The long-run effect of the Medicare Catastrophic Coverage Act

This study examines the long-run effect of the 1988 Medicare Catastrophic Coverage Act (MCCA). Although most of the MCCA provisions were repealed after only one year, remaining in the law today are the provisions that directly affected the ability of married people to live in the community when their spouses were in a nursing home. We use longitudinal data from the National Long-Term Care Survey and exploit the differential effect of the MCCA on single and married people to test for changes in the probability of going to a nursing home, in wealth, and in the probability of living with others. Our study showed that the MCCA did not achieve its desired effect of preventing spousal impoverishment in the aggregate, even when the sample was restricted to those people most likely to be affected.