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Medicare Advantage is a success and can serve as the first stage of reform, but Congress will have to change the existing payment system and provide a system of premium support, properly adjusted, for each beneficiary. What is needed next is more robust competition for the entire program and parity in the payment to health care options that seniors choose.

Medicare Advantage is a success and can serve as the first stage of reform, but Congress will have to change the existing payment system and provide a system of premium support, properly adjusted, for each beneficiary. What is needed next is more robust competition for the entire program and parity in the payment to health care options that seniors choose.

Medicare is based on the cost of seniors’ health care being borne primarily by younger workers. The demographic reality is there are diminishing numbers of workers per senior. Promises to today’s and future beneficiaries must be kept, but not at the expense of future generations. Building incentives for high quality, efficient care directly into the Medicare payment structure and using the power of personal choice and competition are key reform elements.

In August of 2007, the Centers for Medicare and Medicaid released a directive on the State Children’s Health Insurance Program (SCHIP). The directive keeps the program focused on its core population—low-income uninsured children—and pays particular attention to the impact that SCHIP expansions have on existing private coverage.

Under existing congressional formulas, Medicare payment rates for the services that physicians provide to Medicare beneficiaries will be reduced by 10 percent in July of this year. Instead of reforming this broken payment system, Congress will doubtless resort to another short-term fix, repeating the annual congressional fire drill to make sure that its own Medicare pricing system, featuring complex fee schedules and price controls, does not actually go into effect and wreak havoc on doctors and undercut access to care among Medicare patients.

If the present trend in federal aid to states continues, federally sponsored programs will soon eclipse state budgets and turn the federal government into the single largest revenue source for states. Federal aid to states blurs lines of government accountability to voters and erodes state fiscal independence, limiting states’ ability to implement innovative fiscal policies and meet state priorities effectively.

Congress is about to make a bad decision on Medicaid that will affect taxpayers and families alike. The Centers for Medicare and Medicaid Services (CMS), which is responsible for administering the Medicaid program, has issued seven rules designed to curb certain Medicaid fraud and abuses. Congress is poised to block these rules and thus allow abusive, fraudulent, and wasteful activities to continue.

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