Estimating the Effect of Disability on Medicare Expenditures

• Main Author: Burk, David Morris
• Format: Others
• Published: BYU ScholarsArchive 2009
• Subjects: generalized method of moments; health care expenditures; Medicare; Medicare disability; Statistics and Probability
• Online Access: https://scholarsarchive.byu.edu/etd/2127; https://scholarsarchive.byu.edu/cgi/viewcontent.cgi?article=3126&context=etd

We consider the effect of disability status on Medicare expenditures. Disabled elderly historically have accounted for a significant portion of Medicare expenditures. Recent demographic trends exhibit a decline in the size of this population, causing some observers to predict declines in Medicare expenditures. There are, however, reasons to be suspicious of this rosy forecast. To better understand the effect of disability on Medicare expenditures, we develop and estimate a model using the generalized method of moments technique. We find that newly disabled elderly generally spend more than those who have been disabled for longer periods of time. Also, we find that increases in expenditures have risen much more quickly for those disabled Medicare beneficiaries who were at the higher ends of the expenditure distribution before the increases.