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An International Look at the Medical Care Financing Problem

An International Look at the Medical Care Financing Problem

Chapter:
(p.69) 3 An International Look at the Medical Care Financing Problem
Source:
Health Care Issues in the United States and Japan
Author(s):
David M. Cutler
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226903248.003.0004

This chapter emphasizes that, as populations age and medical spending rises, medical systems will account for an increasing part of economic activity. It is noted that demographic change will present a financing hurdle for all developed countries. It is also assumed that medical costs increase at all ages by 1 percent per year above the rate of per capita gross domestic product (GDP) growth. Continued increases in costs result in disproportionately large increases in the size of the medical sector. There are three possible ways to pay for the coming medical care burden: firstly, increase revenues from people currently alive to pay for medical care in the future; secondly, wait until the future and then tax working generations to pay for the increased medical care burden that future elderly will incur; and, finally, make people pay more for medical care when they use services, especially at older ages.

Keywords:   medical spending, populations age, medical systems, financing, medical costs, gross domestic product, medical care, tax

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