HLTH 385 Lecture Notes - Lecture 11: Moral Hazard, European Cooperation In Science And Technology, Fixed Income
Lindsay Allen (lindsay.a[email protected])
How to cut medicare
• Decreasing the number of enrollees
o Raising the age to 70 from 65
• Benefits redesign
o Changing what drugs will be covered
o Leave it up to the patients to decide what benefits will be covered/is
important to them
• "Paul Ryan Medicare Plan"
o wants to repeal and replace ACA, changing Medicaid program to a block grant
style
• Readmissions Reduction Program (helped lower costs)
▪ If we get rid of this, hospitals won't care as much about reducing
readmissions
• Reduces healthcare spending overall in many ways
o also make changes to Medicare
• Give elderly adults vouchers (worth a set amount of money)- they have
the choice to spend the money however they want
▪ Benefits
• purchasing a private healthcare insurance plan, competition
will drive the price down
• Private companies save admin. Costs
▪ Negatives
• Private insurers can't bargain like Medicare can
• Economies of scale
▪ The idea is that we'll be spending less money on the vouchers than
we would on just normal costs- COST SHIFTING
• Giving a smaller amount in voucher, people don't get the same
benefits! (this is a BAD PLAN)
• Moral hazard- if you are covered by insurance, and you just get checkups often and
use up healthcare expenses, you use more because you don't think about the cost
(b/c you're covered by insurance!
• Monopoly 1 price maker
• Cost sharing without Paul Ryan Voucher plan
o Fixed income
o Pays less than most private insurance companies
• Cut provider money
o Not gonna fly - AMA and other powerful lobbies
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