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


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A Skeptic's View of Global Budget Caps

Article Citation

Poterba, James M. 1994. "A Skeptic's View of Global Budget Caps." Journal of Economic Perspectives, 8(3): 67-74.

DOI: 10.1257/jep.8.3.67


This brief paper explores the likely effects of government-imposed global budget caps, such as those in the Clinton administration proposal, on health care spending. It argues that health reform proposals that guarantee universal access to a basic package of medical benefits create a substantial new constituency for higher health care outlays. Political and potential legal pressures to expand rather than limit the set of guaranteed benefits, coupled with an expansion of the number of individuals with health insurance coverage, make it unlikely that global budget targets will succeed in reducing the rate of health care spending growth.

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Poterba, James M. (MIT)

JEL Classifications

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


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