VOUCHERS FOR MEDICARE The Domenici-Rivlin panel has a far-reaching proposal to give Medicare enrollees vouchers to buy coverage from Medicare or a competing private plan offered on a Medicare exchange. The voucher would increase in value at roughly half the likely rate of medical inflation. If the cost of coverage rose faster than that, the beneficiary would have to pay an extra premium to cover the difference or seek a cheaper plan.

The commission believes that competition on the exchanges will cause insurance plans to find ways to lower premiums. It also believes beneficiaries will restrain their own spending. The panel projects savings from premium support and its near-term cuts and cost-shifting could be huge  more than $2 trillion through 2030 and more than $7 trillion through 2040.

We see considerable merit in having traditional Medicare and private plans compete for business, but only if the competition is fair. There would have to be tight regulation to require plans to accept all comers, to set limits to cost-sharing.

SPENDING CAPS The health care reform law already seeks to cap the growth in Medicare spending per beneficiary to roughly half the rate it has been increasing in recent decades. It empowers a new board to find savings should the target be breached, subject to Congressional veto. The Bowles-Simpson commission would expand that approach by placing a cap on total federal spending for health care  not just Medicare and Medicaid but the subsidies on new exchanges and tax exemptions. But the commission punts on what to do should the growth cap be exceeded, as many experts deem likely.

FIXING THE SYSTEM The best way to lower health care spending is to reform the dysfunctional health care system whose costs seem unrelated to the quality of care delivered. The reform law makes a good start, sponsoring research to determine which treatments are effective and which are not, starting pilot projects to change the way care is delivered and paid for, and setting up new organizations to rush successful approaches into wide use in Medicare and ultimately the private sector.

Neither commission goes much further, probably because reformers had already scooped up most of the plausible approaches. The White House commission wants to speed up the adoption rate for reforms shown to work in pilot projects, an idea we heartily endorse.

Lawmakers from both parties need to take a serious look at the commission’s recommendations. So far, we have not heard much more than the usual posturing from either side of the aisle. Meanwhile the Republicans are still vowing to repeal the new health care reform law or block its implementation. That is yet one more reason why their claims to fiscal rectitude are so unbelievable.