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Medicaid insurance in old age

Mariacristina De Nardi, Eric French and John Bailey Jones
Journal article | American Economic Review

The old age provisions of the Medicaid program were designed to insure retirees against medical expenses. We estimate a structural model of savings and medical spending and use it to compute the distribution of lifetime Medicaid transfers and Medicaid valuations across currently single retirees. Compensating variation calculations indicate that current retirees value Medicaid insurance at more than its actuarial cost, but that most would value an expansion of the current Medicaid program at less than its cost. These findings suggest that for current single retirees, the Medicaid program may be of the approximately right size.

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IFS Working Paper W17/04
Presentation
This presentation was given at the 2016 Annual Meeting of the Society for Economic Dynamics.