We review the policy concerns underlying some of the most contentious issues that must be resolved prior to the enactment of a Medicare drug benefit. We consider critical issues both in benefit design-targeted versus universal eligibility, benefit subsidies, and benefit comprehensiveness--and in benefit administration, focusing especially on issues involving the administration of the drug benefit in traditional Medicare. Despite the apparent contentiousness of the drug benefit debate, alternative proposals may not be so far apart on these issues.
Because the optimal level of medical malpractice liability depends on the incentives provided by the health insurance system, the rise of managed care in the 1990s may affect the relationship between liability reform and defensive medicine. In this paper, we assess empirically the extent to which managed care and liability reform interact to affect the cost of care and health outcomes of elderly Medicare beneficiaries with cardiac illness.
Previous research suggests that "direct" reforms to the liability system - reforms designed to reduce the level of compensation to potential claimants - reduce medical expenditures without important consequences for patient health outcomes. We extend this research by identifying the mechanisms through which reforms affect the behavior of health care providers.