Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/36003
Authors: 
Michaud, Pierre-Carl
Goldman, Dana
Lakdawalla, Darius
Zheng, Yuhui
Gailey, Adam H.
Year of Publication: 
2009
Series/Report no.: 
IZA Discussion Papers 4366
Abstract: 
The public economic burden of shifting trends in population health remains uncertain. Sustained increases in obesity, diabetes, and other diseases could reduce life expectancy - with a concomitant decrease in the public-sector's annuity burden - but these savings may be offset by worsening functional status, which increases health care spending, reduces labor supply, and increases public assistance. Using a microsimulation approach, we quantify the competing public-finance consequences of shifting trends in population health for medical care costs, labor supply, earnings, wealth, tax revenues, and government expenditures (including Social Security and income assistance). Together, the reduction in smoking and the rise in obesity have increased net public-sector liabilities by $430bn, or approximately 4% of the current debt burden. Larger effects are observed for specific public programs: annual spending is 10% higher in the Medicaid program, and 7% higher for Medicare.
Subjects: 
Disability
health care costs
social security
microsimulation
JEL: 
I10
I38
J26
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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