The Medicare program is now an important source of transfers to elderly and disabled beneficiaries, and will continue to grow rapidly in the future. Because the Medicare program is so large in magnitude, it can have significant redistributional effects. In this paper, we measure the flow of Medicare benefits to high-income and low-income neighborhoods in 1990 and 1995. We find that Medicare spending per capita for the lowest income groups grew much more rapidly than Medicare spending in either high income or middle income neighborhoods. Home health care spending played an important role in the increased spending among the lowest income neighborhoods. To our knowledge, this differential shift in spending has not been documented, yet it exceeds in magnitude the entire per capita transfer from the Earned Income Tax Credit (EITC) and is half of the average transfers to the elderly poor from Supplemental Security Income (SSI). Recent cutbacks in home health care benefits may undo some of this change. Still, this example illustrates how specific technical changes in Medicare policy can have redistributional effects comparable to major and much more visible expenditure and tax policies.
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Length: Date of creation: Jan 1999 Date of revision: Publication status: published relationship to a non-chapter. This should not happen. Please contact NBER. Handle: RePEc:nbr:nberwo:6910
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Chapter
Julie Lee & Mark McClellan & Jonathan Skinner, 1999.
"The Distributional Effects of Medicare,"
NBER Chapters,
in: Tax Policy and the Economy, volume 13, pages 85-108
National Bureau of Economic Research, Inc.
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Find related papers by JEL classification: H5 - Public Economics - - National Government Expenditures and Related Policies I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
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Mark McClellan & Jonathan Skinner, 1997.
"The Incidence of Medicare,"
NBER Working Papers
6013, National Bureau of Economic Research, Inc.
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