There is an old saying among lawmakers that describes the propensity of constituents to support taxes that don't affect them. It goes: "Don't tax you, don't tax me, tax the guy behind the tree."
A similar sentiment has stymied HCFA's attempts to implement a Medicare managed-care competitive bidding demonstration project.
Republicans and Democrats alike have extolled the virtue of moving Medicare's managed-care program away from a price-setting system to a market-driven model in which providers bid for contracts.
HCFA twice has tried to implement such a plan. The first time was in Baltimore. The second was in Denver.
Both had a similar structure. HMOs would be required to submit bids for the Medicare basic benefit package. HCFA then would choose a reimbursement amount. Any plan that submitted a bid higher than the chosen rate would be required to either charge the difference to beneficiaries in the form of a premium or eat the difference. Plans not submitting bids would be barred from doing business in the geographic test market for three years.
Another thing both the attempts have in common is that they were stillborn.
Pressure from managed-care plans and local lawmakers led HCFA to scrap both projects. The Baltimore demonstration was ended by HCFA voluntarily. The Denver project died after Colorado lawmakers eliminated funding for the program and the American Association of Health Plans won a temporary court injunction halting the plans.
But that might not be the end of competitive bidding demonstrations.
House and Senate budget negotiators agreed to a compromise plan that would require HCFA to choose four competitive bidding demonstration sites before the year 2000. Three more sites would be chosen after 2000.
The agreement requires that at least one of the four initial sites be located in Florida and another in Louisiana, a tip of the cap to the Senate's two most vocal proponents of competitive bidding, Sens. Connie Mack (R-Fla.) and John Breaux (D-La.).
But HCFA would not be able to choose the sites on its own. The compromise requires HHS to establish a division within the department to oversee the demonstration sites. There also would be a national advisory panel to consult on sites for the programs.
Finally, the House and Senate compromise terminates the Denver project for good but adds that Denver is not excluded from consideration for one of the new programs.