Bending the Cost Curve through Market-Based Incentives

In order to reduce health care spending, the authors suggest two market-based approaches. To reduce federal Medicare spending, they suggest a premium-support model (defined contribution); in the private insurance market, they suggest reducing the tax exemption for employer-sponsored health insurance. Both approaches change the incentives for health care spending. In this election year, U.S. national spending on health care will reach $2.8 trillion, or about 18% of total spending on all goods and services. This high level of spending reduces our ability to invest in other important parts of the economy and also adds to our unsustainable national debt. There is wide agreement that we must find ways to bend the health care cost curve. Taking different approaches, the two articles that follow present a range of options, including reducing both the prices and quantity of services for public and private payers, reducing administrative costs, implementing new market-based incentives, . . .