THE MEDICARE REFORM DEBATE - WHAT IS THE NEXT STEP

Medicare costs are rising faster than projected revenues. Action to cl ose the emerging deficit is inescapable. We propose converting Medicar e from a ''service reimbursement'' system to a ''premium support'' sys tem. These changes would resemble many that are now reshaping private employer-based insurance. Our reform would encompass not just the ''pu blic'' Medicare program but also the ''real'' Medicare, which includes the supplemental plans to which most Medicare beneficiaries have acce ss. Approved plans would have to offer stipulated services. We review numerous technical issues in moving to a new system that cannot be sol ved quickly and that preclude quick budget savings.