2015 Fiscal Year Research-status Report
Wealth-Health Inequality at Retirement: an Implication for a Social Security Reform
| Project/Area Number |
15K03505
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| Research Institution | National Graduate Institute for Policy Studies |
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Principal Investigator |
Porapakkarm P. 政策研究大学院大学, 政策研究科, 助教授 (10751266)
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| Project Period (FY) |
2015-04-01 – 2018-03-31
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| Keywords | medical spending / health care cost / health insurance |
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| Outline of Annual Research Achievements |
Our first paper from this project is titled Medical Spending in the US: Facts from the Medical Expenditure Panel Survey Dataset. In this paper, we document the important patterns and statistics regarding the medical spending in the U.S. Our findings point out that medical expenses is highly concentrated among a small number of the population. Specifically, the top 5% of spenders account for more than half of the total expenditure. Even higher concentration is observed among hospital spending where the top 5% of spenders contribute around 80% to the total expenditure. The concentration in medical spending decreases with age: the Gini coefficient of the total medical spending is 0.75 for people aged between 25 and 64 years old and 0.63 for people older than 65 years old. We find that average medical spending of people in the bottom income quintile is higher than that of people in the top income quintile for all age groups. In terms of persistence of medical spending, medical spending of people in the bottom and top quintiles has higher persistence relative to other groups.
Our results illustrates that medical expense risk can be an important factor affecting wealth accumulation and contributing toward wealth inequality. Specifically, given that the medical expense risk increases quickly with ages, this can help explaining the observed large wealth gap between healthy and unhealthy people near the retirement age.
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| Current Status of Research Progress |
Current Status of Research Progress
3: Progress in research has been slightly delayed.
Reason
First, we currently find that the underlying health shock process is very important in explaining the wealth accumulation among people in different health status, so called wealth-health gradient. Second, we document that the health shock process is more complicated than those typically assumed in the existing literature. So in order to better understand the wealth-health gradient, we need to develop a new health shock process which can better match the dynamic of health status as in the data.
Though the unexpected second findings cost us more work and time than our initial estimation, we believe that this will make an important contribution to existing literature, our understanding of health risk over a lifecycle, and the underlying factors behind the wealth inequality among people experiencing different health outcomes.
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| Strategy for Future Research Activity |
Now I and two of my research collaborators are estimating a new health shock process that can better capture the dynamic of health status as in the data. Once we get a convincing estimation of the health shock process, we will introduce into our structural lifecycle model. We expect that the progress after getting the health shock process to be smooth since we will use the existing structural model that we developed in Fiscal Year 2015.
We expect that we will have the draft of the paper and start presenting our findings from this part of the project by the end of this calendar year.
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| Causes of Carryover |
In Fiscal year 2015, I have some budget left to carry over to Fiscal year 2016. This is because I have a research meeting trip to the US during March and April 2016. So the unused fund will be used to cover this trip expenses.
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| Expenditure Plan for Carryover Budget |
1)In Fiscal year 2016, I plan to use the carry over and new funds to support research meeting trips with the two collaborators on this project and conference trips to present our findings.
2)A part of the funds will be allocated to purchase and upgrade research equipment, such as computer and its peripherals. This includes software licensing fees.
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