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Medicare's Chief Actuary: Choice & Competition Have Successful History

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Published on Feb 28, 2012

House Budget Committee Chairman Paul Ryan held a hearing on February 28, 2012 with Richard Foster, the Chief Actuary for the Centers for Medicare and Medicaid Services and Stephen Goss, the Chief Actuary of the Social Security Administration.

RYAN: I want to get into "competitive bidding." As you may know I've been working across the aisle with a member of the Oregon delegation from the senate on a premium support plan that uses competitive bidding to help determine the contribution. Competitive bidding we've seen has worked well in Medicare Part D and Medicare Advantage, I'd like to get your thoughts on choice and competition as it relates to these previous successful reform plans. Given what we've seen in these aspects of Medicare, do you believe that competitive bidding is a process that can be successfully applied Medicare-wide?

FOSTER: Yes I think it can. Obviously it would represent a large change from the status quo. But I think it could work. We've seen the signs of this -- you mentioned the Part D prescription drug program, for example, where the different drug plans compete against each other on the quality of their benefit package and the premium level. And we've seen every year since Part D started, a migration of beneficiaries to more efficient plans with lower premiums. So that can help.

We've also seen for durable medical equipment that competitive bidding, in this particular area of Fee-For-Service Medicare, reduced prices that we had to pay by 40%.

RYAN: By forty percent?

FOSTER: Forty percent, that's right.

RYAN: Those are the kinds of cost-savings we're going to have to achieve if want to continue to make good on the promise of the Medicare guarantee.

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