized paying Medicare private plans more than the average per capita costs in traditional Medicare.

While this increased enrollment in private plans, it distorted the market. It also raised fairness issues and put a strain on Medicare finances. As part of any health care reform package, Congress should end the subsidies to the private plans -- freeing up resources and resetting the market to encourage efficiency and innovation.

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