Table of Contents
Preface to the Second Edition ix
Acknowledgments xiii
Introduction 1
Chapter 1 The Challenge: Obtaining High-Quality, Affordable Health Care 9
The Good: Innovation 9
The Bad: High Costs and a Large Uninsured Population 14
High Costs: No Easy Answer 14
The Uninsured Population: Many Causes, Uncertain Consequences 19
The Ugly: Backlash against Markets and the Misguided Policy Response 23
The Backlash against Markets 24
The Misguided Policy Response 25
Chapter 2 Five Policy Reforms to Make Markets Work 31
Increase Individual Involvement in Health Care Decisions 33
In Private Markets, Reform Taxation of Health Spending 34
Increase Cost Sharing in Government Programs 49
Deregulate Insurance Markets and Redesign Medicare and Medicaid 52
Deregulate Insurance Markets 52
Redesign Medicare and Medicaid 63
Expand Provision of Health Information 66
Control Anticompetitive Behavior 67
Reform the Malpractice System 69
Study the Tax Preference for Nonprofits 74
Chapter 3 Impacts of Proposals on Health Care Spending, the Uninsured, the Federal Budget, and the Distribution of Tax Burdens 77
Effects of Reforms on Health Care Spending 78
Tax Deductibility 79
Tax Credit 81
Insurance-Market Reform 81
Malpractice Reform 82
Summary and Discussion 82
Effects of Reforms on the Number of Uninsured 84
Tax Deductibility 85
Tax Credit 85
Insurance-Market and Malpractice Reforms 85
Summary and Discussion 86
Effects of Reforms on the Federal Budget 88
Tax Deductibility 88
Tax Credit 90
Insurance-Market and Malpractice Reforms 90
Subsidy for the Chronically Ill 90
Summary and Discussion 92
Distributional Impact 93
Conclusion 97
Appendix A Estimating the Impact of Policy Reforms on Health Care Spending 107
Appendix B Estimating the Impact of Policy Reforms on Uninsurance 117
Appendix C Derivation of the Elasticity of Total Health Care Spending with Respect to the After-Tax Price of Out-of-Pocket Spending 121
Appendix D Estimating the Impact of Policy Reforms on the Federal Budget 125
Notes 133
About the Authors 147
About the Hoover Institution's Working Group on Health Care Policy 149
Index 151