IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/2579.html

Medical Spending Risk among Older Households by Race

Author

Listed:
  • Arapakis, K.
  • French, E.
  • Jones, J. B.
  • McCauley, J.

Abstract

We document racial differences in total and out-of-pocket medical expenditures, using data from the Health and Retirement Study linked to Medicare and Medicaid records. While White, Black, and Hispanic households have similar total annual medical expenditures, minorities, who have fewer financial resources, benefit from higher Medicaid recipiency and face lower out-of-pocket spending. At age 65, White, Black, and Hispanic households incur on average $136,000, $59,000, and $68,000, respectively, in out-of-pocket medical spending over the remainders of their lives. We use our model to evaluate a policy reform that expands public nursing home insurance. Given that White households currently pay the most out-ofpocket, they have the most to gain from the reform. In the absence of a highly redistributive funding scheme, this reform will on average redistribute financial resources from minorities to White households, illustrating how expanding public insurance can have unintended distributional consequences.

Suggested Citation

  • Arapakis, K. & French, E. & Jones, J. B. & McCauley, J., 2025. "Medical Spending Risk among Older Households by Race," Cambridge Working Papers in Economics 2579, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:2579
    as

    Download full text from publisher

    File URL: https://www.econ.cam.ac.uk/sites/default/files/publication-cwpe-pdfs/cwpe2579.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ellora Derenoncourt & Chi Hyun Kim & Moritz Kuhn & Moritz Schularick, 2024. "Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860–2020," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(2), pages 693-750.
    2. Eric French & John Bailey Jones & Rory McGee, 2023. "Why Do Retired Households Draw Down Their Wealth So Slowly?," Journal of Economic Perspectives, American Economic Association, vol. 37(4), pages 91-114, Fall.
    3. Richard Blundell & Jack Britton & Monica Costa Dias & Eric French, 2023. "The Impact of Health on Labor Supply near Retirement," Journal of Human Resources, University of Wisconsin Press, vol. 58(1), pages 282-334.
    4. Karlsson, Martin & Wang, Yulong & Ziebarth, Nicolas R., 2024. "Getting the right tail right: Modeling tails of health expenditure distributions," Journal of Health Economics, Elsevier, vol. 97(C).
    5. Arellano, Manuel & Blundell, Richard & Bonhomme, Stéphane & Light, Jack, 2024. "Heterogeneity of consumption responses to income shocks in the presence of nonlinear persistence," Journal of Econometrics, Elsevier, vol. 240(2).
    6. Blundell, Richard & Britton, Jack & Dias, Monica Costa & French, Eric & Zou, Weijian, 2026. "The dynamic effects of health on the employment of older workers: Impacts by gender, country, and race," The Journal of the Economics of Ageing, Elsevier, vol. 34(C).
    7. Patrick Bayer & Kerwin Kofi Charles, 2018. "Divergent Paths: A New Perspective on Earnings Differences Between Black and White Men Since 1940," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1459-1501.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ikawa, Jorge & Martins, Clarice & C. Sant’Anna, Pedro & Santarrosa, Rogerio, 2026. "Elections that inspire: Effects of Black mayors on educational attainment," Journal of Public Economics, Elsevier, vol. 257(C).
    2. Karger, Ezra & Wray, Anthony, 2024. "The Black–white lifetime earnings gap," Explorations in Economic History, Elsevier, vol. 94(C).
    3. Diego Ascarza-Mendoza & Christian Velasquez, 2025. "On the Dynamics of Mental Health," Working Papers 2025-010, Banco Central de Reserva del Perú.
    4. İmrohoroğlu, Ayşe & Kumru, Çağrı S. & Lian, Jiu, 2026. "Racial disparities in crime and wealth," Journal of Monetary Economics, Elsevier, vol. 160(C).
    5. Nicolò Russo & Rory McGee & Mariacristina De Nardi & Margherita Borella & Ross Abram, 2024. "Midlife Health and Later Life Economic Inequality," NBER Working Papers 32971, National Bureau of Economic Research, Inc.
    6. Ellora Derenoncourt & Chi Hyun Kim & Moritz Kuhn & Moritz Schularick, 2023. "Unemployment Risk, Portfolio Choice, and the Racial Wealth Gap," Working Papers 332, Princeton University, Department of Economics, Center for Economic Policy Studies..
    7. Léo Czajka & Amory Gethin, 2025. "Racial Inequality and Redistribution in Post-Apartheid South Africa," Working Papers 040, EU Tax Observatory.
    8. Blundell, Richard & Britton, Jack & Dias, Monica Costa & French, Eric & Zou, Weijian, 2026. "The dynamic effects of health on the employment of older workers: Impacts by gender, country, and race," The Journal of the Economics of Ageing, Elsevier, vol. 34(C).
    9. Tan, Eugene & Zeida, Teegawende H., 2024. "Consumer demand and credit supply as barriers to growth for Black-owned startups," Journal of Monetary Economics, Elsevier, vol. 143(C).
    10. Dang, Thang, 2025. "Long-lasting consequences of being targeted," World Development, Elsevier, vol. 195(C).
    11. Doerrenberg, Philipp & Duncan, Denvil & Li, Danyang, 2024. "The (in)visible hand: Do workers discriminate against employers?," Journal of Public Economics, Elsevier, vol. 231(C).
    12. Pashchenko, Svetlana & Porapakkarm, Ponpoje, 2020. "Saving Motives over the Life-Cycle," MPRA Paper 100208, University Library of Munich, Germany.
    13. Kelley Sarussi & Thomas Walstrum, 2019. "Education and the Evolution of Earnings Across Population Groups Since 2000," Profitwise, Federal Reserve Bank of Chicago, issue 5, pages 1-13.
    14. Andrew G. Sutherland & Matthias Uckert & Felix W. Vetter, 2024. "Occupational Licensing and Minority Participation in Professional Labor Markets," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 62(2), pages 453-503, May.
    15. Paul R. Flora, 2021. "Regional Spotlight: Labor Market Disparities," Regional Spotlight, Federal Reserve Bank of Philadelphia, vol. 6(2), pages 18-23, July.
    16. Julie L. Hotchkiss & Robert E. Moore, 2022. "Some Like it Hot: Assessing Longer-Term Labor Market Benefits from a High-Pressure Economy," International Journal of Central Banking, International Journal of Central Banking, vol. 18(2), pages 193-243, June.
    17. Hero Ashman & Seth Neumuller, 2020. "Can Income Differences Explain the Racial Wealth Gap: A Quantitative Analysis," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 35, pages 220-239, January.
    18. LaVoice, Jessica & Vamossy, Domonkos F., 2024. "Racial disparities in debt collection," Journal of Banking & Finance, Elsevier, vol. 164(C).
    19. Jansen Andreas, 2026. "Some are Hit Hard, for Others It’s Business as Usual: The Effects of Chronic Illnesses on Employment and Income Trajectories," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 246(1-2), pages 51-82.
    20. Nathan Wilmers & Letian Zhang, 2022. "Values and Inequality: Prosocial Jobs and the College Wage Premium," American Sociological Review, , vol. 87(3), pages 415-442, June.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G52 - Financial Economics - - Household Finance - - - Insurance
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:cam:camdae:2579. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jake Dyer (email available below). General contact details of provider: https://www.econ.cam.ac.uk/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.