Macroeconomic Effects of Medicare
Juan Carlos Conesa (),
Daniela Costa (),
Parisa Kamali (),
Timothy Kehoe (),
Gajendran Raveendranathan and
Akshar Saxena ()
Additional contact information
Vegard Nygard: Federal Reserve Bank of Minneapolis
Authors registered in the RePEc Author Service: Vegard Mokleiv Nygaard ()
No 548, Staff Report from Federal Reserve Bank of Minneapolis
This paper develops an overlapping generations model to study the macroeconomic effects of an unexpected elimination of Medicare. We ﬁnd that a large share of the elderly respond by substituting Medicaid for Medicare. Consequently, the government saves only 46 cents for every dollar cut in Medicare spending. We argue that a comparison of steady states is insufficient to evaluate the welfare effects of the reform. In particular, we ﬁnd lower ex-ante welfare gains from eliminating Medicare when we account for the costs of transition. Lastly, we ﬁnd that a majority of the current population benefits from the reform but that aggregate welfare, measured as the dollar value of the sum of wealth equivalent variations, is higher with Medicare.
Keywords: Medicare; Medicaid; Overlapping generations; Steady state; Transition path (search for similar items in EconPapers)
JEL-codes: E21 E62 H51 I13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-dge, nep-hea, nep-ias and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed
Downloads: (external link)
https://minneapolisfed.org/research/sr/sr548.pdf Full text (application/pdf)
Journal Article: Macroeconomic effects of Medicare (2018)
Working Paper: Macroeconomic Effects of Medicare (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:548
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Staff Report from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Jannelle Ruswick ().