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Abstract

The Effects of Medicaid and Medicare Reforms on the Elderly’s Savings and Medical Expenditures
by Mariacristina De Nardi, Eric French and John Bailey Jones
WP 2010-236
We study a model in which retired single people optimally choose consumption, medical spending and saving while facing uncertainty about their health, lifespan and medical needs. This uncertainty is partially offset by insurance provided by the government and private institutions. We first show how well the model matches important features of the data and we analyze the degree of insurance provided by current programs. We then analyze the effects of some reforms, meant to capture changes in Medicaid and Medicare, on savings and medical expenditures.
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