Medicaid, Medicare, and Social Security for Couples and Singles

Social Security, Medicare, and Medicaid jointly account for a large share of Federal government expenditures (45 percent in 2017) and the cost of these programs is projected to increase due to aging population and rising medical costs. Most of the research on these topics do not consider the distinction between couples and singles. This project utilizes a rich framework including both couples and singles to examine taxation, Social Security, and Medicaid, with the goal of evaluating the costs and benefits of these programs. The findings in this research will have broad policy implications on these government programs. The research will respond to the urgent need in understanding these costs and benefits given the recent COVID-19 induced recession and corresponding challenges in raising taxes and financing government programs.

This research project will yield two main contributions. First, it will carefully estimate a rich structural model of longevity and medical expenses risks, and bequest motives of couples and singles during retirement. Second, it will develop an overlapping-generations model with working and retirement stages for couples and singles and it will use this model to study the costs and benefits of several Social Security, Medicare, and Medicaid reforms, in conjunction with various tax changes. The first part of the project will yield new findings about the elderly, which will help in understanding the risks that they face and the tools that they currently have at their disposal to insure these risks. The second part of this project will explore how to reform Medicaid, Medicare, and Social Security in a model that incorporates couples and singles, the risks that they face, and their motivation to work and save.