The National Bureau of Economic Research
Medicare is one of the largest health insurance programs in the world with an annual cost of about $260 billion. At 17 percent of the US health costs and about one-eighths of the federal budget Medicare provides universal health insurance for the elderly as well as the many disabled Americans. Since the start of Medicare in 1965 to now it remains the single largest change in health insurance coverage in history. The introduction was associated with the 23% increase in total hospital expenses and with the spread of health insurance from 1950 to 1990 we can start to see where the the 40% of that periods rise in health spending. Rand Health Insurance Experiment (HIE) is one of the largest experiments of the kind to be conducted in the United States. HIE compared the spending of individuals randomly assigned to different health insurance plans and based on the comparisons the impact of health insurance on hospital spending was at least five times smaller than what other economist estimated. Market wide changes may increase market demand for health care enough to make it worthwhile for hospitals to incur the fixed costs of adopting a new technology.
Amy Finkelstein and Robin McKnight investigated the question of What benefits did Medicare produce for health care consumers, while still noting that public health insurance may provide better health and create risk reduction. In their analysis of comparing the insurance value of the reduction in the risk of large out of pocket medical expenses they estimate that Medicare is enough to cover between 45 and 75 percent of its incurred costs. In the long run Medicare has been associated with hospitals getting more cardiac technologies and the elderly mortality may be much larger than the ten year impact initially thought.
Interesting summary. I had no idea that Medicare is 1/8 of the Federal budget! Can that be?
ReplyDeleteYou have not yet answered the question at the top of this post. Are you finding answers.