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

25 Pages Posted: 10 Sep 2007 Last revised: 28 Jul 2022

See all articles by Gopi Shah Goda

Gopi Shah Goda

Stanford University

John B. Shoven

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Sita N. Slavov

American Enterprise Institute; Occidental College - Department of Economics

Date Written: September 2007

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.

Suggested Citation

Goda, Gopi Shah and Shoven, John B. and Slavov, Sita N., A Tax on Work for the Elderly: Medicare as a Secondary Payer (September 2007). NBER Working Paper No. w13383, Available at SSRN: https://ssrn.com/abstract=1012837

Gopi Shah Goda

Stanford University ( email )

SIEPR
366 Galvez St.
Stanford, CA 94305
United States
6507360480 (Phone)

John B. Shoven (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
650-326-5377 (Phone)
650-328-4163 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Sita N. Slavov

American Enterprise Institute ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

HOME PAGE: http://www.aei.org/scholar/sita-nataraj-slavov/

Occidental College - Department of Economics ( email )

Los Angeles, CA 90041
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
30
Abstract Views
1,172
PlumX Metrics