The Challenges of Bringing Market-Based Reforms to Medicare

Dates of Project: May 2012–October 2013

Misaligned incentives embedded in Medicare fee-for-service provider reimbursement have affected the entire health care delivery system (because of Medicare’s dominant size in the marketplace), driving up costs without commensurate increases in health care quality.

Description: With reform of fee-for-service Medicare as a focus, in 2011–2013 the American Enterprise Institute for Public Policy Research and RWJF convened a roundtable of health policy experts that determined the themes for a study of Medicare; then AEI commissioned papers analyzing market-based solutions to both Medicare’s projected sustainability crisis and the inherent inefficiencies of the current system and held another roundtable.

Key Results

  • The study resulted in three policy briefs (released April 2013) that together offer market-based solutions to both Medicare’s sustainability crisis and the inherent inefficiencies of the current system.

    • The Role of Medicare Fee-for-Service in Inefficient Health Care Delivery
    • A Competitive Bidding Approach to Medicare Reform
    • Plan Competition and Consumer Choice in Medicare: The Case for Premium Support
  • The project team organized a public conference to present project work, “Markets, Not Madness: Medicare Reform That Works” held in Washington on April 16, 2013.

  • Members of an advisory roundtable held in October 2013 produced a research agenda to inform further efforts to promote market-based reforms of Medicare and the broader health care system.

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3 policy briefs commissioned by #AEI identify market-based solutions for Medicare sustainability