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Good article on Medicare in Fortune magazine

- We can try to fix Medicare in two ways. One is a proven winner, the other a proven loser. The stakes could scarcely be higher -- and right now we're betting on the loser.

One way to fix it is the Brute Force approach. That's the concept on which Medicare was built. The federal government dictates which services are covered and how much will be paid to doctors, hospitals, and others for everything they do. To keep costs under control, Washington restricts what it covers or dials down what it pays.

"It never works," says Mark McClellan, former head of the Centers for Medicare and Medicaid Services.

The other way to fix Medicare is the People Aren't Dummies approach. It's the concept on which most markets operate. Let people spend their own money -- even if it's given to them -- and let providers compete for it. Providers aren't dummies, so they'll innovate in ways that bureaucrats would never think of. Consumers aren't dummies, so they'll choose what works for them. Quality rises, and costs stay reasonable.

The People Aren't Dummies approach has a proven record, and it's the opposite of Brute Force's record. Medicare Part D, which took effect in 2006, lets users choose from competing private plans for prescription-drug coverage. "Most of those plans aren't at all what the law envisioned," says McClellan. Instead, they're what consumers actually want. And Part D costs are about 45% below what was predicted when it was created.


So which approach are we banking on? You guessed it. Brute Force is the guiding principle for controlling Medicare in the health care reform law.


Lots more at the link. Enjoy. Good reading..

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