A Tax on Work for the Elderly: Medicare as a Secondary Payer
AbstractMedicare as a Secondary Payer (MSP) legislation requires employer-sponsored health insurance to be a primary payer for Medicare-eligible workers at firms with 20 or more employees. While the legislation was developed to better target Medicare services to individuals without access to employer-sponsored insurance, MSP creates a significant implicit tax on working beyond age 65. This implicit tax is approximately 15-20 percent at age 65 and increases to 45-70 percent by age 80. Eliminating this implicit tax by making Medicare a primary payer for all Medicare-eligible individuals could significantly increase lifetime labor supply due to the high labor supply elasticities of older workers. The extra income tax receipts from such a policy would likely offset a large percentage of the estimated costs of making Medicare a primary payer.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13383.
Date of creation: Sep 2007
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Other versions of this item:
- Gopi Shah Goda & John Shoven & Sita Slavov, 2009. "A Tax On Work For The Elderly: Medicare As A Secondary Payer," Discussion Papers 08-60, Stanford Institute for Economic Policy Research.
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
This paper has been announced in the following NEP Reports:
- NEP-AGE-2007-09-09 (Economics of Ageing)
- NEP-ALL-2007-09-09 (All new papers)
- NEP-HEA-2007-09-09 (Health Economics)
- NEP-IAS-2007-09-09 (Insurance Economics)
- NEP-LAB-2007-09-09 (Labour Economics)
- NEP-PUB-2007-09-09 (Public Finance)
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