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Social security and the rise in health spending

Listed author(s):
  • Zhao, Kai
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In a quantitative model of Social Security with endogenous health, I argue that Social Security increases the aggregate health spending of the economy because it redistributes resources to the elderly whose marginal propensity to spend on health is high. I show by using computational experiments that the expansion of US Social Security can account for over a third of the dramatic rise in US health spending from 1950 to 2000. In addition, Social Security has a spill-over effect on Medicare. As Social Security increases health spending, it also increases the payments from Medicare, thus raising its financial burden.

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File URL: http://www.sciencedirect.com/science/article/pii/S0304393214000348
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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 64 (2014)
Issue (Month): C ()
Pages: 21-37

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Handle: RePEc:eee:moneco:v:64:y:2014:i:c:p:21-37
DOI: 10.1016/j.jmoneco.2014.02.005
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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  28. repec:reg:rpubli:282 is not listed on IDEAS
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