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Issues Every Plan to Reform Health Care Financing Must Confront

Author

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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

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    1. Michael Rothschild & Joseph Stiglitz, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, Oxford University Press, vol. 90(4), pages 629-649.
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    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:idbbks:237 is not listed on IDEAS
    3. 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.).
    4. Alessandro Magnoli, 2002. "What Do You Mean?: Conceptual Clarity in Social Policy," IDB Publications (Books), Inter-American Development Bank, number 15358, February.
    5. 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.
    6. repec:kap:iaecre:v:3:y:1997:i:2:p:181-192 is not listed on IDEAS
    7. Cochrane, John H, 1995. "Time-Consistent Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 445-473, June.

    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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