[Health Affairs] More Than A Demo, Less Than An Entitlement: Solving The "CBO Problem"


Old-timers who remember the Breaux-Thomas Bipartisan Medicare Commission from the late 1990s usually remember it for two main policy ideas. First, premium support, an idea to put Medicare’s fee-for-service (FFS) program into more direct competition with private comprehensive “risk” plans (now called Medicare Advantage plans). Second, modernizing Medicare’s benefits, particularly for prescription drugs.

Neither premium support nor the drug benefit materialized quite the way Senator John Breaux (D-LA) and House Ways and Means Chair Bill Thomas (R-CA) envisioned. Yet, over time Medicare has created a larger role for Medicare Advantage plans and Congress added Medicare’s Part D drug benefit in 2003.

But the Medicare Commission had a third policy goal: moving away from blind fee-for-service reimbursement toward a more selective approach to reimbursing health care providers under Medicare’s FFS program. The idea was that the FFS program, under competitive pressure from a premium support system, should be able to select high-quality providers and enforce data-sharing and cost savings requirements, particularly when the program added new benefits or services.