Journal of Economic Perspectives: Vol. 8 No. 3 (Summer 1994)


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Public Finance Principles and National Health Care Reform

Article Citation

Zeckhauser, Richard. 1994. "Public Finance Principles and National Health Care Reform." Journal of Economic Perspectives, 8(3): 55-60.

DOI: 10.1257/jep.8.3.55


Public finance principles, though usually treated as a minor consideration, lie at the heart of effective national health care reform. Four principles are discussed: charge for a service where its cost is created; distinguish rents, resources, and transfers; know what services cost and pay accordingly; balance distributional and equity concerns. The principles' implications include: since employment does not much affect health costs, financing (particularly of incremental insureds) need not be employer-based; health resources being immobile, many cutbacks in expenditure will not reflect real resource savings; and health care financing should mesh with an overall program of taxation and expenditure.

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Zeckhauser, Richard (Harvard U)

JEL Classifications

I18: Health: Government Policy; Regulation; Public Health
I11: Analysis of Health Care Markets


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