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Authors

Brooks E. Allen

Abstract

Faced with an impending Medicare "crisis," scholars and policymakers have advanced a variety of proposals for reforming the program. This Note critically examines one proposed solution that draws on an established technique of health policy and insurance-beneficiary cost-sharing-to reduce expenditures in the rapidly-growing Medicare home health program. Recognizing that cost-sharing mechanisms might generate some savings, the author ultimately rejects these proposed remedies in light of their inequitable consequences and practical /imitations. This Note proceeds by establishing a normative framework for assessing cost-sharing proposals. The author then evaluates the normative implications of an array of cost-sharing mechanisms, taking into account the unique demographic and usage characteristics of the beneficiary population. Drawing on empirical research into the effects of cost-sharing on such variables as income and health status, this Note explores the demand response of beneficiaries. The author concludes that cost-sharing likely would be either ineffective or inequitable. In contrast, alternative reform proposals are likely to generate cost-savings without the normative limitations of beneficiary cost-sharing. This Note urges the abandonment of attempts to extend cost-sharing to the home health benefit, and calls for a further exploration of alternative methods to assume the program 's long-term solvency.

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