Social Security and the Rise in Health Spending ∗

  title={Social Security and the Rise in Health Spending ∗},
  author={Kai Zhao},
In a quantitative model of Social Security with endogenous health, I argue that Social Security increases the aggregate health spending of the economy because it redistributes resources to the elderly whose marginal propensity to spend on health is high. I show by using computational experiments that the expansion of US Social Security can account for over a third of the dramatic rise in US health spending from 1950 to 2000. In addition, Social Security has a spill-over effect on Medicare. As… CONTINUE READING