Public policy and health insurance choices of the elderly: Evidence from the medicare buy-in program

Research output: Contribution to journalArticlepeer-review

11 Scopus citations


This study provides evidence on health insurance decisions of senior citizens. Nearly all senior citizens have health insurance coverage through Medicare, but poor seniors may also qualify for Medicaid that fills many gaps in Medicare coverage. Since 1987, the Medicaid program has expanded eligibility. Using the SIPP, I find that Medicaid eligibility increased from 8.7% in 1987 to 12.4% in 1995. For every 100 elderly who became eligible, approximately 50 took up Medicaid, but more than 30 dropped private coverage, resulting in crowd-out of 60%. Crowd-out came from individuals dropping privately purchased health insurance rather than dropping employer-provided retiree health insurance. The roles of asset tests, health status, and the panel structure of the SIPP are also explored. I find that a major strength of the SIPP is in its point-in-time asset information for determining Medicaid eligibility, while the changing income and demographic information over the course of the 2-year panel adds little insight beyond cross-sectional data.

Original languageEnglish
Pages (from-to)301-324
Number of pages24
JournalJournal of Public Economics
Issue number3
StatePublished - Nov 2000

Bibliographical note

Funding Information:
I thank Jonathan Gruber for helpful discussions and assistance in obtaining some data used in this study. In addition, Janet Currie, David Cutler, Dean Hyslop, Joseph Newhouse, Douglas Staiger, Katherine Swartz, David Wise, Richard Woodbury, two anonymous referees and the editor of this journal, and participants at the NBER Health Economics conference and the Harvard-MIT-BU health seminar provided useful discussion. Gloria Chiang and Geoffrey Rapp provided excellent research assistance. This work was supported by the NBER Health and Aging Fellowship. The data and STATA programs used in this study are available from the author.


  • Aging
  • Crowd-out
  • H51
  • Health insurance
  • I11
  • J14
  • Medicaid
  • Medicare

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Public policy and health insurance choices of the elderly: Evidence from the medicare buy-in program'. Together they form a unique fingerprint.

Cite this