Welfare Cost of Medicare
نویسنده
چکیده
This paper studies the welfare cost of Medicare system. A general equilibrium overlapping generations model with endogenous health accumulation is developed and calibrated to mimic the US economy. The quantitative results show that by eliminating Medicare, we actually obtain a welfare gain which is equivalent to a lump-sum increase in consumption to the agents at a magnitude of 5.1% of GDP. The welfare gain mainly comes from three sources: remove the labor market distortion through the working age, reduce the inAssistant Professor in the Department of Economics at the University of Hawaii at Mānoa. E-mail: [email protected]
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