I have a new background report available at the Heritage Foundation on why Medicare reform should be market-based:
Recently, proposals have been advanced that would bring market discipline to Medicare by converting the program into fixed premium assistance instead of an open-ended, defined-benefit entitlement. These reforms are designed to harness the power of competition to increase efficiency in the Medicare program.
These reform plans have met with fierce criticism in some quarters. A primary argument of opponents is that government-led efforts will work better than competition to control costs without compromising the quality of care for patients. However, a careful review of the history of Medicare and other programs shows that this criticism is wrong. Competition can bring more discipline to the program, whereas the alternative—top-down price controls—will seriously erode the quality of care that seniors and other patients receive….