TY  - JOUR
AU  - Samwick, Andrew
TI  - Means-Testing Federal Health Entitlement Benefits
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 23990
PY  - 2017
Y2  - November 2017
DO  - 10.3386/w23990
UR  - http://www.nber.org/papers/w23990
L1  - http://www.nber.org/papers/w23990.pdf
N1  - Author contact info:
Andrew Samwick
6106 Rockefeller Hall
Department of Economics
Dartmouth College
Hanover, NH 03755-3514
Tel: 603/646-2893
Fax: 603/646-2122
E-Mail: andrew.samwick@dartmouth.edu
M1  - published as Andrew A. Samwick. "Means Testing Federal Health Entitlement Benefits," in Robert A. Moffitt, editor, "Tax Policy and the Economy, Volume 32" University of Chicago Press (2018)

AB  - Recent federal legislation has linked the price paid for health insurance benefits to current income.  Under the Patient Protection and Affordable Care Act of 2010, individuals and families with income as high as 400 percent of the federal poverty level are eligible for premium tax credits that limit their health insurance premiums to under 10 percent of their income.  Under the Medicare Modernization Act of 2003, higher-income beneficiaries face income-related premiums over three times the standard premium for Part B coverage.  For workers at or near retirement age, means-testing based on current income provides an incentive for early retirement, dissaving, and income manipulation, raising concerns about the efficiency of such means-testing.  Further, current income is subject to short-term fluctuations, making it a noisy predictor of ability to pay.  Using the Health and Retirement Study and linked Social Security earnings histories, this paper introduces a measure of lifetime income that compares favorably to current income as a basis for means-testing.  It offers less short-term variation in premiums while improving incentives for pre-retirement work and saving.
ER  -