Medical Spending Risk among Older Households by Race

Karolos Arapakis, Eric French, John Bailey Jones and Jeremy McCauley

No 20738, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We document racial disparities in total and out-of-pocket medical expenditures, using data from the Health and Retirement Study linked to Medicare and Medicaid records. While White, Black, and Hispanic households have similar total annual medical expenditures, minorities benefit from higher Medicaid recipiency and face lower out-of-pocket spending. At age 65, White, Black, and Hispanic households incur on average $136,000, $59,000, and $68,000, respectively, in out-of-pocket medical spending over the remainders of their lives. We use our model to evaluate a policy reform that expands public nursing home insurance. Given that White households currently pay the most out-of-pocket, they have the most to gain from the reform. In the absence of a highly redistributive funding scheme, this reform will on average redistribute financial resources from minorities to White households, illustrating how expanding public insurance can have unintended distributional consequences.

Keywords: Medicaid; Race (search for similar items in EconPapers)
JEL-codes: I11 I13 I14 (search for similar items in EconPapers)
Date: 2025-10
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