Paradigm shifts in Medicare reform.

Abstract

Reforms passed by Congress and vetoed by the president during the past year would have accelerated initiatives already transforming Medicare. Operating in a rapidly changing insurance marketplace, Medicare is shifting from a social insurance model toward a private individual insurance model-expanding the number and type of alternative health plans it offers-and growing numbers of beneficiaries are enrolling in these plans. Such reforms, especially if bolstered by legislative reforms that are likely to resurface after the November elections, will rewrite the social contract enacted more than 30 years ago. They require fundamental shifts in ways of thinking about the federal government's responsibilities; the Medicare program's management; relations between the Medicare program and doctors, hospitals, and other health care providers; and the role of beneficiaries in the Medicare program. The likely deferral of further legislative attempts to reform Medicare affords an opportunity to step back and consider these ongoing changes. It is not easy to describe paradigm shifts accurately, but there are advantages to trying. First, conceptual comparisons can allow public discussion to go beyond budget scorekeeping and media soundbites to consider how different the Medicare program will be if it evolves in the new ways being proposed. Second, a conceptual framework can assist health policy analysts to target what to watch for in tracking changes, to assess the tradeoffs involved, and to advise about the needs for refining legislation. This paper includes examples of what to watch for in tracking the implemented changes. The paradigm shifts are summarized below, then described individually in terms of directions of change along a number of continuums. Note that complete paradigm shifts, from one end of a continuum to the other, are seldom completely realized nor even far advanced. But Medicare's ongoing reforms, accelerated by legislative proposals, seem likely predecessors of future changes. For developing this framework, the authors have drawn on the Medicare provisions of the Conference Agreement on the Balanced Budget Act of 1995, the president's proposals as presented in December 1995, and current and proposed Health Care Financing Administration practices.