Senator Suggests ‘New Entity’ To Oversee Medicare

Published July 1, 2009

Montana Sen. Max Baucus (D), chairman of the Senate Finance Committee, has suggested creating a “new entity” to oversee Medicare, the federal health insurance program for retirees.

According to the Social Security Administration, which along with the Centers for Medicare and Medicaid Services currently manages Medicare benefits, the taxpayer-funded program is facing a funding shortfall of nearly $32 billion over the next 40 years.

Baucus broached the subject of an outside entity replacing the Centers for Medicare and Medicaid Services (CMS) during a confirmation hearing for William Corr, President Barack Obama’s selection to serve as deputy secretary of Health and Human Services.

“There are some very, very thoughtful people in health care who really, seriously, wonder if CMS is up to the job” of handling Medicare oversight, Baucus said at the April hearing. “Some have suggested to me another outfit [should be employed] alongside CMS.”

Thomas Miller, a resident fellow at the American Enterprise Institute, criticized the proposal, saying it “smacked of déjà vu.”

Competing with Private Industry?

“At best, Baucus’s proposal is reminiscent of what free-market advocates proposed in the late 1990s when there were attempts to try and make Medicare more market-based,” Miller said. He said Baucus may be seeking to make Medicare more effective so it can compete against private insurance in the marketplace.

“The only way to make Medicare able to truly compete with private medical plans is to allow the managers of the current program more flexibility and latitude, rather than keeping them in intense centralized control,” said Miller. “This new entity could help push Medicare toward becoming a more decentralized institution.”

Result ‘Won’t Look Pretty’

Miller cautioned whatever Medicare overhaul policy ends up coming out of the Senate Finance Committee “won’t look pretty.”

“Baucus is trying to cobble together a package that attracts whatever votes he needs to get it out of his committee and through the Senate,” Miller said. “The bill may not be elegant, but it has to be something the Democratic leadership sees as palatable, meaning he has to do whatever it takes to make it look like something different than a free-market proposal.”

Medicaid Reform Needed

Reform is necessary to salvage the bankrupt program.

“Medicare has become so bureaucratic it needs to be revamped,” said Dr. Robert Moffit, director of The Heritage Foundation’s Center for Health Policy Studies.

Miller agreed, saying, “Whatever the outcome of Baucus’s attempts to create a new agency to manage the overhaul of Medicare, the program has to be reformed because it is financially unstable.

“These long-term financial trends are not going away, and that still has not been adequately dealt with,” Miller added.

Thomas Cheplick ([email protected]) writes from Massachusetts.