THE DOUBLE WHAMMY OF HIGH HEALTH CARE PRICES

President Bill Clinton has declared health care reform the number one domestic political objective of his administration. He has illustrated his determination to pass comprehensive health care legislation in the United States by appointing his number one political ally, First Lady Hillary Clinton, to spearhead the health care reform effort. INFORUM staffers, in particular Ralph Monaco and Jeff Janoska, have been working on health care too-- they have enhanced the LIFT model in order to better simulate the economic effects of health care reform. The Health Care Financing Administration, the federal agency in charge of overseeing government health care programs, has been one of the heaviest users of the model in recent years. This paper and my presentation should serve three purposes: · summarize our recent work on modeling changes in the health care system; · provide a brief introduction to the health care debate in the United States; and · illustrate the interaction of health care prices and the social insurance funds in the United States (and in LIFT). INFORUM’S Recent Work on Health Care Modeling Ralph Monaco and Jeff Janoska have been busy enhancing and using LIFT for health care modeling. Their work has been largely done with the generous support of the Health Care Financing Administration. Recent INFORUM publications on the issue are listed in the bibliography. INFORUM Working Papers are available from the EconData site on the Internet. In the Spring, LIFT was expanded to include more health care sectors. "Follow " fixes have been added to LIFT to allow individual product prices or components of value added to grow with either overall prices, the GNP deflator, nominal labor compensation per employee, or nominal GNP. The treatment of social insurance contributions by both employers and employees has been revised. Many thanks to my patient INFORUM colleagues, and especially to Ralph Monaco, who deserves almost all of the credit and none of the blame for this work