Housing is mostly exempted from Medicaid and Supplemental Social Insurance means tests. Reforms of this special treatment have been debated, but little is known about its costs, benefits, and redistributive implications. I estimate a life cycle model of single retirees accounting for this exemption. It shows that the homestead exemption explains important patterns of Medicaid recipiency and that it is highly valued. It also shows that estate recovery could cover most of its costs with possibly limited negative welfare consequences. Finally, the model predicts that removing the homestead exemption or enforcing estate recovery programs would reduce redistribution toward lower-income retirees.
"Housing in Medicaid: Should It Really Change?"
American Economic Journal: Economic Policy,
Intertemporal Household Choice; Life Cycle Models and Saving
Household Finance: Household Saving, Borrowing, Debt, and Wealth
National Government Expenditures and Health
Health Insurance, Public and Private
Health: Government Policy; Regulation; Public Health
Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
Retirement; Retirement Policies