by Robert E. Moffit, Alyene Senger
The Heritage Foundation
March 22, 2013
Backgrounder
The structure of Medicare determines how it functions. It also entails undesirable consequences, such as requiring Medicare beneficiaries to pay additional premiums and purchase supplemental coverage; employing price controls that often result in underpayment or overpayment for medical goods and services; placing massive regulation on doctors, hospitals, and other medical professionals; generating tens of billions of dollars annually in waste, fraud, and abuse; and using an administrative payment system that, as an arena for special interest lobbying, results in the politicization of decisions over health care financing and delivery for America’s senior and disabled citizens. The best policy for fixing the inherently flawed and outdated Medicare program, while improving it as an insurance program for seniors, is structural Medicare reform based on a defined-contribution (“premium support”) program of financing.



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