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Medicare Gaps and Widow Poverty

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  • Kathleen McGarry

    (University of California, Los Angeles and NBER)

  • Robert F. Schoeni

    (University of Michigan)

Abstract

Several categories of medical expenditures are not covered by Medicare, including prescription drugs, most nursing home stays, and extended hospital visits. Out-of-pocket costs for these items can be substantial, and what’s more, they are likely to be concentrated at the end of life. At the same time, it is well documented that poverty is 3-4 times more common among widows than among similarly aged married women. This study examines the potential link between these two phenomena, asking the question: to what extent do out-of-pocket health care costs of a dying spouse affect the financial position of the survivor? We find that out-of-pocket medical spending increases substantially just prior to death, and that these expenditures are large relative to income for a large share of elderly couples. Simulations investigate the extent to which expansions in insurance coverage to include nursing home care or prescription drug coverage could improve the financial well-being of the surviving spouse.

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Bibliographic Info

Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp065.

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Length: 34 pages
Date of creation: Dec 2003
Date of revision:
Handle: RePEc:mrr:papers:wp065

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  1. Richard V. Burkhauser & Timothy M. Smeeding, 1994. "Social Security Reform: A Budget Neutral Approach to Reducing Older Women's Disproportional Risk of Poverty," Center for Policy Research Policy Briefs 2, Center for Policy Research, Maxwell School, Syracuse University.
  2. Hurd, Michael D. & McGarry, Kathleen, 1997. "Medical insurance and the use of health care services by the elderly," Journal of Health Economics, Elsevier, vol. 16(2), pages 129-154, April.
  3. Amy Finkelstein & Kathleen McGarry, 2003. "Private Information and its Effect on Market Equilibrium: New Evidence from Long-Term Care Insurance," NBER Working Papers 9957, National Bureau of Economic Research, Inc.
  4. Hurd, Michael D, 1990. "Research on the Elderly: Economic Status, Retirement, and Consumption and Saving," Journal of Economic Literature, American Economic Association, vol. 28(2), pages 565-637, June.
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Cited by:
  1. Lois B. Shaw, 2006. "Differing Prospects For Women and Men: Young Old-Age, Old Old-Age, and Elder Care," Economics Working Paper Archive wp_464, Levy Economics Institute, The.
  2. Bruck, Tilman & Schindler, Kati, 2008. "The Impact of Conflict and Fragility on Households: A Conceptual Framework with Reference to Widows," Working Papers RP2008/83, World Institute for Development Economic Research (UNU-WIDER).

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