Medicare: Usual and Customary Remedies Will No Longer Work

Medicare is projected to be insolvent by the year 2001. The budget for fiscal year 1998 pushes that date ahead a few years by introducing additional cost-control measures, but it will not rectify the structural deficiencies associated with the current system. Moreover, it is likely to worsen the quality of care for Medicare enrollees. A better approach-one that will help solve Medicare's problems in the long run-is to adopt a "defined contribution" plan that will restore consumers' interest in economizing on health care services and boost competition among providers and insurers.