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An Aggregate Model for Policy Analysis with Demographic Change
Many countries are facing challenging fiscal financing issues as their populations age and the number of workers per retiree falls. Policymakers need transparent and robust analyses of alternative policies to deal with demographic changes. In this paper, we propose a simple framework that can easily be matched to aggregate data from the national accounts. We demonstrate the usefulness of our framework by comparing quantitative results for our aggregate model with those of a related model that includes within-age-cohort heterogeneity through productivity differences. When we assess proposals ...
Journal Article
Analyzing the relationship between health insurance, health costs, and health care utilization
Using data the Health and Retirement Survey and the Assets and Health Dynamics among the Oldest Old, this article provides an empirical analysis of the determinants of whether an individual purchases health insurance. The authors describe the relationship between health costs and health care utilization of individuals aged 50 and explore how these factors vary with access to health insurance.
Working Paper
Advertising and Risk Selection in Health Insurance Markets
We study impacts of advertising as a channel of risk selection in Medicare Advantage. We show evidence that both mass and direct mail advertising are targeted to achieve risk selection. We develop and estimate an equilibrium model of Medicare Advantage with advertising to understand its equilibrium impacts. We find that advertising attracts the healthy more than the unhealthy. Moreover, shutting down advertising increases premiums by up to 40% for insurers that advertised by worsening their risk pools, which further reduces the demand of the unhealthy. We argue that risk selection may make ...
Working Paper
Demographics and medical care spending: standard and non-standard effects
In this paper, we examine the effects of likely demographic changes on medical spending for the elderly. Standard forecasts highlight the potential for greater life expectancy to increase costs: medical costs generally increase with age, and greater life expectancy means that more of the elderly will be in the older age groups. Two factors work in the other direction, however. First, increases in life expectancy mean that a smaller share of the elderly will be in the last year of life, when medical costs generally are very high. Furthermore, more of the elderly will be dying at older ages, ...
Working Paper
The sustainability of health spending growth
We evaluate the long-run sustainability of health spending growth. Under the criterion that non-health consumption does not fall, one percent excess cost growth appears to be an upper bound for the economy as a whole when the projection horizon extends over the century, although some groups would experience declines in non-health consumption. More generally, the increase in health spending as a share of income may lead to a significant expansion of public sector financing, as has been the case historically. Extrapolation of historical trends also suggests that higher health spending will lead ...
Working Paper
Are Medicaid and Medicare Patients Treated Equally?
We examine whether Medicaid recipients receive the same health care services as those on Medicare. We track the services provided to the same individual as they age into Medicare from Medicaid at age 65, becoming dual enrolled. Cost sharing remains negligible across the insurance switch, implying that observed changes in service provision reflect supply-side factors. Service provision increases by about 20 percent upon switching to Medicare, across a range of categories and treatments including high-value care. We find that 60 to 90 percent of the increase in office visits is explained by ...
Working Paper
Social security and Medicare policy from the perspective of generational accounting
An application of the generational accounting method of fiscal policy analysis to projected spending paths for Social Security and Medicare suggesting that, under realistic assumptions for these programs, future generations as well as current young Americans could bear a significantly larger share of the burden of government spending than previously thought.
Working Paper
Generational aspects of Medicare
This paper examines the generational aspect of the current Medicare system and some stylized reforms. We find that the rates of return on Medicare for today's workers are higher than those for Social Security and that the Medicare system is shifting a greater share of the burden on future workers than is Social Security. Nonetheless, the rates of return on Medicare, using the Medicare Trustees assumptions, are still not that high--roughly 2 percent for today's youngest workers. But forecasting future Medicare expenditures is quite difficult. Under an alternative higher-cost baseline, which we ...