Retirement Security and Health Costs

Abstract

Abstract Health care spending in the US has risen faster than incomes for decades, but the pace slowed materially after the passage of the Affordable Care Act (ACA). Using data from the Medicare Current Beneficiary Survey, we examine what has happened to out-of-pocket health care spending by different income groups of the elderly over time, and how this has affected resources available for other consumption. We find that the slower pace of health care spending from the ACA was particularly beneficial to the elderly, who devote a greater share of income to health care costs do than the non-elderly. We then examine how out-of-pocket spending on health care by the elderly will change going forward, given current projections for health care spending to accelerate again, and we show that resources available for other spending may fall appreciably for lower income groups.