June 2005 - May 2008

Equitable, Efficient and Sustainable Medicare for the 21st Century


Garber good 4web
Principal Investigator
Senior Fellow
  • Professor, Economics, Emeritus
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John Shoven
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Dana Goldman

It is widely recognized that Medicare's financial base is not adequate to support its anticipated expenditures in the coming years. The vast majority of beneficiaries are enrolled in traditional Medicare, a relatively unrestricted form of fee for service health insurance that has all but vanished from commercial health insurance, emphasizing fragmented acute care services with little scope for rewarding high quality care. The ubiquity of supplemental health insurance blunts the effects of cost-sharing, so Medicare has few mechanisms to ensure that the benefits of the care Medicare enrollees receive are commensurate with the costs. The lack of utilization controls means that Medicare has limited ability to ensure that expensive new medical technologies and procedures are introduced and used appropriately.


Most serious projections of Medicare revenues and expenditures, including those of the Medicare Trustees, indicate that Medicare will go into deficit after large numbers of baby boomers reach the ages of Medicare eligibility. Any substantial reform of Medicare should be debated and developed before a crisis in Medicare financing is upon us, especially if features like incentives to increase savings for medical expenses will be components of the reform.

The four core investigators for this project will draw upon their own past and current work and commission between 8 and 12 background papers by expert consultants on key topics in Medicare reform. The authors of the background papers will present their work at thematic meetings, which will be attended by other consultants with related expertise and interests, along with the core research team. Meetings will be held twice annually, with the expectation that at the end of each meeting enough information will be assembled to develop policy recommendations pertinent to the specific theme area following a series of targeted meetings and with the input of several consultants.

The major areas of reform to be discussed are: 1) defining eligibility for Medicare; 2) identifying financing options, including the use of a consumption tax; 3) changing the structure of Medicare benefits; 4) estimating the impact of Medicare reform on revenues and expenditures, on the health of the elderly, with an evaluation of distributional consequences.

The project will result in a detailed analysis of the current Medicare program and reform options, with a detailed presentation of a specific Medicare reform plan. The plan is not likely to be a variant of options that Congress is seriously considering today, but is intended to be relevant to debates about how Medicare should be reformed in the next 5-10 years.