Structuring Medicare Choices

April 1998

Structuring Medicare Choices is the final product of the study panel that was formed to analyze options for restructuring Medicare’s approach to furnishing beneficiaries with capitated health plan alternatives to traditional fee-for-service Medicare. Capitated arrangements are attractive to policy makers because they hold promise to serve beneficiaries’ needs while reducing the rate of growth in Medicare expenditures.

The study panel reviewed alternative approaches for organizing competition, capitation payment and risk-sharing methods, the implications of benefits design and risk segmentation in health care markets, and methods for facilitating informed beneficiary choice among health plans. It concluded that the technical issues that determine the success or failure of structured choice in Medicare should be the focus of a comprehensive program of research, demonstrations and evaluations. A framework for a model to be tested is proposed.