Medicare: Usual and Customary Remedies Will No Longer Work
Medicare is projected to be insolvent by the year 2001. The budget for fiscal year 1998 pushes that date ahead a few years by introducing additional cost-control measures, but it will not rectify the structural deficiencies associated with the current system. Moreover, it is likely to worsen the quality of care for Medicare enrollees. A better approach-one that will help solve Medicare's problems in the long run-is to adopt a "defined contribution" plan that will restore consumers' interest in economizing on health care services and boost competition among providers and insurers.
The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.