title: Public financing of the Medicare program will make its uniform structure increasingly costly to sustain.
abstract: The US Medicare program consumes an ever-rising share of the federal budget. Although this public spending can produce health and social benefits, raising taxes to finance it comes at the cost of slower economic growth. In this article we describe a model incorporating the benefits of public programs and the cost of tax financing. The model implies that the "one-size-fits-all" Medicare program, with everyone covered by the same insurance policy, will be increasingly difficult to sustain. We show that a Medicare program with guaranteed basic benefits and the option to purchase additional coverage could lead to more unequal health spending but slower growth in taxation, greater overall well-being, and more rapid growth of gross domestic product. Our framework highlights the key trade-offs between Medicare spending and economic prosperity.
authors: Department of Health Policy and Management, Harvard School of Public Health, Boston, Massachusetts, USA. Kbaicker@hsph.harvard.edu
authors: Katherine
authors: K
authors: Baicker
authors: Mark
authors: M
authors: Shepard
authors: Jonathan
authors: J
authors: Skinner
mesh_terms: D005380:Financing, Government / Q000191:economics* / Q000458:organization & administration / Q000706:statistics & numerical data; D059066:Gross Domestic Product / Q000706:statistics & numerical data; D005102:Health Expenditures / Q000706:statistics & numerical data*; D006291:Health Policy / Q000191:economics; D006801:Humans; D019458:Insurance Coverage / Q000191:economics / Q000706:statistics & numerical data; D006278:Medicare / Q000191:economics* / Q000458:organization & administration / Q000706:statistics & numerical data; D018803:Models, Economic; D013660:Taxes / Q000191:economics / Q000706:statistics & numerical data; D014481:United States
keywords: Health Economics; Health Reform; Health Spending; Medicare
references: Annu Rev Econom. 2012 Sep;4:33-56
references: 35722443
references: Health Aff (Millwood). 2011 Jan;30(1):109-17
references: 21209446
references: Ann Intern Med. 2003 Feb 18;138(4):288-98
references: 12585826
references: Health Aff (Millwood). 2011 Aug;30(8):1594-605
references: 21798885
references: N Engl J Med. 2011 Jul 28;365(4):e7
references: 21751901
references: Health Aff (Millwood). 2004 Jan-Jun;Suppl Web Exclusives:W4-184-97
references: 15451981
references: N Engl J Med. 1997 Aug 28;337(9):651-5
references: 9271486
references: N Engl J Med. 2005 Mar 24;352(12):1255-60
references: 15788504
references: N Engl J Med. 1986 Feb 13;314(7):441-5
references: 3080679
references: Health Aff (Millwood). 2008 May-Jun;27(3):771-81
references: 18474971
references: N Engl J Med. 2008 Nov 6;359(19):1977-81
references: 18987366
references: Am J Manag Care. 2009 Jun;15(6):338-43
references: 19514799
references: J Gerontol. 1992 May;47(3):S98-104
references: 1573213
references: Health Aff (Millwood). 1995 Winter;14(4):8-30
references: 8690366
references: JAMA. 2012 Nov 28;308(20):2083-5
references: 23188021
references: Ann Intern Med. 2003 Feb 18;138(4):273-87
references: 12585825