The Case for Competition in Medicare

Abstract: Rapidly rising Medicare spending is a major cause of the federal governments budget problems. Proposals to reform Medicare and slow its spending fall into one of two categories: more government micromanagement or empowerment of health care consumers in a functioning marketplace. Those who promote top-down spending controls optimistically assume that federal regulators can accomplish now something that has eluded Medicares administrators for more than 40 years. In contrast, the market-based approach to reform would harness the power of financial incentives to encourage health care consumers to choose the best,...