A proposal for financing health care of the elderly

The American Medical Association House of Delegates has adopted a proposal for financing health care of the elderly, developed by the Board of Trustees, the Council on Medical Service, and the Council on Legislation. The proposal would replace the present Medicare program with a system of vouchers to older persons to purchase private health insurance policies or plans providing specified adequate benefits including catastrophic coverage. Vouchers would be financed by a new tax on adjusted gross income during working years that would replace the present employee health insurance payroll tax, and by continuation of the employer health insurance payroll tax. Tax rates would be at a level sufficient both to meet obligations to current Medicare beneficiaries and, over a 30-year period, to achieve prefunding of benefits. All tax contributions after that date would be preserved for the future use of those taxed, and could be invested during earning years, rather than being paid out immediately for present beneficiaries. The proposal would place health care for the elderly on a fiscally sound basis, provide increased cost sharing for those who are financially well off, and provide the protection against catastrophic health care expense lacking under the current Medicare program.