Press Releases

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.

The Richmond Fed serves the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. As part of the nation's central bank, we're one of 12 regional Reserve Banks that work together with the Federal Reserve's Board of Governors to strengthen the economy and our communities. We manage the nation's money supply to keep inflation low and help the economy grow. We also supervise and regulate financial institutions to help safeguard our nation's financial system and protect the integrity and efficiency of our payments system.


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