Medicare

Key problems that undermine the ability of the Health Care Financing Administration (HCFA) to manage Medicare effectively can be solved. Currently, no one senior official in HCFA is responsible for managing only Medicare; instead, HCFA's Administrator oversees Medicaid and other state-centered programs' worthy competitors for agency management attention. Frequent changes in agency leadership make it difficult to develop and implement a consistent long-term vision. And constraints on HCFA's ability to acquire appropriate resources and expertise limit its ability to modernize Medicare's operations and carry out the program's growing responsibilities. Elements of recent Medicare reform proposals, together with alternatives from other federal agencies, suggest ways of addressing the focus, leadership, and capacity issues. Options could include creating an entity that would administer Medicare without any non-Medicare responsibilities; establishing a tenure for the program's administrator that, at minimum, would overlap presidential terms; and granting the entity administering Medicare greater operational flexibility.

GAO noted that: (1) Medicare is an inherently difficult program to manage, regardless of its governance structure; (2) any entity administering a public program of Medicare's size and with its vast universe of stakeholders will be the target of affected parties that feel disadvantaged or harmed by some of its decisions, regardless of their merits; (3) however, there are key problems that impair HCFA's ability to manage Medicare effectively that are amenable to solutions; (4) no one senior official in HCFA is responsible for managing only Medicare; instead, the HCFA Administrator oversees Medicaid and other state-centered programs--worthy competitors for agency management attention; (5) frequent changes in agency leadership make it difficult to develop and implement a consistent long-term vision; (6) constraints on HCFA's ability to acquire appropriate resources and expertise limit the agency's capacity to modernize Medicare's existing operations and carry out the program's growing responsibilities; (7) elements of recent Medicare reform proposals, together with alternatives from existing federal agencies, suggest ways of addressing the focus, leadership, and capacity issues; and (8) options could include creating an entity that would administer Medicare without any non-Medicare responsibilities; establishing a tenure for the program's administrator that, at a minimum, would overlap presidential terms; and granting the entity administering Medicare greater operational flexibility.