Understanding the Economic Consequences of Shifting Trends in Population Health

Pierre-Carl Michaud, Dana Goldman, Darius Lakdawalla, Yuhui Zheng () and Adam H. Gailey
Additional contact information
Yuhui Zheng: RAND
Adam H. Gailey: RAND

No 4366, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The public economic burden of shifting trends in population health remains uncertain. Sustained increases in obesity, diabetes, and other diseases could reduce life expectancy ? with a concomitant decrease in the public-sector's annuity burden ? but these savings may be offset by worsening functional status, which increases health care spending, reduces labor supply, and increases public assistance. Using a microsimulation approach, we quantify the competing public-finance consequences of shifting trends in population health for medical care costs, labor supply, earnings, wealth, tax revenues, and government expenditures (including Social Security and income assistance). Together, the reduction in smoking and the rise in obesity have increased net public-sector liabilities by $430bn, or approximately 4% of the current debt burden. Larger effects are observed for specific public programs: annual spending is 10% higher in the Medicaid program, and 7% higher for Medicare.

Keywords: microsimulation; social security; health care costs; disability (search for similar items in EconPapers)
JEL-codes: I10 I38 J26 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2009-08
New Economics Papers: this item is included in nep-age and nep-hea
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Citations: View citations in EconPapers (6)

Published - published as 'The Fiscal Effects of Trends in Public Health' in: National Tax Journal, 2010, 63 (2), 307-324,

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Related works:
Working Paper: Understanding the Economic Consequences of Shifting Trends in Population Health (2009)
Working Paper: Understanding the Economic Consequences of Shifting Trends in Population Health (2009)
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