It's not totally clear that Medicare is badly managed. Those of us that use it as our primary insurance probably have few if any complaints about the insurance as it affects us as users.

As a "business" the story is different. Basically, what's happened, I think, is that Medicare has been managed in a way where the revenues have not been permitted to keep up with the rate that costs have increased. It seems to me that the refusal to increase premiums to cover increased costs has been purely a political one. Congress has enacted the series of patchwork bills to fund Medicare on a year-to-year basis, taking as much as they could from the doctors and hospitals who provide the service and skirting the outrage from the public that would occur if they increased premiums to make the "business" break-even. Basically, Congress has funded an increasingly-used Medicare insurance business by "borrowing" from the future by not replenishing the funds set aside to run the program over a long term as needed.

The problem with Medicare is with the initial legislation that created it, which had limitations in requiring the automatic scaling up of premiums and funding as the population aged, as U.S. life expectancies lengthened, and as usage of the system increased. That lead to the need for the series of almost annual "fix-up bills" that Congress has had to pass to keep Medicare at least marginally solvent.

What's scary about this story is that we may be on the precipice of doing something similar again. With the intense partisanship which seems to be driving the creation of the 2009 healthcare reforms, it seems to me that there's a great risk that again we will create a Rube Goldberg bill, which will have as little chance of long-term success as the original Medicare. Remember, the original Medicare was created by legislation by a Congress that was nearly as fractionalized as it is today. The bill passed by a narrow margin, with lots of amendments, and only because of the intervention of a politically savvy and skillful POTUS. If something passes this year, the underlying situation will be quite similar.

The situation sure seems to call the question: are we about to make all those same mistakes again? Add in the issues that SteveZ notes above and we have the potential of a real witch's brew of a healthcare bill. Legislation is clearly needed, but will Congress and the administration have the cajones to learn from the past and do it right this time?

Oh, why did I ask that last question? Congress is not going to look ahead any further than the 2010 and 2012 elections and their next big campaign contribution. Why should we expect anything different? I can't imagine that this is the system that the founding fathers had in mind.