Abstract
Potential Consequences of Reforming Medicare Into a Competitive Bidding System
Highlights
Medicare beneficiaries would choose from health plans that compete in a market-based bidding system
If the bid exceeds the benchmark, Medicare pays the plan the benchmark rate and the plan must collect the difference by charging a premium to enrollees
If the bid undercuts the benchmark, the plan is paid its bid plus 75% of the difference, which it must return to enrollees via extra benefits or lower premiums
Summary
Medicare beneficiaries would choose from health plans that compete in a market-based bidding system. Based on the Ryan-Wyden plan, the bidding system proposed in the recent House Republican budget replaces the administratively set benchmark with a market-determined benchmark.[3] In every county, either the plan with the second-lowest bid or traditional Medicare (whichever is lower) becomes the benchmark.
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