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Related Experiment Video

Updated: Feb 14, 2026

The Social Dimension of Stress: Experimental Manipulations of Social Support and Social Identity in the Trier Social Stress Test
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Social Security Income and Health Care Spending: Evidence from the Social Security Notch.

Yuping Tsai1

  • 1Centers for Disease Control and Prevention, Atlanta, GA 30329, USA.

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Social Security income significantly impacts elderly healthcare spending, particularly for those with less education. This study reveals a notable responsiveness of medical expenditures to Social Security benefits.

Keywords:
Income elasticitySocial Security benefitshealth care expenditures

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Area of Science:

  • Health Economics
  • Public Policy
  • Gerontology

Background:

  • Understanding the financial impact of Social Security on elderly healthcare utilization is crucial.
  • Previous research suggests limited responsiveness of medical expenditures to income changes at the household level.

Purpose of the Study:

  • To determine the causal effect of Social Security income on out-of-pocket medical expenditures among the elderly.
  • To investigate how changes in Social Security legislation influence healthcare spending patterns in older adults.

Main Methods:

  • Utilized Social Security legislation changes as a natural experiment.
  • Employed an instrumental variables strategy with data from the 1986-1994 Consumer Expenditure Survey.
  • Focused analysis on elderly individuals with less than a high school education.

Main Results:

  • Health care expenditures are significantly responsive to Social Security income changes for the studied demographic.
  • Estimated income elasticities for medical expenditures ranged from 1.41 to 3.47, depending on the outcome measure.
  • Findings contrast with prior studies indicating small income elasticities.

Conclusions:

  • Social Security income plays a substantial role in financing medical care for less educated elderly individuals.
  • Policy implications suggest that Social Security benefits can directly influence healthcare access and utilization for vulnerable elderly populations.