The Lifetime Medical Spending of Retirees

John Jones, Mariacristina De Nardi, Eric French, Rory McGee and Justin Kirschner

No 24599, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using dynamic models of health, mortality, and out-of-pocket medical spending (both inclusive and net of Medicaid payments), we estimate the distribution of lifetime medical spending that retired U.S. households face over the remainder of their lives. We find that households who turned 70 in 1992 will on average incur $122,000 in medical spending, including Medicaid payments, over their remaining lives. At the top tail, 5 percent of households will incur more than $300,000, and 1 percent of households will incur over $600,000 in medical spending inclusive of Medicaid. The level and the dispersion of this spending diminish only slowly with age. Although permanent income, initial health, and initial marital status have large effects on this spending, much of the dispersion in lifetime spending is due to events realized later in life. Medicaid covers the majority of the lifetime costs of the poorest households and significantly reduces their risk.

JEL-codes: D1 D14 E02 E2 H31 (search for similar items in EconPapers)
Date: 2018-05
New Economics Papers: this item is included in nep-age, nep-dge, nep-hea, nep-mac and nep-rmg
Note: EH PE
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Citations: View citations in EconPapers (20)

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Related works:
Journal Article: Lifetime Medical Spending of Retirees (2019)
Journal Article: The Lifetime Medical Spending of Retirees (2018)
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