The Diagnosis and Treatment of Medicare (Aei Studies on Medicare Reform)

The Diagnosis and Treatment of Medicare argues that Medicare is in critical condition. Spending has risen dramatically since the program’s inception, growing from about $200 billion to $450 billion over the last decade. Expenditures have consistently grown at twice the rate of inflation, and at times much faster, outstripping economic growth and absorbing a growing share of federal revenue. The situation will only worsen in the coming decades. As the Baby Boom generation reaches 65, Medicare’s demands on federal revenues will climb even more sharply. Left unchecked, Medicare spending threatens to crowd out federal funding for education, energy, the environment, defense, and other important policy priorities.

Economists Andrew J. Rettenmaier and Thomas R. Saving offer an innovative remedy to Medicare’s woes. The Diagnosis and Treatment of Medicare calls for a rethinking of Medicare’s financing, its benefit structure and its future. They dissect the existing Medicare program, evaluate a series of previously suggested remedies, and put forward their own “prepayment” solution.