UM21-09: The Impact of Medical Spending Shocks on the Wealth and Insurance Purchases of Older Americans



Using data from the Health and Retirement Study (HRS) and the Medicare Current Beneficiary Survey (MCBS), we estimate a dynamic model of medical spending and how medical spending shocks affect the wealth and insurance purchases of older Americans. Our analysis proceeds in three steps. First, we estimate a dynamic model of total medical spending. Second, we estimate how total medical spending, in combination with insurance purchases and household wealth, impacts out-of-pocket medical spending. Third, we estimate how out-of-pocket medical spending risk affects household wealth and insurance purchases.

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