Use of Medicaid in old age

Many health care wonks know that Medicaid covers long-term care for poor elderly individuals.  However, the impact of Medicaid among the elderly may be underappreciated.  As a paper by Di Nardi, French and Jones, finds:

Among respondents in the lowest quintile of lifetime income, nearly seventy percent are receiving Medicaid at age 74.

Medicaid use isn’t just people who were poor for most of their lives.

In the two highest quintiles, eligibility at age 74 is negligible, but grows to twenty percent by age 96…although the lifetime discounted presented value of Medicaid payments does decrease with permanent income, even higher income people can receive sizeable Medicaid payments, as they tend to live longer and face higher medical needs in old age.

Why is Medicaid so popular with even the elderly rich? Mostly because long-term care is expensive and Medicaid provides insulation against rising costs. According to the authors model:

In the top income quintile, out-of-pocket spending rises rapidly from around $4,000 per year at age 74 to $20,000 at age 100; for the lower two income quintiles, out-of-pocket spending remains below $2,000 per year as an individual ages.


  • Mariacristina De Nardi, Eric French, and John Bailey Jones. Medicaid Insurance in Old Age. NBER Working Paper 19151.

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