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The author would like to thank colleagues in the Western Hemisphere Department for useful comments and discussion.
For example, doctors are public employees and hospitals are publicly owned.
All references to Germany refer to the former West Germany. The health care system of the former East Germany was publicly-owned and financed and is currently being reintegrated into the system in the west.
The review of health care systems in Germany, Japan, and Canada are based on the available literature.
The sum of the percentages of the population covered by private insurance, Medicaid, and Medicare and the percentage which is uninsured exceeds 100 because some persons have more than one type of coverage.
Moreover, states can set their own eligibility requirements for Medicaid. For example, in Alabama, a family of three qualifies for Medicaid only if its income is less than 13 percent of the federal poverty guidelines (Pepper Commission (1990), pp. 30-31).
See Nedde (1993) for a discussion of the special characteristics of the health care market and the factors that have contributed to the rapid growth of health spending in the United States.
The conversion to U.S. dollars uses purchasing power parities for GDP.
Compound annual growth rate.
Using purchasing power parities for GDP.
Schneider (1991), pp. 90-92.
Schneider (1991), pp. 97-99.
Physicians have lobbied heavily against the expenditure caps and, as of late 1991, some voluntary (substitute) funds had tentatively agreed to return to straight fee-for-service payment (Wicks (1992), pp. 10-11)).
GAO (1992), pp. 34-5.
Hospital and physician services together accounted for 57 percent of NHE in 1990. Medicare, Medicaid, and other public health programs financed 42 percent of NHE in 1990.
PPS is categorized as a regulatory cost containment measure since it is a form of price control. But to some extent, it is also a competitive approach to cost containment since, like payment methods used, by HMOs, it increases the cost-reducing incentives facing providers.
Anderson’s (1991) discussion of Robinson, J. and H. Luft (1988), “Competition, Regulation, and Hospital Costs, 1982 to 1986,” Journal of the American Medical Association. Vol. 260, No. 18, pp. 2676-2681.
The Budget Enforcement Act of 1990 set up pay-as-you-go requirements to ensure that legislative changes to revenues or mandatory spending programs (such as health care) that would otherwise tend to increase the deficit would be matched by equivalent offsetting changes in revenues or spending. The Congress and the Administration are required by law to use the cost estimates provided by CBO for purposes of satisfying the BEA requirements.
CBO (1994a) contains the assessment of the Administration’s plan; see CBO (1993a) for a thorough discussion of managed competition in general. One aspect of the managed competition model that is missing from the Administration’s proposal is a significant limitation on the exclusion for tax purposes of employer-paid premiums from employees’ income. In the Administration plan, the exclusion would be limited beginning in 2004, but only for supplementary insurance; the plan would not limit the exclusion of premiums for the standard benefit package, regardless of the cost of the health plan chosen.
CBO also projects NHE under a tighter expenditure cap in which health spending is allowed to increase at the rate of growth of GDP since the Act is unclear on this point. Under that assumption, NHE would be 8.5 percent below baseline by 2003.
See CBO (1994c). The proposal does not specify the benefits to be included in the standard package of benefits. In order to prepare cost estimates, CBO assumed two alternative benefit packages. The cost estimates discussed here are based on a comprehensive benefit package like that in the Administration’s proposal.
This is considered limited community rating since age can be used as a factor in determining premiums.