June 29, 2000

June 29, 2000 | News Releases on Health Care

AETNA's Exit from Medicare a Natural Result of Over-Regulation, Analyst Says

WASHINGTON, June 29, 2000-Following today's announcement by Aetna U.S. Healthcare that it will no longer offer Medicare + Choice HMO programs in certain markets next year, citing "inadequate government reimbursements," The Heritage Foundation issued this statement by Director of Domestic Policy Studies Robert Moffit:

"Here we have a textbook example of what happens when an overweening government bureaucracy, operating without effective congressional oversight, attempts to micromanage the healthcare choices of millions of Americans. The Health Care Financing Administration (HCFA), the agency in charge of Medicare, controls nearly every aspect of the financing and delivery of medical services to senior citizens, and results have been predictable: a rigid system of government pricing and reams of burdensome regulations that have frustrated doctors, hospitals and health plans alike. Indeed, The Heritage Foundation predicted this outcome even before the ink was dry on the flawed 1997 Balanced Budget Act that created Medicare + Choice.

"Aetna may be the most visible healthcare plan to call it quits, but it is hardly the first. Many plans have exited the program, and many more will likely follow. Medicare + Choice lost 37 plans in 1999, and more than four dozen have withdrawn this year alone. Only one fee-for-service option has been approved, and there are no medical savings account plans. The American Association of Health Plans, the nation's largest managed healthcare group, today released a survey showing that more than 700,000 beneficiaries would be affected in 2001 by withdraws from Medicare + Choice markets. And while Washington offers lame excuses, the exodus of plans and the onslaught of counterproductive over-regulation by HCFA continue.

"Rather than blame private plans that are being strangled by red tape, Congress should follow the recommendations of its own Medicare commission, which has proposed reforming Medicare along the lines of the Federal Employees Health Benefits Program, a system of competing private plans with minimal regulation that covers the president, Congress, and about 9 million federal workers, retirees, and their families. This would lead to Medicare coverage that is based on patient choice and genuine competition - a proven formula that keeps costs down and delivers high-quality care. At the very least, Congress should roll back excessive HCFA regulation and grant legislative relief to private plans that serve senior citizens."

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