IDEAS home Printed from https://ideas.repec.org/a/aea/aejmac/v6y2014i3p29-72.html
   My bibliography  Save this article

The Impact of Medical and Nursing Home Expenses on Savings

Author

Listed:
  • Karen A. Kopecky
  • Tatyana Koreshkova

Abstract

We consider a life-cycle model with idiosyncratic risk in earnings, out-of-pocket medical and nursing home expenses, and survival. Partial insurance is available through welfare, Medicaid, and social security. Calibrating the model to the United States we show that savings for old-age, out-of-pocket expenses account for 13.5 per- cent of aggregate wealth, half of which is due to nursing home expenses; cross-sectional out-of-pocket nursing home risk accounts for 3 percent of aggregate wealth and substantially slows down wealth decumulation at older ages; and all newborns would benefit if social insurance for nursing home stays was made more generous.

Suggested Citation

  • Karen A. Kopecky & Tatyana Koreshkova, 2014. "The Impact of Medical and Nursing Home Expenses on Savings," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(3), pages 29-72, July.
  • Handle: RePEc:aea:aejmac:v:6:y:2014:i:3:p:29-72
    Note: DOI: 10.1257/mac.6.3.29
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mac.6.3.29
    Download Restriction: no

    File URL: http://www.aeaweb.org/aej/mac/app/0603/2013-0006_app.pdf
    Download Restriction: no

    File URL: http://www.aeaweb.org/aej/mac/data/0603/2013-0006_data.zip
    Download Restriction: no

    File URL: http://www.aeaweb.org/aej/mac/ds/0603/2013-0006_ds.zip
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guner, Nezih & Kulikova, Yuliya & Llull, Joan, 2018. "Marriage and health: Selection, protection, and assortative mating," European Economic Review, Elsevier, vol. 104(C), pages 138-166.
    2. Chiara Canta & Pierre Pestieau & Emmanuel Thibault, 2016. "Long-term care and capital accumulation: the impact of the State, the market and the family," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 61(4), pages 755-785, April.
    3. Capatina, Elena, 2015. "Life-cycle effects of health risk," Journal of Monetary Economics, Elsevier, vol. 74(C), pages 67-88.
    4. repec:eee:jeborg:v:154:y:2018:i:c:p:156-174 is not listed on IDEAS
    5. Wouterse, B.; & Hussem, A.; & Wong, A.;, 2018. "The effect of co-payments in Long Term Care on the distribution of payments,consumption, and risk," Health, Econometrics and Data Group (HEDG) Working Papers 18/24, HEDG, c/o Department of Economics, University of York.
    6. Kitao, Sagiri, 2014. "A life-cycle model of unemployment and disability insurance," Journal of Monetary Economics, Elsevier, vol. 68(C), pages 1-18.
    7. Asako OHINATA & Matteo PICCHIO, 2015. "The Financial Support for Long-Term Elderly Care and Household Savings Behaviour," Working Papers 411, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    8. repec:eee:eecrev:v:109:y:2018:i:c:p:162-190 is not listed on IDEAS
    9. repec:eee:dyncon:v:79:y:2017:i:c:p:126-153 is not listed on IDEAS
    10. Niimi, Yoko & Horioka, Charles Yuji, 2018. "The Wealth Decumulation Behavior of the Retired Elderly in Japan:The Relative Importance of Precautionary Saving and Bequest Motives," AGI Working Paper Series 2018-08, Asian Growth Research Institute.
    11. Ferreira, Pedro Cavalcanti & Gomes, Diego B.P., 2017. "Health care reform or more affordable health care?," Journal of Economic Dynamics and Control, Elsevier, vol. 79(C), pages 126-153.
    12. Thomas F. Crossley & Cormac O'Dea & Richard Blundell & Rowena Crawford & Eric French & Gemma Tetlow, 2016. "Comparing Retirement Wealth Trajectories on Both Sides of the Pond," Fiscal Studies, Institute for Fiscal Studies, vol. 37, pages 105-130, March.
    13. Jones, John Bailey & Li, Yue, 2017. "The Effects of Collecting Income Taxes on Social Security Benefits," Working Paper 17-2, Federal Reserve Bank of Richmond.
    14. Zhao, Kai, 2017. "Social insurance, private health insurance and individual welfare," Journal of Economic Dynamics and Control, Elsevier, vol. 78(C), pages 102-117.
    15. John Ameriks & Joseph Briggs & Andrew Caplin & Matthew D. Shapiro & Christopher Tonetti, 2016. "The Long-Term-Care Insurance Puzzle: Modeling and Measurement," NBER Working Papers 22726, National Bureau of Economic Research, Inc.
    16. repec:aea:aejmac:v:10:y:2018:i:3:p:71-117 is not listed on IDEAS
    17. repec:uwp:jhriss:v:52:y:2017:i:2:p:531-572 is not listed on IDEAS
    18. Lugilde, Alba & Bande, Roberto & Riveiro, Dolores, 2017. "Precautionary Saving: a review of the theory and the evidence," MPRA Paper 77511, University Library of Munich, Germany.
    19. Braun, R. Anton & Joines, Douglas H., 2015. "The implications of a graying Japan for government policy," Journal of Economic Dynamics and Control, Elsevier, vol. 57(C), pages 1-23.
    20. Hofmann, Maurice & Fehr, Hans, 2018. "Tenure Choice, Portfolio Structure and Long-term Care - Optimal Risk Management in Retirement," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181517, Verein für Socialpolitik / German Economic Association.
    21. repec:eee:hapoch:v1_179 is not listed on IDEAS
    22. repec:eee:pubeco:v:159:y:2018:i:c:p:128-145 is not listed on IDEAS
    23. Huang, Sean Shenghsiu & Hirth, Richard A., 2016. "Quality rating and private-prices: Evidence from the nursing home industry," Journal of Health Economics, Elsevier, vol. 50(C), pages 59-70.

    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. The Impact of Medical and Nursing Home Expenses on Savings (AEJ:MA 2014) in ReplicationWiki

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejmac:v:6:y:2014:i:3:p:29-72. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael P. Albert). General contact details of provider: http://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.