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A Tax on Work for the Elderly: Medicare as a Secondary Payer

Gopi Goda, John B. Shoven and Sita Slavov

No 13383, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Medicare as a Secondary Payer (MSP) legislation requires employer-sponsored health insurance to be a primary payer for Medicare-eligible workers at firms with 20 or more employees. While the legislation was developed to better target Medicare services to individuals without access to employer-sponsored insurance, MSP creates a significant implicit tax on working beyond age 65. This implicit tax is approximately 15-20 percent at age 65 and increases to 45-70 percent by age 80. Eliminating this implicit tax by making Medicare a primary payer for all Medicare-eligible individuals could significantly increase lifetime labor supply due to the high labor supply elasticities of older workers. The extra income tax receipts from such a policy would likely offset a large percentage of the estimated costs of making Medicare a primary payer.

JEL-codes: H51 J14 J21 J26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-hea, nep-ias, nep-lab and nep-pub
Date: 2007-09
Note: AG
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Working Paper: A Tax On Work For The Elderly: Medicare As A Secondary Payer (2009) Downloads
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