Saying it wants to rescue Medicare from the flaws Congress built into it 30 years ago, the American Medical Association last week unveiled the key points of a proposal to give older Americans freedom to choose what kind of medical care they want.
The AMA would revamp Medicare from a system that guarantees benefits into one that guarantees contributions, and lets beneficiaries decide how to spend them.
In the process, the AMA says the government would save about $162 billion over seven years.
The AMA's ideas have fallen on fertile soil. During a videocast speech to the association's annual House of Delegates meeting in Chicago, Speaker of the House Newt Gingrich (R-Ga.) waved a little yellow book containing the AMA's working draft.
"What we've suggested is, let's come up with a number of different opportunities," Gingrich told the delegates. "Let's have a medical savings account option, let's have a coordinated-care option, let's have a direct fee-for-service option. Maybe we ought to have an option where people can literally opt out of the system, get a voucher so they can buy any insurance they want, or if they are wealthy, they can self-insure....Give them freedom, not bureaucratic control."
Incoming AMA President Lonnie R. Bristow and President-elect Daniel H. Johnson explained the proposal, which has not yet been published, at a news conference the next day.
The AMA, they said, believes Medicare will never get a grip on costs until it changes incentives. The program needs a complete overhaul, focusing on five points: increased individual responsibility, correcting the transfer of funds across generations and among the elderly, cutting paperwork, using competition to control costs, and reducing unnecessary care.
Medicare patients would receive a "defined contribution" rather than a "defined benefit." With that sum they could choose from the existing fee-for-service model, an HMO, a "benefits payment schedule" model, physician-coordinated care or a medical savings account. The best existing program after which "Medichoice" might be modeled is the Federal Employees Health Benefit Program, the AMA said. Those who bought a lesser package of benefits would be at risk to pay the remainder if they needed care not covered by their package.
These reforms should relieve budgetary pressures, the AMA believes. The association favors means testing to remove the subsidy for wealthy older Americans. It also would raise the eligibility age. And a defined contribution in place of defined benefits would help the government determine its budget more easily.
The AMA says its plan will remove the need for Medigap policies, which lead to increased utilization.
Importantly, the plan would introduce price competition among doctors by eliminating Medicare's dictated prices. Doctors would post their prices and patients could choose practitioners partly on that basis.
Thus, said Bristow, "the elderly will have an incentive to shop for services." This free-market approach should drive prices down without Medicare forcing fee cuts on physicians.
Gingrich's anti-government, pro-free-enterprise rhetoric found a receptive audience at the AMA, and he was often interrupted by applause and laughter.
The AMA has been one of the speaker's ardent supporters for years. According to The Serpent on the Staff, a critical book about the AMA by Howard Wolinsky and Tom Brune, Gingrich ranks first among members of Congress in direct contributions from the AMA's political action committee: $80,636 from his first election to Congress in 1978 through 1994.