Does Medicare Benefit the Poor?

New Answers to an Old Question

Published in: NBER Working Papers, no. 9280 / (Cambridge, Ma: National Bureau of Economic Research, Sep. 2005),Oct. 2002, p. 1-35

Posted on RAND.org on December 31, 2001

by Jay Bhattacharya, Darius N. Lakdawalla

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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.

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