Medicaid Insurance in Old Age

50 Pages Posted: 15 Dec 2012 Last revised: 14 Jun 2013

See all articles by Mariacristina De Nardi

Mariacristina De Nardi

University College London, Economics Dpt.; Federal Reserve Bank of Chicago; National Bureau of Economic Research (NBER) - Public Economics

Eric French

Department of Economics; Institute for Fiscal Studies (IFS)

John Bailey Jones

Federal Reserve Bank of Richmond; SUNY at Albany - School of Business

Multiple version iconThere are 4 versions of this paper

Date Written: November 30, 2012

Abstract

Medicaid was primarily designed to protect and insure the poor against medical shocks. Yet, poorer people tend to live shorter lifespans and incur lower medical expenses before death than richer people. Taking these and other important dimensions of heterogeneity into account, and carefully modeling key institutional aspects, we estimate a structural model of savings and endogenous medical expenses to assess the costs and benefits of Medicaid for single retirees.

We show that even higher-income retirees benefit from Medicaid, if they live long enough for their resources to be depleted by medical expenses. We also find that all retirees value Medicaid insurance coverage highly, compared to the value of the Medicaid transfers that they actually receive on average.

Keywords: Medicaid, Savings, Medical Expenses, Lifecycle Models

JEL Classification: D91, I21, I13

Suggested Citation

De Nardi, Mariacristina and French, Eric and Jones, John B., Medicaid Insurance in Old Age (November 30, 2012). FRB of Chicago Working Paper No. 2012-13, Available at SSRN: https://ssrn.com/abstract=2189514 or http://dx.doi.org/10.2139/ssrn.2189514

Mariacristina De Nardi

University College London, Economics Dpt. ( email )

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Eric French (Contact Author)

Department of Economics ( email )

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John B. Jones

Federal Reserve Bank of Richmond ( email )

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HOME PAGE: http://www.albany.edu/~jbjones

SUNY at Albany - School of Business ( email )

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