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A tax on work for the elderly: Medicare as a secondary payer (Goda et al. 2007)

Absence of conflict of interest.

Citation

Goda, G. S., Shoven, J. B., & Slavov, S. N. (2007). A tax on work for the elderly: Medicare as a secondary payer. (NBER Working Paper No. 13383). Cambridge, MA: National Bureau of Economic Research.

Highlights

  • The study’s objective was to examine the impact of Medicare as a Secondary Payer (MSP) on older workers’ labor force participation and full-time employment
  • The study used a nonexperimental regression design. The authors used data from the 1980 to 2006 March Supplement of the Current Population Survey.
  • The study found that labor force participation for older males increased following the enforcement of the MSP policy, and that older males and females in the labor force were more likely to be employed full time after the policy was enforced.
  • The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before the intervention, and confounding factors could have impacted older workers differentially during the time periods examined. This means we are not confident that the estimated effects are attributable to MSP; other factors are likely to have contributed.

Intervention Examined

Medicare as a Secondary Payer

Features of the Intervention

MSP was adopted by Medicare in 1982. People working at firms with 20 or more employees who would normally be eligible for Medicare must receive employer-sponsored health insurance and can only receive Medicare as a secondary payer. The policy applies to workers 65 and older and their spouses. The policy was enacted in 1982, but was not widely enforced until 1995 through more rigorous efforts to determine which people are eligible for Medicare as a primary payer.

Features of the Study

The authors used a statistical model to compare the outcomes of workers ages 60 to 64 with workers ages 66 to 69. The study estimated difference-in-differences models using Current Population Survey data from 1984 to 2006, separated into periods before and after MSP enforcement in 1995.

Findings

Employment

  • The study found that labor force participation for older males increased following MSP enforcement. Older males and females already in the labor force were more likely to be employed full time before and after the policy was enforced.

Considerations for Interpreting the Findings

Although the study used statistical methods (difference-in-differences modeling), the authors did not account for other factors that could have affected the difference between the groups being compared. The study did not control for a measure of employment or earnings greater than one year before the intervention. Further, there were likely other changes in policy that affected workers ages 60 to 64 differently than workers ages 66 to 69. The authors describe changes in Social Security earnings tests during the 1978 to 2000 period that could change incentives for workers ages 65 to 69.

Causal Evidence Rating

The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before the intervention, and confounding factors could have impacted older workers differentially during the time periods examined. This means we are not confident that the estimated effects are attributable to MSP; other factors are likely to have contributed.

Reviewed by CLEAR

August 2019

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