The Defined Contribution Route to Health Care Choice and Competition

“The coauthors argue that a more sustainable, marketbased, and patient-centered version of health reform must instead convert existing defined benefit promises into ‘defined contributions’ that individuals and their families then can use to enroll in coverage arrangements of their choice. Capretta and Miller recommend that Medicare subsidies should no longer hide the true cost of promised benefits but provide beneficiaries incentives to obtain the most value for them. They find that a move to replace both traditional Medicaid assistance and the tax preference for ESI with defined contribution payments would open up new possibilities for explicit and beneficial coordination between the Medicaid program and the coverage normally offered to working-age Americans.”