Publications
Walter M. Cadette
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Policy Note 2003/3 | June 2003
The Coming Crisis in U.S. Health Care
The time has more than come to begin planning seriously for the aging of the baby-boom generation. The need for planning goes beyond concerns about the solvency of Social Security and Medicare. Another crisis looms in the form of a huge bill for the care of baby boomers who in their old age will need help dressing, eating, taking medication, and performing other daily tasks. Under the current system, most nursing home care is paid for by Medicaid—a program designed primarily to subsidize the acute care of indigent families. This arrangement diverts health care resources from their intended use, thwarts the development of a long-term-care insurance system, and provides meager resources to heavily burdened providers, forcing them to skimp on care needed by a vulnerable population.
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Policy Note 2001/3 | March 2001
There Is a Better Way
The problem is that the payers of health care—government and employers alike—are in open revolt against costs they never anticipated would become so high. Payers succeeded for a time in limiting increases to rises in the general price level. But it is one thing to remedy the most glaring inefficiencies in the system—to pick, as it were, the low-hanging fruit—and quite another to maintain quality when all of that has been harvested.
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Policy Note 2000/4 | April 2000
Hospitals have been squeezed by the Balanced Budget Act; the uninsured population is still on the rise; and long-term care is paid for largely by welfare grants. The nation's flawed structure of health care finance ultimately will adversely affect the quality of care for all.
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Public Policy Brief Highlights No. 59A | February 2000
Replacing a Welfare Model with an Insurance Model
The nation is not prepared to deal with the jump in expenditures for long-term care that will come with the aging of the baby-boom generation. Only a small part of that care is paid for privately (out-of-pocket or through private insurance). Most is financed through Medicaid, the program that is intended to ensure medical care for the indigent. This use of Medicaid comes at a high cost for individuals and society: the allotment of more than a third of the Medicaid budget to long-term care; a two-tier care system; and the commandeering of limited funds by middle- and high-income people through elaborate estate planning to circumvent eligibility requirements. These problems would be mitigated by replacing the welfare model with an insurance model—voluntary or compulsory private insurance, with subsidies through income-scaled tax credits to ensure affordability. An equitable and efficient system could be created with a blend of public money, private insurance, and other private saving, with a safety net for those in greatest need.Download:Associated Program:Author(s):Walter M. Cadette -
Public Policy Brief No. 59 | February 2000
Replacing a Welfare Model with an Insurance Model
The nation is not prepared to deal with the jump in expenditures for long-term care that will come with the aging of the baby-boom generation. Only a small part of that care is paid for privately (out-of-pocket or through private insurance). Most is financed through Medicaid, the program that is intended to ensure medical care for the indigent. This use of Medicaid comes at a high cost for individuals and society: the allotment of more than a third of the Medicaid budget to long-term care; a two-tier care system; and the commandeering of limited funds by middle- and high-income people through elaborate estate planning to circumvent eligibility requirements. These problems would be mitigated by replacing the welfare model with an insurance model—voluntary or compulsory private insurance, with subsidies through income-scaled tax credits to ensure affordability. An equitable and efficient system could be created with a blend of public money, private insurance, and other private saving, with a safety net for those in greatest need.
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Working Paper No. 283 | October 1999
Options for Policy
The nation is ill-prepared to finance the quantum jump in long-term care spending that is on its way as the baby boom ages. By default rather than by design, Medicaid has become the main source of funds for long-term care. But reliance on Medicaid has fostered the institutionalization of the disabled elderly, has given rise to a two-tier care system, and has yielded the bizarre outcome of use of limited welfare funds by middle- and even high-income Americans who have succeeded in sheltering assets from Medicaid's spend-down requirements. Insurance would be a greatly better answer to the nation's long-term care needs. But the market will remain small and underdeveloped as long as Americans can make easy claim on Medicaid. The paper puts forth a plan for universal long-term care insurance, supported by income-scaled tax credits, to replace Medicaid in its current role. That would make for "honest government"--one that not only does not fund inheritance protection but also genuinely protects those with greatest need.
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Policy Note 1999/10 | October 1999
A Bad Idea
Would privatization yield sufficient benefits to support low-income retirees and satisfy all others? Does a focus on private management of assets take attention away from the real issues in the future of Social Security?
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Public Policy Brief No. 47 | December 1998
An Ethical Framework for Cost-Effective Medicine
HMO medicine sets up an inevitable conflict between the physicians’ traditional fiduciary role and the financial interests of the health plan and its physicians. Regulatory interventions, such as the formulation of rules regarding clinical practice, put government in a micromanagement role it cannot hope to perform well. Government instead should focus on building a regulatory framework to protect patients that would deal with the ethical problems that flow from the very design of HMO medicine. It should address fundamental issues, principally, the financial incentives under which HMO physicians work, restrictions on communication with patients about care options not covered by their health plan, accountability for decisions to withhold care, and the return of care decisions to the province of the physician. The challenge for regulators is to retain the power of the economic incentive to encourage cost-conscious practice, but to separate it from the welfare of patients.
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Public Policy Brief Highlights No. 47A | December 1998
An Ethical Framework for Cost-Effective Medicine
HMO medicine sets up an inevitable conflict between the physicians’ traditional fiduciary role and the financial interests of the health plan and its physicians. Regulatory interventions, such as the formulation of rules regarding clinical practice, put government in a micromanagement role it cannot hope to perform well. Government instead should focus on building a regulatory framework to protect patients that would deal with the ethical problems that flow from the very design of HMO medicine. It should address fundamental issues, principally, the financial incentives under which HMO physicians work, restrictions on communication with patients about care options not covered by their health plan, accountability for decisions to withhold care, and the return of care decisions to the province of the physician. The challenge for regulators is to retain the power of the economic incentive to encourage cost-conscious practice, but to separate it from the welfare of patients.Download:Associated Program:Author(s):Walter M. Cadette -
Working Paper No. 239 | July 1998
Confronting the Risks in Managed Care
HMO medicine has been effective in controlling once-runaway health care costs. But it sets up inevitable conflict between patient care and the financial well-being of the health plan and of its employee or contract physicians. This paper looks at the ethical problems posed by managed care (in particular, at its incentives to physicians to economize on care), and points to a regulatory framework to provide consumer protection. The trend to capitated payments is especially problematic. It relieves the insurer from interfering in medical decision-making as a means of cost control, but it pits the interests of physicians directly against the interest of patients.
Policy makers, the finding is, should not try to micromanage HMO medicine, which they have done by mandating, for example, minimal hospital stays after childbirth. The real need is for regulatory oversight of financial incentives and disclosure. Health plans ought to be required to disclose the incentives under which their physicians are paid; to provide subscribers with honest information on health care coverage; and to be prohibited from imposing "gag rules" on physicians. Moreover, ERISA ought to be recast to hold health plans accountable for errant care decisions, which they are not now in many cases. Purchasing cooperatives, the conclusion also is, would play an especially useful role if managed care continues to take hold as the institutional norm.
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Public Policy Brief Highlights No. 40A | May 1998
A Fiscally Responsible Plan for Public Capital Investment
Condemned bridges, dilapidated school buildings, contaminated water supplies, and other infrastructure shortcomings threaten American growth, productivity, and prosperity. The authors of this brief propose a plan for financing infrastructure projects that is designed to have minimal effect on the federal budget and to promote sound fiscal operation. Federal zero-interest mortgage loans to state and local governments for capital projects specified by Congress can cut the cost of such projects, achieve needed improvements in the nation’s infrastructure, and thereby contribute to the American economy’s future.Download:Associated Program:Author(s):Walter M. Cadette -
Public Policy Brief No. 40 | May 1998
A Fiscally Responsible Plan for Public Capital Investment
Condemned bridges, dilapidated school buildings, contaminated water supplies, and other infrastructure shortcomings threaten American growth, productivity, and prosperity. The authors of this brief propose a plan for financing infrastructure projects that is designed to have minimal effect on the federal budget and to promote sound fiscal operation. Federal zero-interest mortgage loans to state and local governments for capital projects specified by Congress can cut the cost of such projects, achieve needed improvements in the nation’s infrastructure, and thereby contribute to the American economy’s future.
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Public Policy Brief No. 34 | September 1997
The Challenge of Financing the Baby Boom’s Retirement
The falling ratio of workers to retirees in the United States has raised concerns about Social Security’s ability to continue to provide a base level of support for all retired workers and to remain in balance with all of government's other fiscal obligations. Of alternative plans that have been proposed to safeguard the system, Walter Cadette argues against radical revamping through privatization and suggests instead minor modifications in the existing tax and benefits structure.
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Public Policy Brief Highlights No. 34A | September 1997
The Challenge of Financing the Baby Boom’s Retirement
The falling ratio of workers to retirees in the United States has raised concerns about Social Security’s ability to continue to provide a base level of support for all retired workers and to remain in balance with all of government's other fiscal obligations. Of alternative plans that have been proposed to safeguard the system, Walter Cadette argues against radical revamping through privatization and suggests instead minor modifications in the existing tax and benefits structure.Download:Associated Program:Author(s):Walter M. Cadette -
Public Policy Brief Highlights No. 30A | April 1997
The Case for Retargeting Tax Subsidies to Health Care
With health care delivery increasingly shaped by market and budgetary discipline, the provision of health care for all seems an ever-more-distant goal.The high cost of American health care is the inevitable by-product of its method of financing. Walter M. Cadette proposes shifting the tax subsidies to health care from the tax exclusion of employment-based health insurance to an income-scaled tax credit for the individual purchase of basic health insurance. This plan holds out promise of improving the operation of the health insurance market, making the labor market more efficient, reducing overall health care costs, and providing protection for the unemployed.Download:Associated Program:Author(s):Walter M. Cadette -
Public Policy Brief No. 30 | April 1997
The Case for Retargeting Tax Subsidies to Health Care
With health care delivery increasingly shaped by market and budgetary discipline, the provision of health care for all seems an ever-more-distant goal.The high cost of American health care is the inevitable by-product of its method of financing. Walter M. Cadette proposes shifting the tax subsidies to health care from the tax exclusion of employment-based health insurance to an income-scaled tax credit for the individual purchase of basic health insurance. This plan holds out promise of improving the operation of the health insurance market, making the labor market more efficient, reducing overall health care costs, and providing protection for the unemployed.
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Working Paper No. 192 | April 1997
The Challenge of Financing the Baby Boom's Retirement
Some reform of Social Security is needed to keep the system solvent given the additional financial pressure that will be placed on it as the baby boom generation retires: the Social Security Administration estimates that payroll taxes will have to be increased 2.2 percent or benefits reduced by an equal amount to maintain financial balance over the next 75 years. The Advisory Council on Social Security has suggested two possible approaches to the long-term financing of the system. One would make minor changes to the existing system to close the gap between contributions and benefits; the other would privatize and thus radically alter the system. Senior Fellow Walter M. Cadette examines these two approaches and concludes that the nation would be better off reforming the current system than making such a fundamental change as privatization.
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Working Paper No. 171 | July 1996
More than 40 million Americans currently have no access to health care for reasons of income. Moreover, plans enacted or discussed at the state level to cover the uninsured face problems of cost and quality of service as well as the question of who pays for such programs. To solve the problem of access, Senior Fellow Walter M. Cadette advocates switching from the current method of financing health care—employment-based health insurance with tax-excluded premiums—to a system that would require everyone to purchase basic but comprehensive coverage with after-tax income. A sliding-scale tax credit, based on level of income, would then be granted. The plan could be paid for with the revenues resulting from eliminating the current exclusion (about $74 billion in federal revenues and $5 billion in state revenues) and the $11 billion the Medicaid program pays to hospitals to assist them in paying for services rendered to those who could not pay for them. The role of the federal government would be to ensure that all plans meet minimum standards of coverage and, possibly, to subsidize part of the cost of high-risk subscribers. State and local governments would channel funds for the insurance of nontaxpayers directly to their insurance carriers. This method of financing health care would eliminate the vertical and horizontal inequities of the existing system and, according to Cadette, encourage individuals to seek out less expensive insurance.
Download:Associated Program:Author(s):Walter M. Cadette
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