Austerity in Public Medical Care Programs

Miserliness or Economic Response?

by Joseph P. Newhouse


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Recent American cutbacks in public medical care programs are often assumed to reflect the conservative ideology of the Reagan Administration, but may in fact reflect the slowed growth of real income and the continuing rise in medical care prices. Moreover, the reductions in Medicaid may well be greater than in Medicare because of the greater secondary benefits of the latter (benefits to spouses and children). The concept of secondary benefits may also explain why old-age pensions are difficult to reduce, but long-term care is widely perceived as not well supported.

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