If you rolled Chevron, GE, Bank of America and ConocoPhillips into one, they would be the size of Medicare; to save Medicare and slow its growth at the same time, there's one reform that's essential

This letter, signed today by 27 health care experts, calls for Medicare reform based on premium support in the House budget next week.

What is premium support? It means that the best spending on Medicare would be funding that give seniors a fixed amount they can spend on insurance each year.

Under a premium support structure, seniors "would be granted an annual subsidy that reflects the costs associated with their health status and their financial wherewithal. This premium support arrangement would reverse the incentives now in Medicare that promote wasteful spending."

The main point of the letter is that Medicare reform without this will be insufficient to get costs under control.

How bad is the cost problem?

• We will spend $568 billion on Medicare this year. Looking at the Fortune 500 list, I notice that means that Medicare this year is about the size of Chevron, GE, Bank of America, and ConocoPhilipps all rolled into one (they are, respectively, the 3rd-6th largest companies in America).
• In ten years we will spend $1 trillion.
• By then, the hospital insurance trust fund will have run out of money.

We need to reform entitlements in multiple ways, but the authors of the letter are highlighting the most important one. Without infusing competition into the insurance marketplace with defined contributions to seniors in the form of senior support, there is literally no other good idea on the table for how to slow the growth in costs.