Journal of Economic Perspectives: Vol. 10 No. 3 (Summer 1996)


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Policy Watch: Medicare

Article Citation

Newhouse, Joseph P. 1996. "Policy Watch: Medicare." Journal of Economic Perspectives, 10(3): 159-167.

DOI: 10.1257/jep.10.3.159


The forecast growth for Medicare spending has created a highly visible budgetary impasse between the president and Congress. Both favor the growth of health plans that accept risk and would promote them by creating less restrictive options than heretofore. Nonetheless, the conference bill the president vetoed for other reasons did not envision price competition among plans but relied upon administered prices instead. The bill allowed Medical Savings Accounts; because of selection, the Congressional Budget Office estimated they would slightly increase Medicare costs. By eliminating the subsidy at the margin to hiring a resident, the bill's provisions would shift demand for residents down.

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Newhouse, Joseph P. (Harvard U)

JEL Classifications

I18: Health: Government Policy; Regulation; Public Health
H51: National Government Expenditures and Health
H53: National Government Expenditures and Welfare Programs
J14: Economics of the Elderly; Economics of the Handicapped


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