Working Paper: NBER ID: w21270
Authors: Mariacristina De Nardi; Eric French; John Bailey Jones; Jeremy McCauley
Abstract: We use data from the Medicare Current Beneficiary Survey (MCBS) to document the medical spending of Americans aged 65 and older. We find that medical expenses more than double between ages 70 and 90 and that they are very concentrated: the top 10% of all spenders are responsible for 52% of medical spending in a given year. In addition, those currently experiencing either very low or very high medical expenses are likely to find themselves in the same position in the future. We also find that the poor consume more medical goods and services than the rich and have a much larger share of their expenses covered by the government. Overall, the government pays for 65% of the elderly's medical expenses. Despite this, the expenses that remain after government transfers are even more concentrated among a small group of people. Thus, government health insurance, while potentially very valuable, is far from complete. Finally, while medical expenses before death can be large, on average they constitute only a small fraction of total spending, both in the aggregate and over the life cycle. Hence, medical expenses before death do not appear to be an important driver of the high and increasing medical spending found in the U.S.
Keywords: Medical Spending; Elderly; Medicare; Health Care Costs
JEL Codes: D12; D14; I13; I14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| age (J14) | medical spending (H51) |
| top 10% of spenders (D12) | concentration of medical spending (H51) |
| past medical spending (H51) | future medical spending (H51) |
| government insurance coverage (I13) | concentration of costs (J30) |
| end-of-life costs (J32) | total medical spending (H51) |