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A Skeptic's View of Global Budget Caps

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  • James M. Poterba

Abstract

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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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.8.3.67
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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: 67-73

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Handle: RePEc:aea:jecper:v:8:y:1994:i:3:p:67-73

Note: DOI: 10.1257/jep.8.3.67
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  1. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
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Cited by:
  1. Makoto Kakinaka & Ryuta Kato, 2013. "Regulated medical fee schedule of the Japanese health care system," International Journal of Health Care Finance and Economics, Springer, vol. 13(3), pages 301-317, December.

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