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Public Policy and Health Care Choices of the Elderly: Evidence from the Medicare Buy-In Program

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  • Aaron Yelowitz

    (UCLA & NBER)

Abstract

This study provides evidence on the economic decisions of senior citizens with respect to the largest means-tested program in the United States: the Medicaid program. Virtually all senior citizens have health insurance coverage through Medicare, but poor seniors may also be eligible for Medicaid, which fills in many of the gaps in Medicare coverage. Since 1987, the Medicaid program has undergone a series of changes relating to eligibility. In particular, two new categories of elderly Medicaid recipients, known as Qualified Medicare Beneficiaries (QMBs) and Specified Low-Income Medicare Beneficiaries (SLMBs), were created. This study uses the Survey of Income and Program Participation to explore three issues relating to the expansions. First, how much did the QMB expansions increase Medicaid eligibility? Second, how did increases in Medicaid eligibility affect supplemental insurance coverage? Finally, does increased Medicaid coverage translate into increased health care utilization? There are five principal findings. First, actual Medicaid eligibility increased dramatically, from 8 percent in 1987 to 12.5 percent in 1995. Second, the expansions for the elderly resulted in dramatically higher Medicaid take-up rates than similar expansions for children. For every 100 elderly who became eligible, 49 took it up. Nearly 30 out of 100 elderly dropped private coverage, however, resulting in crowd out of 60 percent. Third, crowd out was concentrated among the youngest of senior citizens. Fourth, crowd out came from individuals dropping privately purchased health insurance rather than dropping employer-provided retiree health insurance. Finally, Medicaid coverage increased the number of hospitalizations, though the findings on health care utilization are generally inconclusive.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by UCLA Department of Economics in its series UCLA Economics Working Papers with number 773.

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Date of creation: 01 Sep 1997
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Handle: RePEc:cla:uclawp:773

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Web page: http://www.econ.ucla.edu/

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References

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  1. Janet Currie & Jonathan Gruber, 1995. "Health Insurance Eligibility, Utilization of Medical care, and Child Health," NBER Working Papers 5052, National Bureau of Economic Research, Inc.
  2. Janet Currie, 1995. "Do Children of Immigrants Make Differential Use of Public Health Insurance?," NBER Working Papers 5388, National Bureau of Economic Research, Inc.
  3. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June.
  4. David M. Cutler & Jonathan Gruber, 1995. "Does Public Insurance Crowd Out Private Insurance?," NBER Working Papers 5082, National Bureau of Economic Research, Inc.
  5. Currie, Janet & Gruber, Jonathan, 1996. "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1263-96, December.
  6. Rebecca Blank & David Card & Whitney Newey, 1988. "Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?," Working Papers 623, Princeton University, Department of Economics, Industrial Relations Section..
  7. Aaron Yelowitz, 1996. "Using the Medicare Buy-In Program to Estimate the Effect of Medicaid on SSI - Participation," UCLA Economics Working Papers 753, UCLA Department of Economics.
  8. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
  9. Pauly, Mark V, 1986. "Taxation, Health Insurance, and Market Failure in the Medical Economy," Journal of Economic Literature, American Economic Association, vol. 24(2), pages 629-75, June.
  10. Cutler, David M & Gruber, Jonathan, 1996. "The Effect of Medicaid Expansions on Public Insurance, Private Insurance, and Redistribution," American Economic Review, American Economic Association, vol. 86(2), pages 378-83, May.
  11. Shore-Sheppard Lara D., 2008. "Stemming the Tide? The Effect of Expanding Medicaid Eligibility On Health Insurance Coverage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(2), pages 1-35, July.
  12. Lara D. Shore-Sheppard, 2005. "Stemming the Tide? The Effect of Expanding Medicaid Eligibility on Health Insurance," NBER Working Papers 11091, National Bureau of Economic Research, Inc.
  13. repec:fth:prinin:361 is not listed on IDEAS
  14. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  15. James J. Heckman & Thomas E. MaCurdy, 1985. "A Simultaneous Equations Linear Probability Model," Canadian Journal of Economics, Canadian Economics Association, vol. 18(1), pages 28-37, February.
  16. Kathleen McGarry, 1996. "Factors Determining Participation of the Elderly in Supplemental Security Income," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 331-358.
  17. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
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Cited by:
  1. Jonathan Gruber, 2000. "Medicaid," NBER Working Papers 7829, National Bureau of Economic Research, Inc.
    • Jonathan Gruber, 2003. "Medicaid," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 15-78 National Bureau of Economic Research, Inc.

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