- Health Care
Traditional fee-for-service (FFS) Medicare faces growing fiscal pressure and persistent operational inefficiencies, yet policy efforts have largely focused on benefit design rather than administrative reform. This paper argues that a major opportunity to improve Medicare lies in modernizing its administrative infrastructure, specifically the Medicare Administrative Contractor (MAC) system. Currently structured as regional monopolies focused on claims processing, MACs are poorly aligned with beneficiary needs, limit innovation, and contribute to fragmentation in program integrity and coverage policy. We propose transitioning to a multi-MAC competitive regional model, enabling beneficiary choice and introducing both price and nonprice competition. Doing so would incentivize improvements in customer service, fraud prevention, provider access, and technology adoption while reducing systemic operational risk and generating Part B premium rebates, improving FFS Medicare affordability. By reintegrating program integrity functions and aligning incentives with beneficiary outcomes, this model offers a budget-neutral pathway to enhance efficiency, strengthen oversight, and improve the beneficiary experience.
