There is a Better Way: Make Medicaid and Medicare More Like Social Security
36 Pages Posted: 12 Aug 2019 Last revised: 25 Aug 2019
Date Written: August 22, 2019
The Medicare and Medicaid programs are not serving the needs of their target populations as well as they could. Democrats believe that Medicaid can be improved with more money and stricter federal regulation, and that Medicare can be improved by allowing it to negotiate drug prices. Republicans believe Medicaid can be improved by delegating responsibility to the states and adding work requirements, and that Medicare can be improved by moving more people into Medicare Advantage. This Article proposes a very different strategy. Instead of tinkering with these programs, both should be remodeled along the lines of Social Security, the Earned Income Tax Credit, and the Child Tax Credit. These three programs don’t try to provide housing, food, or other goods and services that beneficiaries need. Instead, they give beneficiaries money and let them sort things out for themselves. By using a similar approach for Medicare and Medicaid (i.e., by giving beneficiaries an insurance policy covering catastrophes plus money either in the form of cold hard cash or a restricted spending account), both programs would allow beneficiaries to purchase whatever goods and services they think will best promote their health and well being. The remodeled programs would also unleash the bargain-hunting skills of more than 100 million Americans, helping to drive down costs and minimize fraud.
Keywords: medicare, medicaid, cash-transfer, vouchers, EITC, health care
JEL Classification: I10, I14, I18, K32
Suggested Citation: Suggested Citation