Medicare

Although the private sector quickly embraced managed care as an effective way to control the growth of health care costs, Medicare has moved more slowly. GAO believes that Medicare could benefit from the experience of the private sector and should test such managed care strategies as competitive bidding for health maintenance organizations (HMO). Using market power to negotiate with HMOs over price and increasingly over quality and the production of report-card-type information, large employers are becoming more prudent and sophisticated purchasers of health care. The particulars of these efforts may not be directly transferable to the federal government, but their goals of using incentive-based solutions to contain costs, guarantee quality, and inform consumers are worthy of consideration and testing.