End of an era. The new debate over health care financing.
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Biomedical subjects
Publications and source records attributed to H J Aaron.
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Medicare costs are rising faster than projected revenues. Action to close the emerging deficit is inescapable. We propose converting Medicare from a "service reimbursement" system to a "premium support" system. These changes would resemble many that are now reshaping private employer-based insurance. Our reform would encompass not just the "public" Medicare program but also the "real" Medicare, which includes the supplemental plans to which most Medicare beneficiaries have access. Approved plans would have to offer stipulated services. We review numerous technical issues in moving to a new system that cannot be solved quickly and that preclude quick budget savings.
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The prospects for reforming health care financing revolve around five questions: (1) Will Congress mandate universal coverage? (2) Will Congress require employers to pay most of the cost of employee coverage? (3) Will Congress authorize effective limits on health care spending? (4) What role should regional health alliances play in the reformed system? (5) How much change in health insurance arrangements can be implemented over the remainder of this decade? The author argues that the prospects are slight for quickly implementing reforms as sweeping as those that President Clinton has proposed. But prospects are good for beginning a process that will lead to universal coverage and effective cost controls. The key is the creation of regional alliances.
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Restoring the reality of a budget constraint in the health care plans of all patients and providers--not only in the Medicare program--is the most important issue of domestic social policy in the remainder of this century. There is no case for major new earmarked taxes to "fix" Medicare unless they are elements of an overall tax structure adequate to pay for the expenditures which our political process deems necessary.
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