UM19-11: On the Distribution and Dynamics of Medical Expenditure among the Elderly



Using data from the Health and Retirement Study (HRS) and the Medicare Current Beneficiary Survey (MCBS), we estimate the stochastic process for total medical spending and its components.  By focusing on dynamics, we consider not only the risk of catastrophic expenses in a single year, but also the risk of moderate but persistent expenses that accumulate into a catastrophic lifetime cost.  We also assess the reduction in out-of-pocket medical spending risk provided by public insurance schemes such as Medicare or Medicaid.

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