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There is irony in Republicans' and conservative groups' pushing managed competition as the free-market solution to Medicare, since it is more or less exactly what President Clinton proposed last year as a general health-care reform, which these same voices denounced as "socialized medicine." And their specific objection was precisely that the arrangement would drive people into managed care.
Speaker Gingrich has promised that any Medicare reform will merely expand the options available to seniors and will not force them against their will into new arrangements like managed care. Whether that promise is kept depends, of course, on the cash value of the vouchers. Will it be enough to buy private insurance equal to today's Medicare benefits?
The seniors lobby is understandably skeptical on this point. Once the government's guarantee is defined as a certain amount of money rather than a certain set of benefits, that amount becomes subject to adjustment. Even if the payment starts off fully adequate, it can be allowed to drift down in value as health costs escalate.
Certainly it is hard to see how a voucher system can save Medicare much money unless it pushes people, subtly or otherwise, away from fee-for-service and into managed care (or gets them to pay for the difference out of their own pockets). Leaked reports about the Republican plan for Medicare say that it might impose caps on Medicare's annual cost, and that if costs exceed the caps, the difference would be taken out of the government's payments for fee-for-service insurance only. That is one way to drive people into managed care.
In the coming Medicare debate, beware of the word choice. It can mean two different things. One is freedom to choose your own doctor and services. The other is freedom to choose among different medical plans. Managed competition expands the second type of choice, but by inevitably tilting that choice toward managed care, it reduces the first type of choice. On the other hand, beware of excessive moaning from the seniors lobby about loss of choice. As the private sector has discovered, reducing that choice is the one sure way of bringing costs under control.
The other tricky issue about vouchers is that the cost of private insurance naturally will vary depending on a person's age, health condition and so on. The current Medicare system actually performs two functions. One is subsidizing seniors' health care. The other is "risk pooling": spreading costs evenly among the healthy and the sick, the old and the very old. With vouchers, who will perform that second function?