The Medicare program faces increasing budgetary pressures, with recent estimates suggesting that the Medicare Hospital Insurance Trust will be insolvent as soon as 2028. Simultaneously, the Medicare Advantage (MA) program, a managed competition model, continues to grow its market penetration as beneficiaries increasingly choose private plans over traditional fee for service (FFS) Medicare. With the relative cost of the 2 forms of Medicare a subject of debate, policy experts have proposed a variety of policy options to address the program's budgetary pressures and place it on a firmer fiscal footing. This paper explores the implementation of one of these proposals in greater detail: fully transitioning the entire Medicare program to a competitive bidding model in order to reduce overall program costs and improve price competition. Current MA plan bidding methodology is explored, followed by a description of prior proposed competitive bidding models. Implementation challenges are addressed, along with specific policy considerations to protect beneficiaries who wish to remain in FFS Medicare.
Keywords: budgeting; competition policy; fee for service; medicare; medicare advantage; medicare solvency; payment policy.