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The Impact of Medical and Nursing Home Expenses and Social Insurance Policies on Savings and Inequality

Karen Kopecky () and Tatyana Koreshkova ()

Working Papers from Concordia University, Department of Economics

Abstract: We consider a life-cycle model with idiosyncratic risk in labor earnings, out-of-pocket medical and nursing home expenses, and survival. Partial insurance is available through welfare, Medicaid, and social security. Calibrating the model to the U.S., we find that nursing home expenses play an important role in the savings of the wealthy. In our policy analysis, we find that elimination of out-of-pocket expenses through public health care would reduce the capital stock by 12 percent, Medicaid and old-age welfare programs crowd out 44 percent of savings and greatly increase wealth inequality, and social security effects are influenced by out-of-pocket health expenses.

Keywords: health expenses; nursing home; idiosyncratic risk; savings; wealth inequality; old-age social insurance (search for similar items in EconPapers)
JEL-codes: E21 I18 I38 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2009-06-20
New Economics Papers: this item is included in nep-age, nep-dge, nep-hea, nep-ias, nep-lab and nep-mac
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Working Paper: The Impact of Medical and Nursing Home Expenses and Social Insurance Policies on Savings and Inequality (2009) Downloads
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