Working Paper: NBER ID: w9280
Authors: Jay Bhattacharya; Darius Lakdawalla
Abstract: Previous research has found that Medicare benefits flow primarily to the most economically advantaged groups and that the financial returns to Medicare are consequently higher for the rich than for the poor. Taking a different approach, we find very different results. According to the Medicare Current Beneficiary Survey, the poorest groups receive the most benefits at any given age. In fact, the advantage of the poor in benefit receipt is so great that it easily overcomes their higher death rates. This leads to the result that the financial returns to Medicare are actually much higher for poorer groups in the population and that Medicare is a highly progressive public program. These new results appear to owe themselves to our measurement of socioeconomic status at the individual level, in contrast to the aggregated measures used by previous research.
Keywords: Medicare; socioeconomic status; health benefits; progressivity
JEL Codes: I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Medicare benefits (I18) | benefits flow more significantly to poorer groups (H53) |
| financial returns to Medicare (H51) | higher for poorer groups (I32) |
| advantage in benefit receipt for the poor (H53) | overcomes their higher mortality rates (I14) |
| high school dropouts (I21) | receive nearly double the financial returns from Medicare (H51) |
| previous research (C90) | failed to account for the lower mortality rates faced by disadvantaged groups (I14) |
| measuring socioeconomic status at the individual level (I32) | greater benefits from Medicare for poorer individuals (I14) |