Does One Medicare Fit All? The Economics of Uniform Health Insurance Benefits

Mark Shepard, Katherine Baicker and Jonathan Skinner

No 26472, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: There is increasing interest in expanding Medicare health insurance coverage in the U.S., but it is not clear whether the current program is the right foundation on which to build. Traditional Medicare covers a uniformset of benefits for all income groups and provides more generous access to providers and new treatments than public programs in other developed countries. We develop an economic framework to assess the efficiency and equity tradeoffs involved with reforming this generous, uniform structure. We argue that three major shifts make a uniform design less efficient today than when Medicare began in 1965. First, rising income inequality makes it more difficult to design a single plan that serves the needs of both higher- and lower-income people. Second, the dramatic expansion of expensive medical technology means that a generous program increasingly crowds out other public programs valued by the poor and middle class. Finally, as medical spending rises, the tax-financing of the system creates mounting economic costs and increasingly untenable policy constraints. These forces motivate reforms that shift towards a more basic public benefit that individuals can “top-up” with private spending. If combined with an increase in other progressive transfers, such a reform could improve efficiency and reduce public spending while benefiting low income populations.

JEL-codes: H4 H51 I13 (search for similar items in EconPapers)
Date: 2019-11
New Economics Papers: this item is included in nep-hea, nep-ias and nep-pbe
Note: AG EH PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Does One Medicare Fit All? The Economics of Uniform Health Insurance Benefits , Mark Shepard, Katherine Baicker, Jonathan Skinner. in Tax Policy and the Economy, Volume 34 , Moffitt. 2020

Downloads: (external link)
http://www.nber.org/papers/w26472.pdf (application/pdf)

Related works:
Journal Article: Does One Medicare Fit All? The Economics of Uniform Health Insurance Benefits (2020)
Chapter: Does One Medicare Fit All? The Economics of Uniform Health Insurance Benefits (2019)
Working Paper: Does One Medicare Fit All? The Economics of Uniform Health Insurance Benefits (2019)
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:nbr:nberwo:26472

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w26472

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().