Cato Policy Analysis No. 62 October 31, 1985

Policy Analysis

Averting the Medicare Crisis:
Health IRAs

by Peter J. Ferrara

Peter J. Ferrara, a Washington attorney, is author of Social Security: The Inherent Contradiction and editor of Social Secu- rity: Prospects for Real Reform, both published by the Cato Institute.


Executive Summary

Medicare is in shambles. Official government reports in- dicate that Medicare faces overwhelming long-term financial problems. Recent attempts to control costs through centralized government regulations and controls have led to a deterioration in the quality of care the program provides the elderly. The program is poorly structured for serving both young and old. Now is the time to begin making fundamental reforms to avert looming financial disaster and eliminate the program's other serious problems.

Four innovative congressmen have taken the lead in propos- ing legislation that would do precisely that in a positive, constructive way. Reps. French Slaughter (R-Va.), Philip Crane (R-Ill.), Mark Siljander (R-Mich.), and David Dreier (R-Calif.) have introduced legislation providing for Health IRAs. Through this legislation, the long-term Medicare financing problem can be solved without benefit cuts for the elderly or payroll tax increases for workers.

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