Out-of-Pocket Health Expenditures: A Suggested Role for Social Security |
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| Authors: | Itzhak Zilcha Nancy Schneier |
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| Affiliation: | 1. Itzhak Zilcha works at the College of Management Academic Studies, Israel;2. e-mail: izil@post.tau.ac.il;3. phone: 972-3963-5749;4. fax: 972-3963-5823. Nancy Schneier works for a large law firm in New York City. We are very thankful to our referees for the invaluable suggestions we received during the refereeing process and which have improved our article tremendously. This article was subject to double-blind peer review. |
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| Abstract: | We present economic data to demonstrate that the (random) out-of-pocket health-related expenses of seniors who face medical problems are significant and increasing over time. This remains the case even when we take into account the availability of supplemental health insurance. We propose to apply a modest part of Social Security benefits, without increasing the total expenses of this system, to provide mandatory supplemental health insurance for all recipients. Using a theoretical framework we demonstrate that introducing such additional role for Social Security makes individuals (ex ante) better off and hence results in a Pareto dominating new regime for Social Security. |
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