Unbiased Analysis of Today's Healthcare Issues

Use of Medicaid in old age

Written By: Jason Shafrin - Feb• 25•14

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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One Comment

  1. […] Jason Shafrin has an interesting post about Medicaid eligibility among elderly Americans and how it related to income.  Most people are not surprised to know that low-income Americans rely heavily on Medicaid in their later years.  But roughly one in five higher income (top two quintiles) people end up qualifying for Medicaid as they age (the study looked at age 96).  This is a result of the extremely high cost of nursing home care and the fact that some states use “medical need” eligibility guidelines and take into consideration the cost of care as well as the patient’s financial status.  Jason’s post and the study to which he links are both interesting reads. […]

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