Report

Financing Health Care Reform

A Plan to Ensure the Cost of Reform Is Budget-Neutral

David M. Cutler and Judy Feder propose a plan to insure that the cost of health reform is budget-neutral.

We need to modernize the medical care system so that it costs less and delivers more in terms of quality care. (iStockphoto)
We need to modernize the medical care system so that it costs less and delivers more in terms of quality care. (iStockphoto)

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Financing issues are among the most difficult problems in health care. Because of the deteriorating federal budget, health care reform needs to be budget-neutral over the course of the next decade. After that interval, health reform needs to reduce projected deficits, or the budgetary situation will become untenable. To make this happen, health care reform needs to insure that all Americans have health insurance coverage.

Increasing coverage and saving money requires a complex combination of short- and long-run policies. In this paper, we lay out a set of policies that focus particularly on how the medical care system can be modernized so that it costs less and delivers more in terms of quality care. Alongside these policy proposals, we present options for guaranteeing the budget neutrality of health care reform through a series of “failsafe” policy proposals that could be implemented as needed.

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