The Effects of Medicare on Medical Expenditure Risk and Financial Strain
52 Pages Posted: 28 Feb 2014
Date Written: February 10, 2014
We estimate the current impact of Medicare on medical expenditure risk and financial strain. At age 65, out-of-pocket expenditures drop by 33% at the mean and 53% among the top 5% of spenders. The fraction of the population with out-of-pocket medical expenditures above income drops by more than half. Medical related financial strain, such as problems paying bills, is dramatically reduced. Using a stylized expected utility framework, the gain from reducing out-of-pocket expenditures alone accounts for 18% of the social costs of financing Medicare. This calculation ignores the benefits of reduced financial strain and direct health improvements due to Medicare.
Keywords: Medicare, Health Insurance, Medical Expenditure Risk, Regression Discontinuity
JEL Classification: I13
Suggested Citation: Suggested Citation