Financing Health Care for the Elderly in 2000: Issues, Mechanisms, and Directions

Summary

This chapter examines several key trends likely to shape future health care financing for the elderly. It begins with a description of the current system—its size, cost, and effectiveness. It then examines the causes of mounting Medicare expenditures, which threaten to bankrupt that system before the end of the century. Policies designed to curb these growing Medicare expenditures, which have or should be undertaken, are examined. Next, two principal methods of increasing Medicare revenues—general taxes and higher consumer premiums—are evaluated. Finally, mechanisms for achieving savings in financing long-term care are reviewed. It is argued that, despite the enormous sum of money currently expended for the purchase of high-quality health services for the elderly, insuring their future health service needs will require significant increases in productivity and changes in the financing of the Medicare system.