Medical Spending of the U.S. Elderly

37 Pages Posted: 15 Jun 2015

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

Jeremy McCauley

University College London

Multiple version iconThere are 2 versions of this paper

Date Written: June 2015

Abstract

We use data from the Medicare Current Beneficiary Survey (MCBS) to document the medical spending of Americans aged 65 and older. We find that medical expenses more than double between ages 70 and 90 and that they are very concentrated: the top 10% of all spenders are responsible for 52% of medical spending in a given year. In addition, those currently experiencing either very low or very high medical expenses are likely to find themselves in the same position in the future. We also find that the poor consume more medical goods and services than the rich and have a much larger share of their expenses covered by the government. Overall, the government pays for 65% of the elderly's medical expenses. Despite this, the expenses that remain after government transfers are even more concentrated among a small group of people. Thus, government health insurance, while potentially very valuable, is far from complete. Finally, while medical expenses before death can be large, on average they constitute only a small fraction of total spending, both in the aggregate and over the life cycle. Hence, medical expenses before death do not appear to be an important driver of the high and increasing medical spending found in the U.S.

Suggested Citation

De Nardi, Mariacristina and French, Eric and Jones, John B. and McCauley, Jeremy, Medical Spending of the U.S. Elderly (June 2015). NBER Working Paper No. w21270, Available at SSRN: https://ssrn.com/abstract=2618658

Mariacristina De Nardi (Contact Author)

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Jeremy McCauley

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