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Economists Debate Medicare Voucher System

Two healthcare economists clashed Tuesday at a Senate Finance Committee hearing over how much the government could save by giving Medicare recipients vouchers and allowing them to buy coverage from private health-maintenance organizations or through other insurers.

Former Medicare Administrator Gail Wilensky argued that because private-sector health plans are outperforming Medicare in holding down cost increases, the government should opt for a voucher-like system.

Although from 1983 to 1991 private-sector costs rose more rapidly than Medicare costs, Wilensky said, from 1991 to 1993, “Medicare has grown substantially faster, 6.5 percent versus 4.7 percent in real spending per capita.” She said a recent survey “indicated that for all firms health-care premiums declined 1.1 percent” in 1994.

But Commonwealth Fund president Karen Davis said the government should move gingerly before jumping into a voucher system.

The voucher policy is favored by House Ways and Means Medicare Subcommittee Chairman Bill Thomas, R-Calif. He sees it as a way to reduce Medicare growth and help balance the federal budget by 2002. Finance Chairman Bob Packwood, R-Ore., has said $400 billion will have to be cut from Medicare and Medicaid over seven years to reach that goal and slow the rapid growth of Medicare, which is projected to go bankrupt.

Sen. Daniel Patrick Moynihan, D-N.Y., said Tuesday that new actuarial projections will put the bankruptcy in 2004 rather than 2001, the year generally cited.