The Liquidity Sensitivity of Healthcare Consumption: Evidence from Social Security Payments

Tal Gross, Timothy Layton and Daniel Prinz ()

American Economic Review: Insights, 2022, vol. 4, issue 2, 175-90

Abstract: Insurance is typically viewed as a mechanism for transferring resources from good to bad states. However, insurance may also transfer resources from high-liquidity periods to low-liquidity periods. We test for this type of transfer from health insurance by studying the distribution of Social Security checks among Medicare recipients. When Social Security checks are distributed, prescription fills increase by 6–12 percent among recipients who pay small copayments. We find no such pattern among recipients who face no copayments. The results demonstrate that more complete insurance allows recipients to consume healthcare when they need it rather than only when they have cash.

JEL-codes: D82 G22 H55 I13 I18 L65 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (19)

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Working Paper: The Liquidity Sensitivity of Healthcare Consumption: Evidence from Social Security Payments (2020)
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DOI: 10.1257/aeri.20200830

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