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The Economists' Voice 2.0The Financial Crisis, Health Care Reform, and More$
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Joseph Stiglitz and Aaron Edlin

Print publication date: 2014

Print ISBN-13: 9780231160155

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231160155.001.0001

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How Stable Are Insurance Subsidies in Health Reform?

How Stable Are Insurance Subsidies in Health Reform?

(p.46) Chapter 6 How Stable Are Insurance Subsidies in Health Reform?
The Economists' Voice 2.0

Mark V. Pauly

Columbia University Press

This chapter addresses the question of whether key features of health reform dealing with subsidies aimed at reducing the number of uninsured people are likely to represent a stable political equilibrium. It argues that the high cost of Medicare, along with other aspects of the U.S. federal budgetary problem, means that, when large subsidies for the uninsured are due to begin, taxpayers will be facing high and rising marginal tax rates to pay for Medicare and Social Security. Had they already determined that the current level of subsidies was worth the higher cost they will pay, the program embodying those subsidies should be politically stable. But if instead they come to realize how much this generous program is costing them, they may ask for better evidence on the benefits from it and, if the evidence is lacking, cut back on the program in order to hold down their overall federal taxes.

Keywords:   health care reform, health care policy, health insurance subsidies, uninsured, stability, Medicare

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