Events

Can health insurance, in particular Medicare, improve and extend the productive lives of the elderly? While Medicare has been shown to increase the use of healthcare services, decrease mortality and reduce exposure to catastrophic medical spending risk, its impact on the day to day lives of the elderly is not well understood. Using a regression discontinuity research design, we consider the effect of Medicare on functional limitations, activities of daily living, work limitations and a host of other measures of physical and psychological wellbeing. We demonstrate sharp improvements in functional limitations, work disability and, to some extent, measures of psychological wellbeing at age 65. We explore several mechanisms to explain these patterns such as health care and prescription drug utilization and health behaviors. These findings might hold important implications for the cost-benefit analysis of public health insurance schemes and lessons to reduce work disability among the elderly.