Market-driven Medicare would set US health care on a better course

James Capretta
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James Capretta: American Enterprise Institute

AEI Economic Perspectives, 2021

Abstract: Medicare is the most decisive force in US health care. The program's payment regulations heavily influence how hospitals, physician groups, and other providers organize themselves to maximize profits while delivering medical services to their patients (Medicare and non-Medicare alike). Advocates of government-enforced cost control favor using Medicare's payment rules over private options and market incentives to discipline expenses. Market advocates must offer an alternative that builds on the program's existing consumer-oriented features. Program changes should emphasize strengthened price competition, informed and structured coverage options, and better financial incentives for migration toward low-cost, high-value care. Further, the program's trust funds and insurance benefit need to be updated to complement and reinforce market discipline and to limit the financial burden imposed on current and future taxpayers. Market reforms in Medicare would encourage conforming changes in the commercial sector, which is one reason they encounter stiff resistance from advocates of full governmental control.

Keywords: AEI Economic Perspectives; Health Care Policy; Health Care Reform; Medicare (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2021
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