Who Gains from Public Health Programs?

Abstract

Analysis of the economic impacts arising from the introduction of Medicare and Medicaid into federal and state budgets leads one to question the actual magnitude of gains which recipients can expect to obtain from new funding in the health area. A modified cost-benefit analysis of Medicare/ Medicaid income effects on program recipients, non-recipients, and physicians from 1966 to 1968 shows that scarcely 56 per cent of the $14.8 billion spent on the two programs represented gains to recipients. Over the same period, physicians received average net gains of between $5,400 and $7,400 over what would have been the case in the absence of both programs. The implications of these findings apply as much to the several proposals for national health insurance as they do to Medicaid and Medicare. It can be shown that the President's health in surance plan, among others, would result in a similar if not larger unintended allocation of public funds. This raises seri ous questions of equity in the development of national health policy.