Peter Suderman has an article on a new Medicare proposal from Lorens Helmchen of George Mason University:

Lorens Helmchen, a professor at George Mason University’s Department of Health Administration and Policy, has proposed a novel method of constraining the program’s spending: He thinks the program may be able to save money by spending money—specifically by giving cash to patients who make more cost-effective choices.
The basic idea, dubbed cash-for-care, is as simple as a year-end performance bonus. When faced with two treatments of roughly equal efficacy but dramatically different cost, Medicare would pay patients a cash fee if they chose the less expensive option. The idea is a form of shared savings. But where most shared savings plans share exclusively with health care providers, Cash for Care shares it with patients.

This reminds me of the Hess-Meeks call for Educational Spending Accounts to encourage cost-consciousness among parents of children enrolled in K-12 schools. It also reminded me of Roger Feldman’s call for using medical indemnities to reform the Medicare system, which he describes in How to Fix Medicare: Le’t s Pay Patients, Not Physicians:

Under Feldman’s “medical indemnity” proposal, Medicare would pay each patient a fixed amount of money, reserving larger subsidies for sicker people. Patients, in turn, would select their own medical services from providers who would set their own competitive rates. A medical indemnity system would do away with the distortion in patients’ incentives wrought by conventional Medicare coverage. Given a fixed amount of money to spend on medical care, patients would have strong incentives to shop for the combination of services, providers, and prices that most closely meet their needs.
Medical indemnities have already been tested successfully in the Medicaid program for some patients needing long-term care services. Feldman’s indemnity system protects patients whose conditions are much costlier than average while avoiding the proliferation of costly individual indemnities.

Helmchen’s Cash for Care proposal seems particularly promising in light of the extraordinary cost of end-of-life care options, a subject Peter addresses. My hope would be that Cash for Care would give Medicare beneficiaries very wide autonomy, up to and including allowing them to accept a cash payment in lieu of treatment. This, alas, would bear no small resemblance to offering sick patients a cash bonus to choose an early demise, which would no doubt be seen as more than slightly morbid and perhaps politically unacceptable.