In the debate over how to prevent Medicare from going broke, all sides have found common ground on one point: The government could save money if it stopped setting the rates it pays physicians and HMOs, making them compete for business based on price.
Bringing such "market competition" into Medicare was the central idea proposed in March by a powerful federal commission that struggled to redesign the vast health insurance system for the elderly. And when President Clinton laid out his own plan to reform Medicare two months ago, he predicted that a variety of steps to make the program more competitive could save $33 billion over the next decade.
But even as competition has become the fashionable buzzword of Medicare reformers, one of the government's first attempts to put theory into practice has bumped into a wall of opposition.
Two years ago, Congress told the Health Care Financing Administration (HCFA), the agency that runs Medicare, to experiment by requiring health plans in a few communities to bid on the prices for which they would treat elderly patients.
The average bid--rather than an intricate formula the government uses now--would determine how much they got paid. Congress wanted the experiment, intended to weed out excessive health maintenance organization profits, to start last winter.
It has yet to begin, however. Health plans, hospitals and doctors in the two cities where competitive bidding was to start, Phoenix and Kansas City, have lobbied to thwart it.
Last month, the four senators who represent Arizona and Missouri quietly tucked a few sentences blocking the two state experiments into a major piece of legislation, the Republican "patients' rights" bill.
So far, there has been no similar attempt in the House. But the obstacles loom large enough that a federal advisory committee, created by Congress to oversee the experiment, reluctantly voted to delay its start until January 2001.
"Everyone in Congress says, 'We want competitive bidding in Medicare,' " said John Rother, chief lobbyist for the AARP and a member of the advisory committee. "Then it's like, 'Not in my backyard.' "
In the corridors of HCFA, the recent turn of events is causing deja vu. Even before receiving Congress's instructions in 1997, the agency on its own had begun attempts at competitive bidding for HMOs in Baltimore in 1996 and Denver the following year. Both efforts collapsed within six months.
The demise of the Denver project was particularly dramatic. The American Association of Health Plans, a trade group representing HMOs, filed a lawsuit and won a temporary restraining order. The project's fate was sealed when Congress forbade it in an appropriations bill.
Paradoxically, Congress had by that time already ordered its own experiment. And in the last two years, managed-care plans have become an even more important factor in controlling Medicare costs. Nearly 7 million of the nation's 39 million people on Medicare have chosen to enter such plans.
Leaders of the health care industry in Phoenix and Kansas City contend, however, that competitive bidding would reduce Medicare payments so much that the government would end up undermining the very system it is trying to foster.
"The only apparent goal of this project is to spend less money on our seniors," said obstetrician-gynecologist Deborah Jantsch, president of the Metropolitan Medical Society of Greater Kansas City.
In Phoenix, meanwhile, HMOs have hired a public relations firm to organize a coalition, Arizonans for Medicare Choice, that includes hospitals, physicians and the local Chamber of Commerce. With nine HMOs participating in Medicare in Phoenix, the program already has plenty of competition there, said Gay Ann Williams, until recently the executive director of the Arizona Association of HMOs.
A spokesman for Sen. Jon Kyl (R-Ariz.) said he decided to step in to protect Medicare patients, not the health care industry.
But HCFA officials believe that, regardless of the motivation, the intervention from Capitol Hill has not been helpful. "We need to be able to pick sites and not have them overruled by the Congress," said Robert Berenson, director of HCFA's Center for Health Plans and Providers. "If we can't do that, there's really no point."