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Journal Article
Medicaid and the elderly
In 2009, Medicaid spent over $75 billion on 5.3 million elderly beneficiaries. This article describes the Medicaid rules for the elderly and discusses their economic implications.
Working Paper
Health, Health Insurance, and Retirement: A Survey
The degree to which retirement decisions are driven by health is a key concern for both academics and policymakers. In this paper we survey the economic literature on the health-retirement link in developed countries. We describe the mechanisms through which health affects labor supply and discuss how they interact with public pensions and public health insurance. The historical evidence suggests that health is not the primary source of variation in retirement across countries and over time. Furthermore, declining health with age can only explain a small share of the decline in employment ...
Working Paper
Life expectancy and old age savings
Rich people, women, and healthy people live longer. We document that this heterogeneity in life expectancy is large. We use an estimated structural model to assess the impact of life expectancy variation on the elderly?s savings. We find that the differences in life expectancy related to observable factors such as health, gender, and income have large effects on savings, and that these factors contribute by similar amounts. We also show that the risk of outliving one?s expected lifespan has a large effect on the elderly?s saving behavior.
Working Paper
Why do the elderly save? the role of medical expenses
This paper constructs a rich model of saving for retired single people. Our framework allows for bequest motives and heterogeneity in medical expenses and life expectancies. We estimate the model using AHEAD data and the method of simulated moments. The data show that out-of-pocket medical expenses rise quickly with both age and permanent income. For many elderly people the risk of living long and requiring expensive medical care is a more important driver of old age saving than the desire to leave bequests. Social insurance programs such as Medicaid rationalize the low asset holdings of the ...
Working Paper
End-of-Life Medical Expenses
In this review, we document end-of-life medical spending: its level, composition, funding, and contribution to aggregate medical spending. We discuss how end-of-life expenses affect household behavior and economic evidence on the efficacy of medical spending at the end of life. Finally, we document recent trends in health and chronic disease at older ages and discuss what they might imply for end-of-life spending and medical spending in the aggregate.
Working Paper
Why Do Couples and Singles Save During Retirement?
While the savings of retired singles tend to fall with age, those of retired couples tend to rise. We estimate a rich model of retired singles and couples with bequest motives and uncertain longevity and medical expenses. Our estimates imply that while medical expenses are an important driver of the savings of middle-income singles, bequest motives matter for couples and high-income singles, and generate transfers to non-spousal heirs whenever a household member dies. The interaction of medical expenses and bequest motives is a crucial determinant of savings for all retirees. Hence, to ...
Journal Article
You can't take it with you: asset run-down at the end of the life cycle
This article presents evidence on the extent to which households run down their assets after retirement. The authors show that, once corrections are made for several econometric problems, households engage in very little asset decumulation after retirement.
Working Paper
On the distribution and dynamics of health costs
Using data from the Health and Retirement Survey (HRS) and Assets and Health Dynamics of the Oldest Old (AHEAD), this paper presents estimates of the stochastic process that determines both the distribution and dynamics of health costs. We find that the data generating process for health costs is well represented by an ARMA(1,1). Furthermore, innovations to this process are close to lognormally distributed. In any given year, .1% of our sample receives a health cost shock that costs at least $80,000 in present value. Lastly, we discuss the accuracy of numerical solutions when integrating over ...
Working Paper
Public pensions and labor supply over the life cycle
Virtually all developed countries face projected budget shortfalls for their public pension programs. The shortfalls arise for two reasons. First, populations in developed countries are aging rapidly. Second, until recently older individuals in developed countries have been retiring earlier. These two developments have created serious strains on public pension programs. In order to remain fiscally solvent, many governments have reformed their public pension schemes to encourage labor supply at older ages. These reforms include reductions in the generosity of public pensions and reduced ...