Can managed care and competition control Medicare costs?

Medicare+Choice (M+C) was conceived to bring managed care and competitive forces to bear on Medicare. Ultimately, M+C could not thrive under the conditions of the marketplace and the Balanced Budget Act of 1997. Here I review what went wrong and the lessons from the experience, concluding that M+C is a tool, not a strategy. While managed care in a multiple-choice environment may have the potential to generate limited savings, promoting managed care and competition alone will not preempt the need for a debate on Medicare's obligations and how to finance them.