Medicaid Insurance in Old Age

Mariacristina De Nardi, Eric French and John Jones

No 19151, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The old age provisions of the Medicaid program were designed to insure poor retirees against medical expenses. However, it is the rich who are most likely to live long and face expensive medical conditions when very old. We estimate a structural model of savings and endogenous medical spending with heterogeneous agents and use it to compute the distribution of lifetime Medicaid transfers and Medicaid valuations across currently single retirees. We find that retirees with high lifetime incomes can end up on Medicaid and often value Medicaid insurance the most, as they face a larger risk of catastrophic medical needs at old ages and face the greatest consumption risk. Compensating variation calculations indicate that current retirees value Medicaid insurance at more than its actuarial cost, but that most would value an expansion of the current Medicaid program at less than its cost. These findings suggest that for current single retirees, the Medicaid program may be of the approximately right size.

JEL-codes: D11 D14 D31 E21 H2 I14 (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-age, nep-hea and nep-ias
Note: AG EH PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as Mariacristina De Nardi & Eric French & John Bailey Jones, 2016. "Medicaid Insurance in Old Age," American Economic Review, American Economic Association, vol. 106(11), pages 3480-3520, November.

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Related works:
Journal Article: Medicaid Insurance in Old Age (2016)
Working Paper: Medicaid Insurance in Old Age (2016)
Working Paper: Medicaid insurance in old age (2012)
Working Paper: Medicaid Insurance in Old Age (2012)
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