Medicare Gaps and Widow Poverty

Several categories of medical expenditures are not covered by Medicare, including prescription drugs, most nursing home stays, and extended hospital visits. Out-of-pocket costs for these items can be substantial, and what’s more, they are likely to be concentrated at the end of life. At the same time, it is well documented that poverty is 3-4 times more common among widows than among similarly aged married women. This study examines the potential link between these two phenomena, asking the question: to what extent do out-of-pocket health care costs of a dying spouse affect the financial position of the survivor? We find that out-of-pocket medical spending increases substantially just prior to death, and that these expenditures are large relative to income for a large share of elderly couples. Simulations investigate the extent to which expansions in insurance coverage to include nursing home care or prescription drug coverage could improve the financial well-being of the surviving spouse.

Is nursing home demand affected by the decline in age difference between spouses?

We investigate whether declines in the age difference between spouses has influenced widowhood and nursing home demand. We first use life-table methods to simulate the impact of the declining age gap on the risk of widowhood. We then use the Medicare Current Beneficiary Survey and the Census Public Use Microdata Samples to estimate the impact of widowhood, and other characteristics, on the probability of nursing home entrance. These help us estimate the impact of the declining age gap on nursing home use. We estimate that the decline in the difference in ages between spouses that took place between the birth cohorts of 1900 and 1955 may raise women's annual nursing home expenditures by about $1.4 billion, but lower men's expenditures by about$600 million.age/aging, long-term care, marriage, nursing home

Transfer Behavior within the Family: Results from the Asset and Health Dynamics Survey

If an individual falls on hard times, can he rely on his family for financial support? In view of proposed reductions in public assistance programs, it is important to understand the mechanisms through which families provide support for their members. In this paper we provide evidence that intra-family transfers are compensatory, directed disproportionally to less well-off members. These results hold both for the incidence of transfers and for the amounts. Within a given year, adult children in the lowest income category are 6 percentage points more likely to receive a financial transfer from their parents, and on average they receive over $300 more than siblings in the highest income category. The data used in this study, the new Asset and Health Dynamics Survey (AHEAD), contain information on all children in the family. Thus we are able to estimate models which control for unobserved differences across families. Our results are robust to these specifications. Additionally, we do not find evidence that parents provide financial assistance to their children in exchange for caregiving.

The Economic Status of Elderly Divorced Women

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Income Prospects and Age at Marriage

In an earlier paper Courtship as a Waiting Game, Mark Bagnoli and I proposed a theory that explained why it is the case that in almost every society and at almost all recorded times, the average age at marriage of men exceeds that of women. An additional prediction of this model was that men who married later in life would turn out to have higher incomes when they reach maturity than those who marry young. The current paper reviews this theory and tests it with U.S. data. Consistent with our theory, we find that there is a strong positive relationship for men between age at marriage and earnings in later life and that no such relationship exists for women.Center for Research on Economic and Social Theory, Department of Economics, University of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/101096/1/ECON080.pd

Understanding Participation in SSI

Working Paper: 2015-319The Supplemental Security Income program (SSI) provides a guaranteed income for the elderly. As such it can serve to mitigate any deleterious effects of reductions in Social Security benefits that might result from any Social Security reform. However, participation in SSI among qualified individuals has proven to be low. We show that this low participation rate, just over 50%, observed at the program’s inception has continued to today with little if any change. We also find that transfers from children are far larger among eligible non-participants suggesting that family assistance may offset the need for public assistance.Social Security Administrationhttp://deepblue.lib.umich.edu/bitstream/2027.42/111040/1/wp319.pdfDescription of wp319.pdf : Working pape

The Earnings Effects of Marital Status: An International Comparison

This paper investigates the impact of marital status on the earnings of males 25 to 64 years of age across twelve countries

Liquidity Constraints, the Extended Family, and Consumption

This study examines whether the extended family influences consumption. Extending prior tests on food consumption to total consumption, little to no evidence is found in support of altruism among related households and or that fluctuations in dynastic income affects one’s own consumption. However, the effect of transitory fluctuations in own income on consumption are contingent on own wealth and the wealth of the extended family, with estimates of the marginal propensity to consume roughly three times higher for individuals whose own and extended family wealth is low versus individuals whose own and extended family wealth is high.Social Security Administrationhttp://deepblue.lib.umich.edu/bitstream/2027.42/111883/1/wp320.pdfDescription of wp320.pdf : Working pape