Discussion of papers by Karen Scott Collins and Jan Blustein.

I’m just going to shift and briefly comment on the way in which policy proposals are addressing the issues that we’ve heard discussed this morning, looking first at discussions of competition and Medicare restructuring, and second at expansion or changes in the Medicare benefit, particularly prescription drugs. A lot of the discussion of restructuring Medicare focuses on the “magic” of managed care and competition, and the assumption that having private health plans deliver Medicare benefits and compete for people’s business will lead them to deliver care efficiently. Sometimes the assumption is that new benefits will magically appear as efficiency reduces cost and we will all go off happily into the sunset. That set of assumptions doesn’t jibe with any evidence we have. Let me briefly review some of that evidence. First, even the proponents of managed care, in observing its experience with the working-age population, have emphasized that what we have seen in the last few years is “managed costs” far more than any “managed care.” The focus of managed care among the working-age population is on discounting the prices plans pay for services, something that Medicare excels at, and we certainly don’t need managed care to do that and limiting care, although this seems to be done more with arbitrary limits than in truly managing care. Robert Friedland of the National Academy on Aging and Society and I have done some work reviewing the literature on managed care, especially for chronically ill elderly patients. Our review raises some concerns, not only about whether care has been managed, but about the quality of care where managed care has applied limits on services to an older or a chronically ill population. The evidence is limited, but what we have suggests the following: that Medicare beneficiaries in managed care, as compared with beneficiaries in fee–for–service, receive fewer home health services, with poorer outcomes; that there is a risk that people are more likely in managed care plans to leave hospitals following a stroke and be placed in nursing homes, rather than rehabilitation facilities, which has implications for their prognoses and their recovery; and in general that managed care has been deleterious to the health status of older, poorer people with chronic illnesses. On costs, managed care plans seem to want more, not less, money from Medicare. At the same time that the argument is being put forward that greater reliance on private plans and competition will reduce Medicare costs, we’re © 2000 by the Jacobs Institute of Women’s Health Published by Elsevier Science Inc. 1049-3867/00/$20.00 PII S1049-3867(99)00040-7