The Effects of Medicare on Medical Expenditure Risk and Financial Strain

52 Pages Posted: 10 Mar 2014

See all articles by Silvia Barcellos

Silvia Barcellos

Center for Economic and Social Research (CESR)

Mireille Jacobson

RAND Corporation

Multiple version iconThere are 2 versions of this paper

Date Written: March 2014

Abstract

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.

Suggested Citation

Barcellos, Silvia and Jacobson, Mireille, The Effects of Medicare on Medical Expenditure Risk and Financial Strain (March 2014). NBER Working Paper No. w19954. Available at SSRN: https://ssrn.com/abstract=2406756

Silvia Barcellos (Contact Author)

Center for Economic and Social Research (CESR) ( email )

635 Downey Way
Los Angeles, CA 90089-3332
United States

Mireille Jacobson

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

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