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Economic Brief

May 5, 2017

Economists Analyze Medicaid Benefits for the Elderly

Medicaid is not a program for just the young and the poor. It also provides substantial benefits to elderly people with higher incomes, according to recent research by economists at the Richmond Fed, the Chicago Fed and University College London.

The Richmond Fed’s latest Economic Brief summarizes their research, which finds that lower-income people spend more annually on health care and have more of their spending covered by the government than do higher-income people. However, older adults with higher incomes also can become eligible for Medicaid after they exhaust their savings. These people tend to value Medicaid well above its actuarial cost because it protects them from catastrophic nursing home expenses. Even so, the economists conclude that the value high-income single retirees would place on additional Medicaid benefits would be less than the associated increase in their taxes.

The Richmond Fed’s Economic Brief series provides web-exclusive essays on current economic issues and trends. Sign up to receive an email notification when a new essay is posted.

As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District—including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia—to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.


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