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Reforming Medicare

Options, Tradeoffs, and Opportunities

with Patrick F. Healy. Henry J. Aaron and Jeanne M. Lambrew

Publication Year: 2009

Everyone agrees on the need to reform Medicare but not on how to do it. Some argue the program is too comprehensive, others that it is not comprehensive enough. Some suggest it pays too much for health care, others, too little. Meanwhile, the financial stakes continue to mount. Medicare spending exceeded $400 billion in 2007, making it more expensive than the entire health systems of most other nations, as well as the largest national public program other than Social Security and national defense. In R eforming Medicare, Henry J. Aaron and Jeanne M. Lambrew deftly guide readers through this complex debate. They identify and analyze the three leading approaches to reform. Updated social insurance would retain the current system while rationalizing coverage and reducing bureaucracy. Premium support would replace the current system with a capped, per-person payment that beneficiaries could use to buy health insurance. Consumer-directed Medicare would have beneficiaries pay for care up to a high deductible from government- supported savings accounts and offer premium-support coverage above the deductible. In addition to rating each option on its ability to promote access to health care, improve the quality of care, and control costs, the authors evaluate each reform's political strengths and weaknesses. Given the heat generated by the Medicare debate, it is unlikely that any single approach will be implemented in full. Consequently, Aaron and Lambrew describe incremental strategies that blend elements of each plan. Their analysis provides essential insight into the types of hybrid policies that Congress will consider in coming years.

Published by: Brookings Institution Press

Front Cover

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Title Page, Copyright Page, Foundation Page

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Table of Contents

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pp. vii-viii

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pp. ix-xii

Some day, looking back, this period will be recalled as part of a great transformation in American life. The watershed represented by the aging of 76 million baby boomers will alter tastes in entertainment, transform our politics, and reshape the economy. Older people, after all, have quite different consumption preferences than the young. ...

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1. Medicare Reform: The Stakes

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pp. 1-11

Now in its fifth decade, Medicare provides health coverage to virtually all of the nation’s elderly and a large share of people with disabilities, a population of some 44 million. The program has brought large benefits.1 With dramatically improved access to health care, its beneficiaries have enjoyed longer, healthier lives.2 ...

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2. A Medicare Primer

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pp. 12-28

Since its enactment in 1965, Medicare has expanded from two to four components. The first offerings were Hospital Insurance (HI, or Part A) and Supplementary Medical Insurance covering physicians and other selected services (SMI, or Part B).1 In 1982 Congress added coverage of managed care plans (now named Medicare Advantage, or Part C). ...

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3. Goals, Performance, and Options for Medicare

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pp. 29-50

Medicare is hugely popular with both the public and policymakers. It provides nearly all people aged sixty-five or older and those with certain disabilities with health insurance that many would otherwise find costly or unavailable.1 It covers most medical costs of its elderly enrollees. ...

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4. Strengthening Medicare as a Social Insurance Program

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pp. 51-72

Medicare was originally designed as—and for the most part remains—a social insurance program. Social insurance provides collective protection against certain risks such as involuntary unemployment or loss of income because of retirement, disability, or death of a breadwinner.1 ...

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5. Premium Support

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pp. 73-91

Beginning in the mid-1990s, policy analysts developed and some elected officials endorsed an alternative to traditional Medicare called premium support.1 This term has since been applied to several proposals built around the principle that health care services should be financed by the government but managed by private insurance plans competing on premiums and services. ...

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6. Consumer-Directed Medicare

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pp. 92-114

Under consumer-directed health care, decisionmaking rests with individuals, not with the government (as in social insurance) or with health plans (as in premium support). People would pay for health care through accounts linked to high-deductible insurance plans. ...

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7. Assessing Medicare Reform: Options and Prospects

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pp. 115-138

Almost everyone agrees that Medicare needs to be improved, but not on how to do it.1 Assessments of what is right and wrong with the program are numerous and conflicting. Some argue that the program is too comprehensive, others that it is not comprehensive enough. Some suggest it pays too much for health care, others too little. ...

Appendix A: Payment Systems for Special Hospitals

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pp. 139

Appendix B: Pricing for Selected Outpatient Services

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pp. 140-141

Appendix C: Sustainable Growth Rate System

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pp. 142-143

Appendix D: Hospital Service Prices

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pp. 144-148


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pp. 149-194


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pp. 195-202

Back Cover

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E-ISBN-13: 9780815701507
E-ISBN-10: 0815701500

Page Count: 202
Publication Year: 2009