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The Effects of Medicaid and Medicare Reforms on the Elderly’s Savings and Medical Expenditures

Author Info

  • Mariacristina De Nardi

    (Federal Reserve Bank of Chicago and NBER)

  • Eric French

    (Federal Reserve Bank of Chicago)

  • John Bailey Jones

    (University at Albany, SUNY)

Abstract

We study a model in which retired single people optimally choose consumption, medical spending and saving while facing uncertainty about their health, lifespan and medical needs. This uncertainty is partially offset by insurance provided by the government and private institutions. We first show how well the model matches important features of the data and we analyze the degree of insurance provided by current programs. We then analyze the effects of some reforms, meant to capture changes in Medicaid and Medicare, on savings and medical expenditures.

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File URL: http://www.mrrc.isr.umich.edu/publications/Papers/pdf/wp236.pdf
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Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp236.

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Length: 30 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:mrr:papers:wp236
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  1. David Card & Carlos Dobkin & Nicole Maestas, 2009. "Does Medicare Save Lives?," The Quarterly Journal of Economics, MIT Press, vol. 124(2), pages 597-636, May.
  2. Kopecky, Karen A. & Koreshkova, Tatyana, 2009. "The Impact of Medical and Nursing Home Expenses and Social Insurance Policies on Savings and Inequality," MPRA Paper 16197, University Library of Munich, Germany.
  3. Susann Rohwedder & Steven J. Haider & Michael D. Hurd, 2006. "INCREASES IN WEALTH AMONG THE ELDERLY IN THE EARLY 1990s: HOW MUCH IS DUE TO SURVEY DESIGN?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(4), pages 509-524, December.
  4. Raquel Fonseca & Pierre-Carl Michaud & Titus Galama & Arie Kapteyn, 2009. "On the Rise of Health Spending and Longevity," Working Papers 722, RAND Corporation Publications Department.
  5. Eric French & John Bailey Jones, 2004. "On the distribution and dynamics of health care costs," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 705-721.
  6. Jeffrey R. Brown & Amy Finkelstein, 2008. "The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market," American Economic Review, American Economic Association, vol. 98(3), pages 1083-1102, June.
  7. Khwaja, Ahmed, 2010. "Estimating willingness to pay for medicare using a dynamic life-cycle model of demand for health insurance," Journal of Econometrics, Elsevier, vol. 156(1), pages 130-147, May.
  8. Karen A. Kopecky & Tatyana Koreshkova, 2010. "The impact of medical and nursing home expenses and social insurance," Working Paper 2010-19, Federal Reserve Bank of Atlanta.
  9. John Karl Scholz & Ananth Seshadri & Surachai Khitatrakun, 2006. "Are Americans Saving "Optimally" for Retirement?," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 607-643, August.
  10. Mariacristina De Nardi & Eric French & John B. Jones, 2010. "Why Do the Elderly Save? The Role of Medical Expenses," Journal of Political Economy, University of Chicago Press, vol. 118(1), pages 39-75, 02.
  11. Amy Finkelstein & Robin McKnight, 2005. "What Did Medicare Do (And Was It Worth It)?," NBER Working Papers 11609, National Bureau of Economic Research, Inc.
  12. Motohiro Yogo, 2009. "Portfolio Choice in Retirement: Health Risk and the Demand for Annuities, Housing and Risky Assets," Working Papers, Center for Retirement Research at Boston College wp2009-3, Center for Retirement Research, revised Jan 2009.
  13. Mariacristina De Nardi & Eric French & John Bailey Jones, 2009. "Life expectancy and old age savings," Working Paper Series WP-08-18, Federal Reserve Bank of Chicago.
  14. Zhigang Feng, 2009. "Macroeconomic Consequences of Alternative Reforms to the Health Insurance System in the U.S," Working Papers 0908, University of Miami, Department of Economics.
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