¶ … American Healthcare System has been at the center of debate for many years. One of the most pressing issues confronting the healthcare system is Medicare and its beneficiaries. The purpose of this discussion is to focus on the ramifications of moving Medicare beneficiaries into managed care organizations (MCOs). Our investigation will illustrate that moving the Medicare beneficiaries into MCOs are a bad idea because there will not to be any real cost savings and many individuals are likely to be denied needed care. Cost Savings

An article found in American Economic Review explains that Medicare is the second largest government entitlement program in the United States. The cost associated with running this program is astronomical. The article asserts that in 1999 the government spent $230 billion or 13% of its budget on Medicare and its beneficiaries. (Antos and Bilheimer)

The major issue with Medicare is that it is expected to grow exponentially in the next few years due to the aging population. It is estimated that 47 million people will be enrolled in the Medicare program. (Antos and Bilheimer)

In addition, the article explains, "Medicare spending will grow from 2.6% of GDP in 1995 to 6.3% of GDP in 2030." (Antos and Bilheimer) While the enrolment increases the ratio of workers are going to decrease. This creates a shortage of funds and may lead to an even larger health crisis than the one that currently exist.

Some experts believe that moving Medicare beneficiaries to managed care organizations will alleviate the problem. While Medicare has been growing substantially, managed care organizations have also been expanding. (Fischer) An article entitled "The unraveling of managed care: recent trends and implications" asserts that there is almost no cost savings associated with moving Medicare beneficiaries to Managed Care Organizations. (Gorin) The article explains that there is a great deal of administrative and procedural cost associated with transferring Medicare beneficiaries to a managed care system. (Gorin)

The article also asserts that there have already been attempts to combine Medicare with managed care;...

(Gorin)
The attempts to combine the two programs came in 1997 with the Medicare + Choice program. (Gorin) This was a voluntary program and gave the elderly a wide range of services including private fee-for-service networks medical savings accounts and PPOs. (Gorin) The article explains that the purpose of the program was to open "Medicare to competition and the market would not only lower costs but also enable many beneficiaries to obtain prescription drugs and other benefits not covered by Medicare."(Gorin)

This plain failed and assessment have pointed to several problems that the program presented. The article explains that a previous study, identified several factors as contributors to the decline in M+C enrollment, including a slowdown in the rate of growth of M+C payments (which was a response to previous overpayments to Medicare managed care plans). She also noted that original projections for the program were probably unrealistic. Another important factor was the backlash against managed care, which led to changes in the market that made Medicare HMOs less profitable than anticipated and fueled suspicions about M+C (Gold, 2003). Hurley et al. (2003) also linked the problems of Medicare HMOs with "a growing backlash against the HMO product" (p. 410). Based on the experience of M+C, Gold (2003) concluded that managed care and competition are unlikely to resolve the problems facing Medicare. (Gorin)

The article goes on to explain that very little cost savings was associated with this program because Medicare was often being overcharged and fraud was rampant. (Gorin) The article also explains that while more efficient technologies can reduce prices, these same technologies also increase spending. (Gorin) The article concludes, "Despite all its difficulties, Medicare has been more successful than private insurers in controlling per capita health care spending and satisfying consumers." (Gorin)

From the aforementioned reasons when can conclude that moving Medicare beneficiaries to managed care organizations will not result in any real cost…