37 Pages Posted: 12 Feb 2008
Date Written: December 2003
Several categories of medical expenditures are not covered by Medicare, including prescription drugs, most nursing home stays, and extended hospital visits. Out-of-pocket costs for these items can be substantial, and what's more, they are likely to be concentrated at the end of life. At the same time, it is well documented that poverty is 3-4 times more common among widows than among similarly aged married women. This study examines the potential link between these two phenomena, asking the question: to what extent do out-of-pocket health care costs of a dying spouse affect the financial position of the survivor? We find that out-of-pocket medical spending increases substantially just prior to death, and that these expenditures are large relative to income for a large share of elderly couples. Simulations investigate the extent to which expansions in insurance coverage to include nursing home care or prescription drug coverage could improve the financial well-being of the surviving spouse.
Suggested Citation: Suggested Citation
McGarry, Kathleen M. and Schoeni, Robert F., Medicare Gaps and Widow Poverty (December 2003). Michigan Retirement Research Center Research Paper No. WP 2003-065. Available at SSRN: https://ssrn.com/abstract=1092154 or http://dx.doi.org/10.2139/ssrn.1092154
By James Smith