If Government Must Be Involved With Healthcare, Let There Be Competition

In a presidential election year, there has been surprisingly little mention by news outlets of  Medicare. This is quite surprising considering that Medicare Part A (hospital insurance) will begin running deficits next year and will deplete the trust fund (becoming insolvent) by 2030. The program overall is not performing much better. However, the lack of publicity does not mean that lawmakers have stopped trying to alter Medicare in financially destructive ways.

Earlier in January, the Medicare Payment Advisory Commission (MedPAC) released a very under-the-radar report about Medicare Advantage. Medicare Advantage constitutes Part C of the Medicare program. In it, private insurance plans are able to compete – with the approval of the government – for the business of Medicare enrollees, offering them similar services. The plans have become so popular that more than half of Medicare enrollees are a part of a Medicare Advantage plan.

However, government central planners don’t like the looming influence of free market competition. Last year, the Biden administration announced a plan to cut $4.7 billion from Medicare Advantage, even as more seniors are flocking to the program. Further, the Centers for Medicare and Medicaid Services (CMS) will release a rate notice, potentiating further cuts to the program.

This is in line with the aforementioned MedPAC report, which conveniently glossed over many of the positive aspects of Medicare Advantage – which include very low premiums – in its findings. The competition model of Medicare Advantage is winning the day over the traditional government-run Medicare program. This is what makes it one of the first targets for government cuts when the time comes.

It should be noted that a hard look at Medicare is sorely needed. As already mentioned, the program is approaching insolvency within the decade and is one of the largest budget line items year after year. It is unsustainable. No criticisms of these cuts to Medicare Advantage or the underhanded tactics used to usher them in should be construed as an opposition to all Medicare cuts.

These cuts are not an indication that the Biden administration and its bureaucrats have, at long last, embraced fiscal responsibility. In fact, the opposite is true. The administration is zeroing in its focus to the one part of Medicare that incorporates market competition and seems to be functioning well enough to continually attract a growing share of enrollees.

If the bitter clingers insist on continuing to ride the Medicare train as it barrels towards insolvency, perhaps the best use of their time would be to focus on substantive reforms. Instead, these barely publicized reports are being used to usher in cuts to the one vestige of market economics left in this wasteful behemoth. To focus on Medicare Advantage is to miss the point entirely.