Policy Watch: Medicare

The forecast growth for Medicare spending has created a highly visible budgetary impasse between the president and Congress. Both favor the growth of health plans that accept risk and would promote them by creating less restrictive options than heretofore. Nonetheless, the conference bill the president vetoed for other reasons did not envision price competition among plans but relied upon administered prices instead. The bill allowed Medical Savings Accounts; because of selection, the Congressional Budget Office estimated they would slightly increase Medicare costs. By eliminating the subsidy at the margin to hiring a resident, the bill's provisions would shift demand for residents down.