Medicaid Insurance in Old Age

Area of Science:

• Health economics
• Public finance
• Retirement security

Background:

• The Medicaid program's old age provisions aim to protect retirees from significant medical expenses.
• Understanding the financial value and optimal scale of these provisions for retirees is crucial for policy evaluation.

Purpose of the Study:

• To estimate the distribution of lifetime Medicaid transfers and valuations among single retirees.
• To assess whether the current scale of Medicaid benefits for retirees is appropriate relative to its cost.

Main Methods:

• Estimation of a structural model integrating savings and medical spending behavior.
• Computation of lifetime Medicaid transfers and individual valuations using the model.
• Analysis of compensating variation to compare retiree valuation against actuarial costs.

Main Results:

• Currently single retirees value their Medicaid insurance benefits at more than the actuarial cost.
• Most retirees would value an expansion of the current Medicaid program at less than its associated cost.
• The findings suggest the existing size of the Medicaid program is approximately appropriate for current single retirees.

Conclusions:

• The Medicaid program's current scale appears well-aligned with the valuation of single retirees.
• Policy adjustments expanding Medicaid for retirees may not be cost-effective based on current valuations.
• Further research could explore different retiree demographics and program structures.