Cost Control in the Age of Health-Care Reform

The U.S. is spending approximately $800 billion a year on health-care. To combat the rising increase in expenditures, the President has proposed a plan of "pay or play." The plan is based on the theory of "managed competition." The goal of the theory to "foster the purchase of thrifty health plans ... " The plan would require all employers to provide health insurance to their full time employees or to pay a portion of the cost of obtaining coverage for workers and their dependents through newly created purchasing pools. The President will also appoint a National Health Board to set an annual "global" budget governing health expenditures and devise a standard health-care package that all insurers will be required to provide. Even though employers will be required to insure their full-time employees, there are ways that they could reduce their health-care expenditures. They could be more selective and hire healthy employees, start a preventive medicine program, and/or implement an early retirement program. Employers could increase their product prices to cover the expenditures. They could also reduce the amount of full-time individuals. Employers could pick inexpensive insurance programs or help their employees become more aggressive and knowledgeable purchasers of medical services. In addition, they could start an incentive program to reward individuals who stayed healthy.B.A. (Bachelor of Arts