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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.

Suggested Citation

  • Henry J. Aaron, 1994. "Issues Every Plan to Reform Health Care Financing Must Confront," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 31-43, Summer.
    • 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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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.8.3.31
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    References listed on IDEAS

    as
    1. Michael Rothschild & Joseph Stiglitz, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 629-649.
    2. Henry J. Aaron & Barry P. Bosworth, 1994. "Economic Issues in Reform of Health Care Financing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1994 Micr), pages 249-299.
    3. Robert J. Gordon, 1977. "Can the Inflation of the 1970s be Explained?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 8(1), pages 253-279.
    Full references (including those not matched with items on IDEAS)

    Citations

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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. repec:idb:brikps:237 is not listed on IDEAS
    3. Magnoli, Alessandro, 2002. "What Do You Mean?: Conceptual Clarity in Social Policy," IDB Publications (Books), Inter-American Development Bank, number 237.
    4. 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.).
    5. Cochrane, John H, 1995. "Time-Consistent Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 445-473, June.
    6. Ann Helwege, 1996. "Preventive versus Curative Medicine: A Policy Exercise for the Classroom," The Journal of Economic Education, Taylor & Francis Journals, vol. 27(1), pages 59-71, January.
    7. Bahram Adrangi & Kambiz Raffiee, 1997. "An econometric analysis of health care reform in the U.S," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 3(2), pages 181-192, May.
    8. Alessandro Magnoli, 2002. "What Do You Mean?: Conceptual Clarity in Social Policy," IDB Publications (Books), Inter-American Development Bank, number 15358, February.

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    More about this item

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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