Alexandria, Va.: How do you feel the current debate in the Senate is shaping up? Are you pleased with the way the Republicans are pushing the legislation forward?

Robert Moffit: The Senate debate is not going well, either for the reform of the Medicare program, or for the taxpayer. Part of the reason is the process itself. The 664 page bill was unveiled on June 10th; it was marked up by the Senate Finance Committee on June 12th, and came to the floor this past Monday. Members of the Senate have yet to absorb the complexity of these provisions, which means that the bill is fraught with unintended consequences. One big one has already surfaced: roughly one third of seniors with employer provided drug coverage are going to lose it and be forced to pay higher out of pocket costs for an inferior government drug program. The second problem is that the "Medicare Advantage" provisions are burdened with a payment system that is unlikely to attract private plans in sufficient numbers. So, we are likely to end up with a massive entitlement expansion and pale imitation of the kind of reform that Medicare needs- particularly for the next generation of retirees.

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Detroit, Mich.: Mr. Moffit:

One provision of the Medicare reform bill calls for the government to hire "Contingency Fee Contractors" to look through doctors medical records to look for inappropriate billings to Medicare. The contractor would then get a share of the money "recovered" from the review. This is very scary.

Wouldn't this be a conflict of interest, in that the recovery auditors actions will be motivated by greed rather than being an honest broker? What do you think of this provision?

Robert Moffit: You are correct to be concerned. If anything, there has been an inadequate focus on the problems of privacy in the Medicare program. The so-caloed OASIS program governing home health care agencies authorizes inappropriate intrusion into the personal lives o medicare patients. Likewise, a couple of years ago, the General Accounting Office issued a report on the safety and confidentiality of sensitive Medical records in the medicare program. The GAO concluded that Medicare patients are in danger of having their sensitive medical records subject to unauthorized disclosure. The provision you describe would aggravate these privacy concerns, and end up creating a bounty hunter system in the process. Exactly, it constitutes a conflict of interest.

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Woodstock, Md.: Mr. Moffit:

The pending legislation in the House and Senate would establish a "new" agency Center for Medicare Choices to compete with the Center for Medicare and Medicaid Services who currently run Medicare.

What is the rationale behind creating two agencies? Won't this end up costing tax payers more? Won't this create a lot of bureaucratic back and forth concerning the creation of the new agency while the focus should be on the new benefit under Medicare?

Robert Moffit: Not really. The Center for Medicare and Medicaid Services would administer the traditional Medicare fee for service system. The proposed Center for Medicare Choices would administer the new competitive system. They would perform two entirely different sets of functions. The CMS function is basically a regulatory function: CMS, under Congressional authority, sets prices for thousands of medical procedures and enforces the conditions for the delivery of medical services in Medicare Part A and Part B. In contrast, the new CMC would enter into contracts with private plans, enforce consumer protection rules for beneficiaries and make sure that private plans offering benefits and drug coverage met the statutory requirements. Hopefully, the relationship between the CMC and private plans would be a business relationship, not a regulatory relationship. The model for that is, of course, the Office of Personnel Management that administers the popular and successful Federal Employees Health Benefits Program (FEHBP).

By the way, one of the greatest weaknesses of the current program is that CMS is doing too much, is subject to heavy Congressional micro-management, and is burdened by bureaucratic inflexibility. We can do much better.

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Washington, D.C.: How can a Heritage Foundation official credibly discuss "reforming" Medicare? Heritage officially supports terminating the entire program -- it says so on your Web site!

Robert Moffit: Heritage has, since 1992, argued that the health care system, and Medicare in particular, would benefit from the powerful injection of consumer choice and competition into the decision-making in both the public and private sector. Today, millions of individuals in both the public and private sector are on the receiving end of the decisions of others- from what kind of benefits and medical services they get, to the kinds of doctors and physicians they will have. This has led to inefficiency, a decline in the quality of care, and increasing frustration for doctors and patients.

As to Medicare, Heritage has proposed, and the Heritage web-site details this quite nicely- the transformation of Medicare into a program that broadly resembles the Federal Employees Health Benefits Program that currently covers federal workers and retirees and their families. This is a program that is superior to the current Medicare program in every way: in the richness and variety of its benefit package, in the provision of update medical benefits and medical technology, coordinated care, and , of course, in the provision of catastrophic and prescription drug coverage. We need a superior system. We should be prepared to absorb the next generation of retirees, the baby boomers, who will start to retire in just eight years. Of course, if a person wants to remain, or to enroll, in the traditional Medicare program, that should be their personal choice. Personal choice. Personal freedom. That is the key value to be preserved in this national debate.

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Cumberland, Md.: Is there any realistic chance the Medicare bill will do down to defeat either on the floor or in conference? That strikes me as the best outcome for a flawed bill.

Robert Moffit: Anything is possible. The politics of this legislation today seem a bit different than the politics just one week ago. The legislation may, as the Washington Post aptly described it this morning, resemble a "locomotive" that has lost its brakes. But, there is a profound uneasiness both in the House and in the Senate with this legislation. Many members of Congress believe, perhaps eroneously, that it is a political necessity to vote for a bill that gives drug coverage for senior citizens. But the details, not bumoper sticker politics, are crucial. It is not clear that everything in this legislation is going to come out peachy keen- particularly for the people the legislation is designed to help. The recent CBO projection of the dumping of millions of retirees out of private coverage into a government program is likely to be more than a mere annoyance. Recall that we had a similar experience on a major Medicare benefit expansion in 1988: the Medicare Catastrophic Coverage Act. Everybody, but everybody, supported that legislation, including the seniors' lobbies. It was repealed one year later.

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Oregon: How much of a burden are malpractice lawsuits (and subsequent insurance) when it comes to medical costs? Is there a good way to reduce these costs without hampering people's right to seek due compensation in the case of medical error? Thank you.

Robert Moffit: It is very difficult to say precisely how much medical malpractice problems add to the rapidly rising cost of the health care system. The Wall Street Journal published a piece not long ago that estimated costs in excess of $50 billion per year.The root of these costs, incentives governing the behavior of doctors, is in the encouragement of defensive medicine, and there is a great deal of acnecdotal evidence to support that supposition. Doctors will cover their bets and add extra tests and extensive, and often more expensive , treatments in order to avoid the appearance of malpractice. There is another cost that is far worse and impossible to quantify: the fear of practicing medicine under a litigious atmosphere. This fear results in a breakdown of internal communication among medical professionals, and it also causes doctors to restrict their practice and, in some cases, quit practicing medicine altogether. This is one of those problems that could get very bad very quickly. We'll see it in a sharp increase in the number of people going to already crowded emergency rooms. It is a serious problem, and the President is right to call attention to it.

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Woodbridge, Va.: My father was recently in the hospital for an extended period of time. He is 70, a retired Marine, a retired government worker and also had enough time to qualify for a small social security pension. Since he is paying through his retirement check for health insurance with a private company, why was a majority of his hospital bill picked up by Medicare? I guess what I don't understand is if people have the resources to have private health plans, why would Medicare feel responsible for their health care? Isn't that why you are paying Aetna each month?

Robert Moffit: For most Americans, like your father, Medicare is the primary payer for medical services. Medicare Part B, the part of the program that pays doctors bills, is , in fact, a voluntary program, though almost every retiree signs up for it. Medicare Part A, the part of the program that pays for hospitalization, is not a voluntary program: you pay payroll taxes for the program and you are enrolled in it if you qualify for Social Security. In these cases, private insurance, including the private insurance that is available to federal retirees, acts as a "wrap around plan" paying the medical bills that Medicare doesn't cover, including catastrophic coverage.

But you raise an excellent point. Medicare is facing a cash flow problem in 2013, and the trust funds for the Hospitalization program are going to be exhausted in 2026. At that point, almost a quarter of every dollar collected in federal taxes will be going to sustain the Medicare program. We have to make a basic policy decision: are we going to subsidize the retired librarian and the wealthy retiree the same way? Are we going to ask young working families to shell out the same level of subsidies for both. My own view is that we cannot, and we should not.

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Woodlawn, Md.: Mr. Moffit:

Are the bureaucrats that currently work at CMS really the bad guys? Or is it that there are 42,000,000 beneficiaries and 1,000,000 providers who want to maximize their Medicare benefits. Can you explain why CMS is so hated?

Robert Moffit: CMS, the agency previously known as HCFA, is deeply disliked by physicians and other medical professionals because they enforce tens of thousands of pages of rules, regulations and related paperwork that many doctors feel compromises their professional integrity and independence. The problem is not the staff at CMS. The problem is Congress, which insists on micrmanaging the system. But, then again, if the government must define every benefit, then the government must define the conditions under which the benefit is delivered, as well as the pricing of the benefit. The problem is central planning, which has never worked well anywhere.

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washingtonpost.com:

That wraps up today's show. Thanks to everyone who joined the discussion.

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