Medicare and Private Plans: Separating Fact from Fiction

I am pleased to be here today to testify about the role that greater reliance competition among private plans to serve Medicare beneficiaries should play. I will argue that a number of issues need to be carefully weighed before moving in this direction. Market forces do not represent the magic bullet that will solve all of Medicare's problems. Rather, the issue is to what extent they can help at the margins. Difficult challenges arise in deciding how to reform Medicare to meet future demands that at aging population and rising health care costs inevitably will place on the system. Costs to society for the health care of older and disabled Americans will rise over time, both in dollars and as a share of our economy. This will put pressure both on financing issues and on other changes that will help the program move into the future.