Cognitive Ability and Retiree Health Care Expenditure

37 Pages Posted: 17 Nov 2010

See all articles by Hanming Fang

Hanming Fang

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

Lauren Hersch Nicholas

University of Michigan at Ann Arbor - Institute for Social Research (ISR)

Dan Silverman

University of Michigan at Ann Arbor - Economics Department; National Bureau of Economic Research (NBER)

Date Written: September 1, 2010

Abstract

Prior research indicates that retirees with less cognitive ability are at greater financial risk because they have lower incomes yet higher medical expenditures. Linking HRS data to administrative records, we evaluate two hypotheses about why this group spends more on health: (1) they are in worse health; (2) they receive more expensive or less effective care for the same conditions. We find that the bulk, but not all, of the cross-sectional relationship can be attributed to the poorer health of those with lower cognitive functioning. Much of this relationship appears to be driven by coincident declines in cognitive ability and health. While, in this respect, the data have important limitations, we find no evidence of substantial differences in care, conditional on observable health.

Suggested Citation

Fang, Hanming and Nicholas, Lauren Hersch and Silverman, Dan, Cognitive Ability and Retiree Health Care Expenditure (September 1, 2010). Michigan Retirement Research Center Research Paper No. 2010-230, Available at SSRN: https://ssrn.com/abstract=1710118 or http://dx.doi.org/10.2139/ssrn.1710118

Hanming Fang (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Lauren Hersch Nicholas

University of Michigan at Ann Arbor - Institute for Social Research (ISR) ( email )

Ann Arbor, MI 48106-1248
United States

HOME PAGE: http://www.psc.isr.umich.edu/people/profile/792/Lauren_Nicholas

Dan Silverman

University of Michigan at Ann Arbor - Economics Department ( email )

701 Tappan Street
Ann Arbor, MI 48109
United States
734-764-2447 (Phone)
734-764-2769 (Fax)

HOME PAGE: http://www.econ.lsa.umich.edu/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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