A Note on Income Effects and Health Care Cost Growth in Medicare

McGuire Thomas G. ()
Additional contact information
McGuire Thomas G.: Department of Health Care Policy, Harvard Medical School, 180 Longwood Ave, Boston, MA 02115, USA

Forum for Health Economics & Policy, 2014, vol. 17, issue 1, 1-12

Abstract: This paper sets out a model of technical change and health care cost growth for a representative Medicare beneficiary facing a budget constraint. Derivation of an explicit expression for health care cost growth shows how technological change and preferences, including income effects, affect cost growth. The analysis highlights the role of the 76% subsidy from current taxpayers to Medicare beneficiaries for purchase of health insurance. This subsidy insulates beneficiaries from the income effects of cost growth by shifting the costs and income effects to taxpayers. Simulations show that over the next 10–20 years, income effects will have little effect on cost growth in Medicare.

Keywords: cost growth; income effects; Medicare (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/fhep-2013-0001 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:fhecpo:v:17:y:2014:i:1:p:12:n:3

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/fhep/html

DOI: 10.1515/fhep-2013-0001

Access Statistics for this article

Forum for Health Economics & Policy is currently edited by Dana Goldman

More articles in Forum for Health Economics & Policy from De Gruyter
Bibliographic data for series maintained by Peter Golla ().