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Housing in Medicaid: Should it Really Change?

Author

Listed:
  • Bertrand Achou

Abstract

Housing is mostly exempted from Medicaid and Supplemental Social Insurance means tests. Reforms of this special treatment have been debated but little is known about its costs, benefits and redistributive implications. I estimate a life-cycle model of single retirees accounting for this exemption. The model shows that the homestead exemption explains important patterns of Medicaid recipiency, that it is highly valued and may be of limited cost as it incentivizes saving and reduces Medicaid recipiency at older ages. The model also predicts that removing the homestead exemption or enforcing more systematically estate recovery programs would reduce redistribution towards lower-income retirees.

Suggested Citation

  • Bertrand Achou, 2020. "Housing in Medicaid: Should it Really Change?," Cahiers de recherche / Working Papers 3, Institut sur la retraite et l'épargne / Retirement and Savings Institute.
    • Handle: RePEc:rsi:irersi:3
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    File URL: http://ire.hec.ca/wp-content/uploads/2020/09/cahier_IRE_3_housing_medicaid_should_it_really_change.pdf
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    References listed on IDEAS

    as
    1. Makoto Nakajima & Irina A. Telyukova, 2017. "Reverse Mortgage Loans: A Quantitative Analysis," Journal of Finance, American Finance Association, vol. 72(2), pages 911-950, April.
    2. 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, February.
    3. Rory McGee, 2021. "Old Age Savings and House Price Shocks," University of Western Ontario, Departmental Research Report Series 20214, University of Western Ontario, Department of Economics.
    4. Antoine Arnoud & Fatih Guvenen & Tatjana Kleineberg, 2019. "Benchmarking Global Optimizers," NBER Working Papers 26340, National Bureau of Economic Research, Inc.
    5. John Ameriks & Joseph Briggs & Andrew Caplin & Matthew D. Shapiro & Christopher Tonetti, 2020. "Long-Term-Care Utility and Late-in-Life Saving," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2375-2451.
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    Cited by:

    1. Philippe De Donder & Marie‐Louise Leroux, 2021. "Long term care insurance with state‐dependent preferences," Health Economics, John Wiley & Sons, Ltd., vol. 30(12), pages 3074-3086, December.
    2. Achou, Bertrand & De Donder, Philippe & Glenzer, Franca & Lee, Minjoon & Leroux, Marie-Louise, 2022. "Nursing home aversion post-pandemic: Implications for savings and long-term care policy," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 1-21.
    3. Tatyana Koreshkova & Minjoon Lee, 2020. "Nursing Homes in Equilibrium: Implications for Long-term Care Policies," Working Papers wp414, University of Michigan, Michigan Retirement Research Center.
    4. Achou, Bertrand, 2021. "Housing liquidity and long-term care insurance demand: A quantitative evaluation," Journal of Public Economics, Elsevier, vol. 194(C).

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    More about this item

    Keywords

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    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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