Rein in Medicare Subsidies

Health insurance companies have started a campaign to protect the government payments they get for operating private Medicare plans. Anybody who wants to see the U.S. tame its bloated and inefficient health-care system—and keep the Affordable Care Act affordable—should hope they fail.

The program at issue here is Medicare Advantage, which pays private insurers to provide Medicare health benefits. The program started in 1982 with a reasonable premise: If private insurers could operate more cheaply than the federal government, both taxpayers and enrollees would win. Unfortunately, Congress eventually bowed to pressure from insurers to increase rates. By 2009, Medicare Advantage payments per enrollee were 14 percent higher than traditional Medicare.