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The Effects of Medicare on Medical Expenditure Risk and Financial Strain

Author

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  • Silvia H. Barcellos
  • Mireille Jacobson

Abstract

We estimate the current impact of Medicare on medical expenditure risk and financial strain. At age 65, out-of-pocket expenditures drop by 33% at the mean and 53% among the top 5% of spenders. The fraction of the population with out- of-pocket medical expenditures above income drops by more than half. Medical- related financial strain, such as problems paying bills, is dramatically reduced. Using a stylized expected utility framework, the gain from reducing out-of-pocket expenditures alone accounts for 18% of the social costs of financing Medicare. This calculation ignores the benefits of reduced financial strain and direct health improvements due to Medicare.

Suggested Citation

  • Silvia H. Barcellos & Mireille Jacobson, 2014. "The Effects of Medicare on Medical Expenditure Risk and Financial Strain," NBER Working Papers 19954, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19954
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    References listed on IDEAS

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    Cited by:

    1. Marco Angrisani & Vincenzo Atella & Marianna Brunetti, 2016. "Public Health Insurance and Household Portfolio Choices: Unraveling Financial “Side Effects” of Medicare," CEIS Research Paper 382, Tor Vergata University, CEIS, revised 07 Feb 2017.
    2. Witman, Allison, 2015. "Public health insurance and disparate eligibility of spouses: The Medicare eligibility gap," Journal of Health Economics, Elsevier, vol. 40(C), pages 10-25.
    3. Christelis, Dimitris & Georgarakos, Dimitris & Sanz-de-Galdeano, Anna, 2014. "The impact of health insurance on stockholding: A regression discontinuity approach," CFS Working Paper Series 488, Center for Financial Studies (CFS).
    4. Amanda E. Kowalski, 2015. "What Do Longitudinal Data on Millions of Hospital Visits Tell Us about the Value of Public Health Insurance as a Safety Net for the Young and Privately Insured?," Cowles Foundation Discussion Papers 1983, Cowles Foundation for Research in Economics, Yale University.
    5. Luojia Hu & Robert Kaestner & Bhashkar Mazumder & Sarah Miller & Ashley Wong, 2016. "The Effect of the Patient Protection and Affordable Care Act Medicaid Expansions on Financial Wellbeing," NBER Working Papers 22170, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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