Study Finds Solution to Deficit Woes Through Buying Into Foreign Health Programs

For Immediate Release: March 2004

Contact: Debi Kar, 202-387-5080

A new study from the Center for Economic and Policy Research (CEPR), "Medicare Choice Plus, the Answer to the Long-Term Deficit Problem " by economist and Co-Director Dr. Dean Baker, shows that the federal government would realize enormous savings by allowing Medicare recipients the choice to buy into foreign health care programs.

This approach offers a potential long-term solution to the projected rise in the federal budget deficit, which is largely attributable to projected increases in U.S. health care costs. Medicare Choice Plus is a market-oriented program that would take advantage of international trade to substantially reduce the rate of growth of health care costs.

The United States health care system is by far the most expensive in the world. Medicare Choice Plus would allow seniors to buy into the more efficient health care programs of countries with longer life expectancies than the United States. The savings would be split between the U.S. government, the Medicare beneficiaries, and foreign governments. The latter would be allowed to charge a premium in addition to the normal cost for providing health care to seniors, in order to provide an incentive to allow U.S. seniors into their systems.

Medicare Choice Plus would save the federal government about $2,000 per enrolled Medicare recipient in 2006. If half of all seniors opted to take advantage of the vouchers, the annual savings to the government would be nearly $100 billion a year in 2020.