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Issues Every Plan to Reform Health Care Financing Must Confront

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  • Henry J. Aaron

Abstract

This paper focuses on three main issues of fundamental health care reform. First, should experience rating--the linkage of premiums to actual loss experience--be retained? Despite widespread support for experience rating among economists, the paper argues that it should be abandoned for reasons of efficiency and equity. Second, would abandonment of experience rating cause much redistribution? The paper shows that redistribution among industries could require significant transitional adjustments. Third, should companies or individuals be subject to an insurance mandate? The paper calls for combining individual mandates, which have long-term advantages, with employer mandates, which have short-run pluses.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.8.3.31
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 8 (1994)
Issue (Month): 3 (Summer)
Pages: 31-43

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Handle: RePEc:aea:jecper:v:8:y:1994:i:3:p:31-43

Note: DOI: 10.1257/jep.8.3.31
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  1. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
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Cited by:
  1. James M. Poterba, 1996. "Government Intervention in the Markets for Education and Health Care: How and Why?," NBER Chapters, in: Individual and Social Responsibility: Child Care, Education, Medical Care, and Long-Term Care in America, pages 277-308 National Bureau of Economic Research, Inc.
  2. Louise Sheiner, 1999. "Health care costs, wages, and aging," Finance and Economics Discussion Series 1999-19, Board of Governors of the Federal Reserve System (U.S.).

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