%0 Journal Article %J JAMA Neurology %D Forthcoming %T Declines in Wealth Among US Older Adults at Risk of Dementia. %A Li, Jing %A Skinner, Jonathan S %A Kathleen McGarry %A Nicholas, Lauren Hersch %A Wang, Shao-Pang %A Bollens-Lund, Evan %A Kelley, Amy S %K Dementia %K medical cost %K Wealth %X Dementia is a set of neurocognitive conditions marked by a gradual deterioration of cognitive capacity that interferes with daily life, with Alzheimer disease being the most common.1 This process may adversely affect household wealth, a key social determinant of health, due to negative outcomes of financial decision capacity2 and need for expensive medical and long-term care services.3,4 We compared trajectories in household wealth for older adults (aged ≥65 years) who developed probable dementia with those of a control cohort without dementia. %B JAMA Neurology %G eng %R 10.1001/jamaneurol.2023.3216 %0 Report %D 2023 %T Long-term Care in the United States %A Gruber, Jonathan %A Kathleen McGarry %K Informal care %K Long-term Care %K Wealth %X The population of the United States, as with the rest of the world, is aging rapidly, with the most rapid growth occurring among the age 85 and older population, those who rely most on long-term care. In this chapter, we review the delivery and financing of long-term care in the U.S. We show that the resources of most elderly in the U.S. are insufficient to finance these ongoing long-term care needs and the public sector finances the majority of long-term care spending. At the same time, informal care plays a critical role, with the elderly at every age and every disability level receiving informal care more frequently than formal care. Indeed, when properly valued, informal care accounts for more than one-third of the nearly 2 percent of U.S. GDP devoted to long-term care. %B Working Paper %I NBER %C Cambridge, MA %G eng %R 10.3386/w31881 %0 Book Section %B New Models for Managing Longevity Risk: Public-Private Partnerships %D 2022 %T Perceptions of Mortality: Individual assessment of longevity risk %A Kathleen McGarry %A Olivia S. Mitchell %K Life Expectancy %K Mortality %K Survival %B New Models for Managing Longevity Risk: Public-Private Partnerships %I Oxford University Press %@ 978–0–19–285980–8 %G eng %& 2 %R 10.1093/oso/9780192859808.001.0001 %0 Book Section %B America’s Aging Workforce and the Future of ’Working Longer’ %D 2020 %T How Caregiving for Parents Reduces Women’s Employment: Patterns Across Sociodemographic Groups %A Sean Fahle %A Kathleen McGarry %K Caregiving %K eldercare %K female labor force participation %K female labor supply %K Informal care %K Long-term Care %X This chapter examines the social patterns of elder caregiving among women ages 50 and older in the United States. We find that women who provide personal care for parents or parents-in-law, tend to be from more advantaged sociodemographic groups, with larger differences by socioeconomic status than by race and ethnicity. Prior to initiating care, caregivers also have greater labor market attachment than non-caregivers. In contrast, although less likely to provide care, women from less advantaged groups tend to provide more time-intensive care when they do provide care, particularly in the extreme upper-end of the distribution of care hours. We find strong negative associations between caregiving and employment, hours, and earnings, both immediately and over a longer 10-year period. The relationship between care and work is similar across the sociodemographic groups that we examine. %B America’s Aging Workforce and the Future of ’Working Longer’ %I Oxford University %G eng %U https://squaredawayblog.bc.edu/wp-content/uploads/2020/12/Fahle_McGarry_Overtime.pdf %0 Report %D 2020 %T Perceptions of Mortality: Individual Assessments of Longevity Risk %A Kathleen McGarry %K Health Shocks %K longevity risk %K Survival %X Financially successful retirement depends in large part on managing longevity risk: individuals need to save during their working lives to cover expenses in retirement, and then they must spend down those savings carefully so as not to outlive their assets. Despite the centrality of individuals’ expectations regarding life expectancy, little is known about how longevity expectations are formed and how they evolve as individuals age. This paper assesses the evolution of subjective survival probabilities, defined as the probabilities that people believe they will live to at least 75 or 85 years of age. I examine the correlates of these reported probabilities when initially measured, how they change over time, and in particular, how they change with major life course events like the death of a parent, in-law, spouse, or sibling. I also examine how the subjective probabilities change in response to health shocks such as a heart attack or diagnosis of diabetes. %B Wharton Pension Research Council Working Papers %I University of Pennsylvania %C Philadelphia %G eng %U https://repository.upenn.edu/cgi/viewcontent.cgi?article=1680&context=prc_papers %0 Journal Article %J Journal of the American Geriatrics Society %D 2020 %T Residential Setting and the Cumulative Financial Burden of Dementia in the 7 Years Before Death %A Amy Kelley %A Kathleen McGarry %A Bollens-Lund, Evan %A Rahman, Omari-Khalid %A Husain, Mohammed %A Ferreira, Katelyn B. %A Jonathan S Skinner %K community-dwelling older adults %K Dementia %K health-related costs %K Medicare and Medicaid %K nursing home %X OBJECTIVES Care for older adults with dementia during the final years of life is costly, and families shoulder much of this burden. We aimed to assess the financial burden of care for those with and without dementia, and to explore differences across residential settings. DESIGN Using the Health and Retirement Study (HRS) and linked claims, we examined total healthcare spending and proportion by payer—Medicare, Medicaid, out-of-pocket, and calculated costs of informal caregiving—over the last 7 years of life, comparing those with and without dementia and stratifying by residential setting. SETTING The HRS is a nationally representative longitudinal study of older adults in the United States. PARTICIPANTS We sampled HRS decedents from 2004 to 2015. To ensure complete data, we limited the sample to those 72 years or older at death who had continuous fee-for-service Medicare Parts A and B coverage during the 7-year period (n = 2909). MEASUREMENTS We compared decedents with dementia at last HRS assessment with those without dementia across annual and cumulative 7-year spending measures, and personal characteristics. We present annual and cumulative spending by payer, and the changing proportion of spending by payer over time, comparing those with and without dementia and stratifying results by residential setting. RESULTS We found that, consistent with prior studies, people with dementia experience significantly higher costs, with a disproportionate share falling on patients and families. This pattern is most striking among community residents with dementia, whose families shoulder 64% of total expenditures (including \$176,180 informal caregiving costs and \$55,550 out-of-pocket costs), compared with 43% for people with dementia residing in nursing homes (\$60,320 informal caregiving costs and \$105,590 out-of-pocket costs). CONCLUSION These findings demonstrate disparities in financial burden shouldered by families of those with dementia, particularly among those residing in the community. They highlight the importance of considering the residential setting in research, programs, and policies. %B Journal of the American Geriatrics Society %G eng %U https://onlinelibrary.wiley.com/doi/abs/10.1111/jgs.16414 %9 Journal %R 10.1111/jgs.16414 %0 Book Section %B Women Working Longer: Increased Employment at Older Ages %D 2018 %T Labor Market Implications of Providing Family Care %A Sean Fahle %A Kathleen McGarry %A Goldin, Claudia %A Katz, Lawrence F. %K Caregiving %K Employment and Labor Force %K Family Roles/Relationships %B Women Working Longer: Increased Employment at Older Ages %I University of Chicago Press %C Chicago %P 157-178 %@ 9780226532509 %G eng %R 10.7208/chicago/9780226532646.001.0001 %0 Journal Article %J Demography %D 2018 %T Parental Investments in College and Later Cash Transfers %A Steven Haider %A Kathleen McGarry %K College %K Family transfers %K Finances %K Social Support %X Parents often provide generous financial transfers to their adult children, perhaps assisting with college expenses, recognizing major life course events, or cushioning against negative financial shocks. Because resources are limited, a transfer made to one child likely affects transfers made to others in the family. Despite such possibilities, data limitations have led previous authors to focus almost exclusively on a single type of transfer made at a single point in time. Using data from the Health and Retirement Study, we examine the relationships among parental transfers for college and later cash transfers to all children within a family. We find that parents typically spend differentially on the postsecondary schooling of their children but find no evidence that this differential spending is offset by later cash transfers. %B Demography %V 55 %P 1705-1725 %8 10/2018 %G eng %U http://link.springer.com/10.1007/s13524-018-0703-6http://link.springer.com/content/pdf/10.1007/s13524-018-0703-6.pdfhttp://link.springer.com/content/pdf/10.1007/s13524-018-0703-6.pdfhttp://link.springer.com/article/10.1007/s13524-018-0703-6/fulltext.html %N 5 %! Demography %R 10.1007/s13524-018-0703-6 %0 Journal Article %J Education Finance and Policy %D 2018 %T Postsecondary Schooling and Parental Resources: Evidence from the PSID and HRS %A Steven Haider %A Kathleen McGarry %K Education %K Inequality %K Parents %K PSID %X We examine the association between young adult postsecondary schooling and parental financial resources using two datasets that contain high-quality data on parental resources: the Panel Study of Income Dynamics (PSID) and the Health and Retirement Study (HRS). We find the association to be pervasiveit exists for income and wealth, it extends far up the income and wealth distributions, it remains even after we control for a host of other characteristics, and it continues beyond simply beginning postsecondary schooling to completing a four-year degree. Using the Transition to Adulthood supplement to the PSID, we also find that financial resources strongly affect postsecondary schooling for all levels of high school achievement, and particularly for those at the highest level. %B Education Finance and Policy %V 13 %P 72-96 %G eng %U http://www.mitpressjournals.org/doi/abs/10.1162/edfp_a_00219http://www.mitpressjournals.org/doi/pdf/10.1162/EDFP_a_00219 %N 1 %! Education Finance and Policy %R 10.1162/edfp_a_00219 %0 Report %D 2017 %T Caregiving and work: The relationship between labor market attachment and parental caregiving %A Sean Fahle %A Kathleen McGarry %K Caregiving %K Employment and Labor Force %X There has been much concern over the provision of long-term care and the stresses it imposes on the family members who provide that care. However, despite the importance of this issue, it has been difficult to assess a causal relationship between caregiving and work. A chief concern is that those with weaker attachments to the labor force may be more willing to provide care— inducing a negative correlation when caregiving itself does not negatively affect employment. In this study we draw on 20 years of data from the Health and Retirement Study to examine anew the relationship between parental caregiving and work. We use two alternative identification strategies: First, we exploit the multiple observations per person existing in our data to estimate a fixed effects model for the relationship between caregiving and work. Second, we use unique data from the Social Security Administration on earnings histories to control for a woman’s labor market behavior long before the potential need to provide care. We find evidence that caregivers have at least a strong, and by some measures a stronger, relationship to the labor market than non-caregivers. Rather than labor force attachment, the provision of care appears to be driven primarily by parental need and by the availability of alternative caregivers, particularly sisters. However, we also find that caregiving has negative long-term effects on employment and earnings and can thus be detrimental to the financial well-being of caregivers. %B Working Paper Series %I Michigan Retirement Research Center %C Ann Arbor, MI %8 01/2017 %G eng %U http://www.mrrc.isr.umich.edu/publications/papers/pdf/wp356.pdf %0 Book Section %B Women Working Longer: Increased Employment at Older Ages %D 2017 %T Women Working Longer: Labor Market Implications of Providing Family Care %A Sean Fahle %A Kathleen McGarry %K family and work %K Labor force participation %K women %X Women have been working longer for a long time in US history. Their labor market participation increased decade after decade during the twentieth century, as more women were drawn into the labor force. But that is an old story. The new story is that a large portion of women are working a lot longer into their sixties and even their seventies. Their increased participation at older ages started in the late 1980s before the turnaround in older men’s labor force participation and before the economic downturns of the first decade of the twenty- first century. %B Women Working Longer: Increased Employment at Older Ages %I University of Chicago Press %P 157-181 %G eng %U http://www.nber.org/chapters/c13800 %0 Journal Article %J Journal of Public Economics %D 2016 %T Dynamic aspects of family transfers %A Kathleen McGarry %K Adult children %K Divorce %K Job loss %K Marriage %K Older Adults %X Parents transfer a great deal to their adult children, and we have rich theoretical models providing a framework for these transfers. However, both the models and existing empirical work typically examine behavior in the cross section. To date, we know little about the dynamic aspects of family transfers. Here I examine transfers over a span of 17 years and find substantial changes in recipiency over time and a strong negative correlation between transfers and transitory income. I also find that events such as job loss and divorce are strong predictors of parental transfers and, although rare, are typically associated with larger transfers than income alone might predict. Finally, transfers are distributed unequally across siblings, and perhaps surprisingly, the distribution of transfers becomes even more unequal when examined over an extended period of time than in any single year. The evidence presented here thus suggests that dynamic analyses can provide insights into behavior that are impossible to obtain in a static context. %B Journal of Public Economics %V 137 %P 1 - 13 %8 Jan-05-2016 %G eng %U http://linkinghub.elsevier.com/retrieve/pii/S0047272716300147http://api.elsevier.com/content/article/PII:S0047272716300147?httpAccept=text/xmlhttp://api.elsevier.com/content/article/PII:S0047272716300147?httpAccept=text/plain %! Journal of Public Economics %R 10.1016/j.jpubeco.2016.03.008 %0 Journal Article %J Ann Intern Med %D 2015 %T The burden of health care costs for patients with dementia in the last 5 years of life. %A Amy Kelley %A Kathleen McGarry %A Rebecca Jean Gorges %A Jonathan S Skinner %K Aged %K Aged, 80 and over %K Cost of Illness %K Dementia %K Female %K Health Expenditures %K Humans %K Insurance, Health %K Male %K Medicaid %K Medicare %K Retrospective Studies %K Socioeconomic factors %K Terminal Care %K United States %X

BACKGROUND: Common diseases, particularly dementia, have large social costs for the U.S. population. However, less is known about the end-of-life costs of specific diseases and the associated financial risk for individual households.

OBJECTIVE: To examine social costs and financial risks faced by Medicare beneficiaries 5 years before death.

DESIGN: Retrospective cohort.

SETTING: The HRS (Health and Retirement Study).

PARTICIPANTS: Medicare fee-for-service beneficiaries, aged 70 years or older, who died between 2005 and 2010 (n = 1702), stratified into 4 groups: persons with a high probability of dementia or those who died because of heart disease, cancer, or other causes.

MEASUREMENTS: Total social costs and their components, including Medicare, Medicaid, private insurance, out-of-pocket spending, and informal care, measured over the last 5 years of life; and out-of-pocket spending as a proportion of household wealth.

RESULTS: Average total cost per decedent with dementia ($287 038) was significantly greater than that of those who died of heart disease ($175 136), cancer ($173 383), or other causes ($197 286) (P < 0.001). Although Medicare expenditures were similar across groups, average out-of-pocket spending for patients with dementia ($61 522) was 81% higher than that for patients without dementia ($34 068); a similar pattern held for informal care. Out-of-pocket spending for the dementia group (median, $36 919) represented 32% of wealth measured 5 years before death compared with 11% for the nondementia group (P < 0.001). This proportion was greater for black persons (84%), persons with less than a high school education (48%), and unmarried or widowed women (58%).

LIMITATION: Imputed Medicaid, private insurance, and informal care costs.

CONCLUSION: Health care expenditures among persons with dementia were substantially larger than those for other diseases, and many of the expenses were uncovered (uninsured). This places a large financial burden on families, and these burdens are particularly pronounced among the demographic groups that are least prepared for financial risk.

PRIMARY FUNDING SOURCE: National Institute on Aging.

%B Ann Intern Med %I 163 %V 163 %P 729-36 %8 2015 Nov 17 %G eng %N 10 %1 http://www.ncbi.nlm.nih.gov/pubmed/26502320?dopt=Abstract %4 Care and treatment/Public Policy/Financial risk/Dementia/Medicare/Palliative care/Health care expenditures %$ 999999 %R 10.7326/M15-0381 %0 Thesis %D 2015 %T Essays on Intergenerational Transfers %A Sean Fahle %Y Kathleen McGarry %K Adult children %K Healthcare %K Methodology %K Public Policy %X The chapters of this dissertation examine transfers between generations across three distinct contexts: a potential role for informal care in U.S. long-term care policy (Chapter 1), the effect of caregiving on bequests (Chapter 2), and making inferences about intra-household allocations using data on intergenerational transfers (Chapter 3). The first chapter poses the question: how can government policy leverage family caregiving to make Medicaid financing of long-term care more sustainable without compromising the well-being of elderly beneficiaries and their families? This question is addressed using a partial equilibrium life-cycle model augmented with a repeated game played between an elderly parent and her adult child over long-term care and living arrangements. The results indicate that policies which either expand access to consumer-directed home care or provide direct financial compensation to caregivers can result in a substantial reduction in the use of institutional care, an increase in informal caregiving, and a decrease in government expenditures. The second chapter is one of the first studies to examine bequest patterns and their determinants using data on actual bequests from a large and approximately representative, longitudinal survey of the U.S. population over age 50. The results indicate that caregiving from and co-residence with adult children are important predictors of the division of assets among children, with child caregivers receiving larger bequests than non-caregivers. The effects are strongest for bequests of housing assets. The salience of housing assets is further supported by evidence of a relationship between ownership of housing assets and the receipt of informal care from children near the end-of-life. The third chapter utilizes a novel source of variation, intergenerational financial transfers from parents to children, to recover the intra-household allocation of resources (the "sharing rule") in a collective model of household behavior. The identifying assumption is that financial transfers from a household to, for instance, the wife's own children (the stepchildren of her husband) can be regarded as the private consumption (an "assignable" good) of the wife. The results indicate that married women receive roughly half of household resources and that an increase in a wife's wage increases her share of household income. %I University of California, Los Angeles %C Los Angeles %V 3704330 %P 174 %8 2015 %G English %U http://proxy.lib.umich.edu/login?url=http://search.proquest.com/docview/1685959877?accountid=14667http://mgetit.lib.umich.edu/?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&rfr_id=info:sid/ProQuest+Dissertations+%26+Theses+Full+Text&rft_val_fmt=info:ofi/ %9 Ph.D. %M 1685959877 %4 0501:Economics %! Essays on Intergenerational Transfers %0 Journal Article %J American Economic Review %D 2013 %T The Estate Tax and Inter Vivos Transfers over Time %A Kathleen McGarry %K Economics %K Estate tax %K Inter Vivos Transfers %K Older Adults %B American Economic Review %V 103 %P 478 - 483 %8 Jan-05-2013 %G eng %U http://pubs.aeaweb.org/doi/10.1257/aer.103.3.478http://pubs.aeaweb.org/doi/pdf/10.1257/aer.103.3.478 %N 3 %! American Economic Review %R 10.1257/aer.103.3.478 %0 Journal Article %J J Gen Intern Med %D 2013 %T Out-of-pocket spending in the last five years of life. %A Amy Kelley %A Kathleen McGarry %A Sean Fahle %A Samuel M Marshall %A Qingling Du %A Jonathan S Skinner %K Aged %K Cause of Death %K Female %K Health Expenditures %K Health Services for the Aged %K Humans %K Male %K Marital Status %K Medicare %K Retrospective Studies %K Socioeconomic factors %K Terminal Care %K United States %X

BACKGROUND: A key objective of the Medicare program is to reduce risk of financial catastrophe due to out-of-pocket healthcare expenditures. Yet little is known about cumulative financial risks arising from out-of-pocket healthcare expenditures faced by older adults, particularly near the end of life.

DESIGN: Using the nationally representative Health and Retirement Study (HRS) cohort, we conducted retrospective analyses of Medicare beneficiaries' total out-of-pocket healthcare expenditures over the last 5 years of life.

PARTICIPANTS: We identified HRS decedents between 2002 and 2008; defined a 5 year study period using each subject's date of death; and excluded those without Medicare coverage at the beginning of this period (n = 3,209).

MAIN MEASURES: We examined total out-of-pocket healthcare expenditures in the last 5 years of life and expenditures as a percentage of baseline household assets. We then stratified results by marital status and cause of death. All measurements were adjusted for inflation to 2008 US dollars.

RESULTS: Average out-of-pocket expenditures in the 5 years prior to death were $38,688 (95 % Confidence Interval $36,868, $40,508) for individuals, and $51,030 (95 % CI $47,649, $54,412) for couples in which one spouse dies. Spending was highly skewed, with the median and 90th percentile equal to $22,885 and $89,106, respectively, for individuals, and $39,759 and $94,823, respectively, for couples. Overall, 25 % of subjects' expenditures exceeded baseline total household assets, and 43 % of subjects' spending surpassed their non-housing assets. Among those survived by a spouse, 10 % exceeded total baseline assets and 24 % exceeded non-housing assets. By cause of death, average spending ranged from $31,069 for gastrointestinal disease to $66,155 for Alzheimer's disease.

CONCLUSION: Despite Medicare coverage, elderly households face considerable financial risk from out-of-pocket healthcare expenses at the end of life. Disease-related differences in this risk complicate efforts to anticipate or plan for health-related expenditures in the last 5 years of life.

%B J Gen Intern Med %I 28 %V 28 %P 304-9 %8 2013 Feb %G eng %N 2 %1 http://www.ncbi.nlm.nih.gov/pubmed/22948931?dopt=Abstract %2 PMC3614143 %4 Public policy/Medicare/End of life/health expenditures/out of pocket costs %$ 69626 %R 10.1007/s11606-012-2199-x %0 Report %D 2012 %T Dynamic Aspects of Family Transfers %A Kathleen McGarry %K Adult children %X Each year parents transfer a great deal of money to their adult children. While intuition might suggest that these transfers are altruistic and made out of concern for the well-being of the children, empirical tests of the model have consistently yielded negative results. However, an important limitation in these sorts of studies and of our understanding of transfers in general has stemmed our inability to observe transfers over time. Estimates of patterns in a single cross section necessarily miss important aspects of behavior. In this paper I expand on the static altruistic model and posit a dynamic model in which parents use current observations on the incomes of their children to update their expectations regarding future incomes and desired future transfers. I then draw on data spanning a 17 year period to examine the dynamic aspects of transfer behavior. I find substantial change across periods in recipiency, large differences across children within the family, and a strong negative correlation between inter vivos transfers and the transitory incomes of the recipients. This evidence suggests that dynamic models can provide insights into transfer behavior that are impossible to obtain in a static context. %B NBER Working Paper %I National Bureau of Economic Research %C Cambridge, MA %G eng %4 Transfers/Families %$ 25340 %R 10.3386/w18446 %0 Report %D 2012 %T Parental Investments in College and Later Cash Transfers %A Steven Haider %A Kathleen McGarry %K Adult children %K Consumption and Savings %K Education %K Public Policy %X The rising cost of college tuition and the accompanying investment parents often make have received considerable attention recently. While classic models in economics make important predictions about the magnitudes of these investments, their distribution across children, and their relationship with later cash transfers, there has been little empirical work examining these predictions, especially with regards to the differential treatment of siblings. Using unique data from a supplement to the Health and Retirement Study, we find that parents typically invest differentially in the schooling of siblings, but we find no evidence that these investments are offset by later cash transfers. %I Cambridge, Mass., National Bureau of Economic Research %G eng %U http://www.nber.org/papers/w18485 %4 Educational Finance/Publicly Provided Goods/intergenerational Transfers/College tuition/Families/siblings %$ 25330 %0 Report %D 2011 %T Co-residence and Geographic Proximity of Mothers and Adult Children in Intact and Step Families %A Judith A Seltzer %A Suzanne M. Bianchi %A Kathleen McGarry %A Jenjira J Yahirun %K Adult children %K Demographics %K Other %I UCLA %G eng %4 Families/geographic dispersion/co-residence/co-residence %$ 25350 %0 Report %D 2010 %T Geographic Dispersion and the Well-being of the Elderly %A Suzanne M. Bianchi %A Kathleen McGarry %A Judith A Seltzer %A Michigan Retirement Research Center %K Adult children %K Demographics %K Healthcare %K Medicare/Medicaid/Health Insurance %K Other %X Perhaps the largest problem confronting our aging population is the rising cost of health care, particularly the costs borne by Medicare and Medicaid. A chief component of this expense is long-term care. Much of this care for an unmarried (mostly widowed) mother is currently provided by adult children. The provision of family care depends importantly on the geographic dispersion of family members. In this study we provide preliminary evidence on the geographic dispersion of adult children and their older unmarried mother. Coresidence is less likely for married adult children, those who are parents and the highly educated and more likely for those who are not working or only employed part time and for black and Hispanic adult children. Close proximity is more common for married children who are parents but less common for the highly educated. When we look at transitions between one wave of data collection and the next (a two-year interval), about half of adult children live more than 10 miles away at both points, a little less than one quarter live within 10 miles at both points, and 8 percent are coresident at both points in time. Among the 17 percent who make a transition, about half of the changes result in greater distance between the adult child and mother and half bring them into closer proximity. The needs of both generations are likely reflected in these transitions. In fact, a mother s health is not strongly related to most transitions and if anything, distance tends to be greater for older mothers relative to those mothers in their early 50s. %B MRRC Working Paper %I Michigan Retirement Research Center, University of Michigan %C Ann Arbor, MI %G eng %U http://hdl.handle.net/2027.42/78351 %4 medicare/medicaid/Long Term Care/Transfers/geographic dispersion/coresidence %$ 24350 %0 Report %D 2010 %T The Risk of Out-of-Pocket Health Care Expenditure at End of Life %A Samuel M Marshall %A Kathleen McGarry %A Jonathan S Skinner %K Demographics %K Health Conditions and Status %K Healthcare %K Net Worth and Assets %X There is conflicting evidence on the importance of out-of-pocket medical expenditures as a risk to financial security, particularly at older ages. We revisit this question, focusing on health care spending near the end of life using data from the Health and Retirement Study for the years 1998-2006. We address difficulties with missing values for various categories of expenditures, outliers, and variations across individuals in the length of the reporting period. Spending in the last year of life is estimated to be 11,618 on average, with the 90th percentile equal to 29,335, the 95th percentile 49,907, and the 99th equal to 94,310. These spending measures represent a substantial fraction of liquid wealth for decedents. Total out-of-pocket expenditures are strongly positively related to wealth and weakly related to income. We find evidence for a mechanism by which wealth could plausibly buy health: large expenditures on home modifications, helpers, home health care, and higher-quality nursing homes, which have been shown elsewhere to improve longevity. %B NBER Working Paper %I National Bureau of Economic Research %C Cambridge, MA %G eng %4 health care costs/demographics/education/wealth/Longevity %$ 23280 %R 10.3386/w16170 %0 Report %D 2009 %T The Long-Term Financial and Health Outcomes of Disability Insurance Applicants %A Kathleen McGarry %A Jonathan S Skinner %K Disabilities %K Healthcare %K Insurance %K Net Worth and Assets %I 11th Annual Joint Conference of the Retirement Research Consortium %G eng %4 DISABILITY/DISABILITY/health outcomes/financial outcomes/financial outcomes/Insurance %$ 26010 %0 Report %D 2008 %T Out-of-Pocket Medical Expenses and Retirement Security %A Kathleen McGarry %A Jonathan S Skinner %K Medicare/Medicaid/Health Insurance %K Retirement Planning and Satisfaction %G eng %4 Medical Expenditures/retirement security/retirement security/retirement planning %$ 26000 %0 Journal Article %J American Economic Review %D 2008 %T Preference Heterogeneity and Insurance Markets: Explaining a Puzzle of Insurance. %A David M Cutler %A Finkelstein, Amy %A Kathleen McGarry %K Health Insurance %K insurance markets %X Standard theories of insurance, dating from Rothschild and Stiglitz (1976), stress the role of adverse selection in explaining the decision to purchase insurance. In these models, higher risk people buy full or near-full insurance, while lower risk people buy less complete coverage, if they buy at all. While this prediction appears to hold in some real world insurance markets, in many others, it is the lower risk individuals who have more insurance coverage. If the standard model is extended to allow individuals to vary in their risk tolerance as well as their risk type, this could explain why the relationship between insurance coverage and risk occurrence can be of any sign, even if the standard asymmetric information effects also exist. We present empirical evidence in five difference insurance markets in the United States that is consistent with this potential role for risk tolerance. Specifically, we show that individuals who engage in risky behavior or who do not engage in risk reducing behavior are systematically less likely to hold life insurance, acute private health insurance, annuities, long-term care insurance, and Medigap. Moreover, we show that the sign of this preference effect differs across markets, tending to induce lower risk individuals to purchase insurance in some of these markets, but higher risk individuals to purchase insurance in others. These findings suggest that preference heterogeneity may be important in explaining the differential patterns of insurance coverage in various insurance markets. %B American Economic Review %V 98 %P 157-162 %8 2008 May %G eng %N 2 %R 10.1257/aer.98.2.157 %0 Journal Article %J American Economic Review %D 2006 %T Multiple Dimensions of Private Information: Evidence from the Long-Term Care Insurance Market %A Finkelstein, Amy %A Kathleen McGarry %K Insurance %K Medicare/Medicaid/Health Insurance %K Risk Taking %X We demonstrate the existence of multiple dimensions of private information in the long-term care insurance market. Two types of people purchase insurance: individuals with private information that they are high risk and individuals with private information that they have strong taste for insurance. Ex post, the former are higher risk than insurance companies expect, while the latter are lower risk. In aggregate, those with more insurance are not higher risk. Our results demonstrate that insurance markets may suffer from asymmetric information even absent a positive correlation between insurance coverage and risk occurrence. The results also suggest a general test for asymmetric information. %B American Economic Review %I 96 %V 96 %P 938-58 %G eng %N 4 %L newpubs20070403_aer.96.4.pdf %4 Insurance, Long Term Care/Insurance Coverage/risk factors %$ 17360 %0 Journal Article %J The American Economic Review %D 2005 %T Dynamic Inefficiencies in Insurance Markets: Evidence from Long-Term Care Insurance %A Finkelstein, Amy %A Kathleen McGarry %A Sufi, Amir %K Long-term Care %K Medicare/Medicaid/Health Insurance %K Risk Factors %X Most analyses of insurance market failures have been implemented in a one-period (static) setting, with considerably less attention devoted to problems arising in a multi-period (dynamic) context. In a dynamic framework, risk-averse individuals benefit not only from period-by-period "event" insurance, but also from insurance against becoming a bad risk and begin reclassified into a higher-risk group with a concomitant increase in premiums. We refer to this latter possibility as "reclassification risk." This article examines the private market for long-term care insurance in the US and present empirical evidence suggesting that it does not provide full insurance against reclassification risk. %B The American Economic Review %V 95 %P 224-228 %G eng %U http://proxy.lib.umich.edu/login?url=https://search.proquest.com/docview/233029440?accountid=14667 %N 2 %0 Journal Article %J Journals of Gerontology, Series B: Psychological and Social Sciences %D 2005 %T Widow(er) Poverty and Out-of-Pocket Medical Expenditures Near the End of Life %A Kathleen McGarry %A Robert F. Schoeni %K Income %K Net Worth and Assets %X Objectives. Elderly widows are three times as likely to live in poverty as older married people. This study investigates the gap in poverty, income, and wealth between these groups. Focus is placed on the role played by out-of-pocket medical expenditures spent on dying spouses. Methods. A national panel survey of people age 70 and older in 1993 was used. Income, poverty, wealth, and out-of-pocket expenditures were examined before and after widowhood, with comparisons made with couples not experiencing a death. Results. Forty-four percent of the difference in economic status between widow(er)s and married elderly persons was due to disparities in economic status that existed prior to widowhood. The remaining 56 was due to factors more directly related to the death of a spouse, including the loss of income and expenses associated with dying. On average, out-of-pocket medical expenditures in the final 2 years of life were equal to 30 of the couple's annual income. For couples in the bottom quarter of the income distribution, these expenditures were 70 of their income. Discussion. As policy makers continue to debate expansions and reforms of Medicare, the potential effects of these reforms on economic well-being, particularly among widows, should be considered. Despite the overwhelming success and popularity of programs such as Social Security and Medicare, some subgroups of the elderly population continue to face substantial risks of living in poverty. Whereas the poverty rate for elderly individuals is now hovering at 10 , the poverty rate for elderly widows is nearly twice as high. When examining poverty rates for women in particular, one finds that approximately 5 of married elderly persons are poor compared with 17 of widows (Figure 1). Although policy makers have repeatedly expressed concern about these high rates and enacted legislation attempting to improve the well-being of surviving spouses, the figure demonstrates that this gap has stubbornly remained (see endnote 1). Obviously, the more that is known about the causes and characteristics of poverty among widows, the better targeted public policy can be. %B Journals of Gerontology, Series B: Psychological and Social Sciences %I 60B %V 60B %P S160-S168 %G eng %U http://psychsoc.gerontologyjournals.org/contents-by-date.0.shtml %N 3 %L pubs_2005_McGarrySchoeni.pdf %4 Widowhood/Poverty/income/Wealth %$ 16210 %0 Journal Article %J National Tax Journal %D 2004 %T Estate and Gift Tax Incentives and Inter Vivos Giving %A Joulfaian, David %A Kathleen McGarry %K Adult children %K Consumption and Savings %K Event History/Life Cycle %K Income %X The estate tax has received a great deal of attention from policy makers and the public in recent years. Yet we know little about its effect on the transfer of wealth. In this paper we explore the effect of the tax on inter vivos giving. In particular, we look at the degree to which wealthy individuals exploit the potential for tax-free transfers as a means of spending-down their estates, and examine the responsiveness of inter vivos transfers over time to changes in the tax law. To address these questions we employ two data sets, each with important strengths and weaknesses. Using panel data from the Health and Retirement Study (HRS) we find that many of the wealthy fail to take advantage of the gift tax annual exemption to make tax-free transfers in any given year. Even those who do make a transfer in one year, often do not repeat the transfer annually and transfer far less than the tax law would allow. We then use data from linked gift and estate tax returns to examine giving over a much longer period. We find in the aggregate that there are sizable shifts in the timing of giving in response to tax changes, but again, the wealthy appear to transfer very little during their lifetimes. Overall, we conclude that while taxes are an important consideration in transfer behavior of the rich, their behavior is not universally consistent with a tax minimization strategy. %B National Tax Journal %I 57 %V 57 %P 429-444 %G eng %N 2 %4 Altruism/Intertemporal Consumer Choice/Life Cycle Models and Saving/Personal Income and Wealth Distribution/Estate Tax %$ 13652 %R https://doi.org/10.1016/S0047-2727(00)00102-X %0 Journal Article %J The Journal of Human Resources %D 2004 %T Health and Retirement: Do Changes in Health Affect Retirement Expectations? %A Kathleen McGarry %K retirement expectations %X The choice of a retirement date is one of the most important decisions facing older workers. It is a decision that will affect their economic well-being for the remainder of their lives. One factor that undoubtedly impacts this choice is the worker's health. However, the many studies examining the relationship between health and retirement have failed to agree on the relative importance of health compared with financial variables. Efforts to do so have been hampered by the difficulty of correctly measuring health status. Much of the concern centers on the fear that subjective reports of health are biased by individuals using poor health as a justification for early retirement. This paper takes advantage of a unique measure of labor force attachment, the subjective probability of continued work, to reexamine the role of health and changes in health status. By focusing exclusively on workers, I eliminate the concern about justification bias among retired individuals and find that subjective reports of health do have important effects on retirement, effects that are arguably stronger than those of the financial variables. The effects of subjective health remain large even when the model includes more objective measures of health, such as disease conditions. I also find that changes in retirement expectations are driven to a much greater degree by changes in health than by changes in income or wealth. %B The Journal of Human Resources %V 39 %P 624-648 %@ 0022166X %G eng %N 3 %R https://doi.org/10.2307/3558990 %0 Book Section %B The Distributional Aspects of Social Security and Social Security Reform %D 2002 %T Guaranteed Income: SSI and the Well-Being of the Elderly Poor %A Kathleen McGarry %E Feldstein, Martin %E Jeffrey B Liebman %K Demographics %K Methodology %K Public Policy %K Social Security %X It is a well known fact that over the past 40 years Social Security has made a major contribution to reducing the poverty levels of elderly persons. At the same time people are beginning to realize the decline in labor force participation of the near-elderly. This paper examines these two topics, as well as, the elderly population that is not being provided sufficient Social Security compensation. Within this context the authors discuss possible changes in Supplemental Security Income, the elimination of the asset test, increasing unearned income disregards, raising guarantees to the poverty line, using social security income, costs of changes, and the effects on poverty. %B The Distributional Aspects of Social Security and Social Security Reform %I University of Chicago Press %C Chicago %G eng %U https://www.nber.org/papers/w7574 %4 Elderly/Low Income Groups/Social Security Research/Supplemental Security Income/Public Policy %$ 8532 %! Guaranteed Income: SSI and the Well-Being of the Elderly Poor %0 Journal Article %J The Economic Journal %D 2002 %T The Predictive Validity of Subjective Probabilities of Survival %A Michael D Hurd %A Kathleen McGarry %K Expectations %K Methodology %X Although expectations, or more precisely subjective probability distributions, play a prominent role in models of decision making under uncertainty, we have had very little data on them. Based on panel data from the Health and Retirement Study, we study the evolution of subjective survival probabilities and their ability to predict actual mortality. In panel, respondents modify their survival probabilities in response to new information such as the onset of a new disease condition. Subjective survival probabilities predict actual survival: those who survived in the panel reported survival probabilities approximately 50 greater at baseline than those who died. %B The Economic Journal %I 112 %V 112 %G eng %U https://www.jstor.org/stable/798539 %N 482 %4 Survival/Subjective Probability %$ 6566 %0 Journal Article %J National Tax Journal %D 2000 %T Behavioral Responses to the Estate Tax: Inter-vivos Giving %A Kathleen McGarry %K Adult children %K Public Policy %X Individuals who value the amount left to heirs have a clear incentive to engage in behavior that reduces the tax; by transferring a portion of an eventual bequest during their lifetime, a parent can substantially reduce the tax eventually paid by an estate. %B National Tax Journal %I 53 %V 53 %P 913-31 %G eng %U https://ideas.repec.org/a/ntj/journl/v53y2000i4p913-32.html %N 4, Part 1 %L pubs_2000_McGarry_KNaTaxJourn.pdf %4 Transfers/Estate Tax/Tax Policy %$ 1084 %0 Report %D 2000 %T Testing Parental Altruism: Implications of a Dynamic Model %A Kathleen McGarry %K Adult children %K Income %X Each year parents transfer a great deal of money to their adult children. While intuition might suggest that these transfers are altruistic and made out of concern for the well-being of the children, the fundamental prediction of the altruistic model has been decisively rejected in empirical tests. This paper shows that, in fact, the prediction that an increase of one dollar in the income of the recipient, accompanied by a decrease of one dollar in the income of the donor, leads to a one dollar reduction in transfers will not hold, if parents use observations on the current incomes of children to update their expectations about future incomes. This result implies that many past studies have relied on too restrictive a test, and furthermore, that our ability to distinguish empirically between altruistic and exchange behavior is severely limited. The paper also analyzes the variation in transfer behavior over time and finds substantial change across periods in recipiency status as well as strong correlation between inter vivos transfers and the transitory income of the recipient. This evidence suggests that dynamic models can provide insights into transfer behavior that are impossible to obtain in a static context. %I NBER %G eng %U http://papers.nber.org/papers/W7593 %4 Personal Income and Wealth Distribution/Inter Vivos Transfers/Altruism/Family transfers, structure %$ 1082 %0 Journal Article %J Journal of Public Economics %D 1999 %T Inter Vivos Transfers and Intended Bequests %A Kathleen McGarry %K Adult children %K Consumption and Savings %K Event History/Life Cycle %X Empirical work on intergenerational transfers has focused on distinguishing between altruistic and exchange motivated behavior. However, these two models are unable to explain the strong tendency for inter vivos transfers to be negatively related to the income of the recipient, while bequests bear no relationship to income. This paper presents a new framework for analyzing transfers from parents to children that is more consistent with observed behavior than are the altruistic and exchange models alone. In particular, the model developed here predicts differing behavior with respect to inter vivos transfers and bequests due to liquidity constraints and uncertainty about the recipient's permanent income. The empirical work uses data from the Health and Retirement Study and the Asset and Health Dynamics Study. The patterns observed in these data are consistent with earlier findings that inter vivos transfers go disproportionately to less well-off children, while bequests are divided equally across children. Further, the results support the predictions of the model in that differences in inter vivos transfers arise from differences in current income, while differences in bequests result when indicators of the children's permanent incomes differ. %B Journal of Public Economics %I 73 %V 73 %P 321-51 %G eng %N 3 %L pubs_1999_McGarry_KJPuEc.pdf %4 Altruism/Consumer Economics: Empirical Analysis/Consumer Economics: Empirical Analysis/Intertemporal Consumer Choice/Life Cycle Models and Saving/Bequests/Family/Transfers %$ 1076 %R 10.1016/S0047-2727(99)00017-1 %0 Book Section %B Inquiries in the economics of aging %D 1998 %T Caring for the Elderly: The Role of Adult Children %A Kathleen McGarry %E David A Wise %K Adult children %K Consumption and Savings %K Demographics %K Healthcare %K Methodology %B Inquiries in the economics of aging %S NBER Project Report series %I University of Chicago Press %C Chicago and London %P 133-63 %G eng %U https://www.nber.org/chapters/c7084.pdf %4 Caregiver Status/Adult Children/Economics of the Elderly/Analysis of Health Care Markets/Marriage/Marital Dissolution/Family Structure/Elderly %$ 1088 %! Caring for the Elderly: The Role of Adult Children %0 Book Section %B Frontiers in the Economics of Aging %D 1998 %T Pensions and the Distribution of Wealth %A Kathleen McGarry %A Davenport, Andrew %E David A Wise %K Net Worth and Assets %B Frontiers in the Economics of Aging %I University of Chicago Press %C Chicago, IL %G eng %4 Pension Wealth %$ 8246 %! Pensions and the Distribution of Wealth %0 Journal Article %J J Health Econ %D 1997 %T Medical insurance and the use of health care services by the elderly. %A Michael D Hurd %A Kathleen McGarry %K Activities of Daily Living %K Aged %K Health Care Surveys %K Health Services for the Aged %K Health Status Indicators %K Hospitalization %K Humans %K Insurance, Health %K Medicare %K Office Visits %K Patient Acceptance of Health Care %K Private Sector %K Probability %K United States %X

The objective of this paper is to find how health insurance influences the use of health care services by the elderly. On the basis of the first wave of the Asset and Health Dynamics Survey, we find that those who are the most heavily insured use the most health care services. Because our data show little relationship between observable health measures and either the propensity to hold or to purchase private insurance, we interpret this as an effect of the incentives embodied in the insurance, rather than as the result of adverse selection in the purchase of insurance.

%B J Health Econ %I 16 %V 16 %P 129-54 %8 1997 Apr %G eng %U https://www.ncbi.nlm.nih.gov/pubmed/10169091 %N 2 %L pubs_1997_Hurd_MJHE.pdf %1 http://www.ncbi.nlm.nih.gov/pubmed/10169091?dopt=Abstract %4 Health Status/Health Services/Economic Status %$ 8100 %R 10.1016/s0167-6296(96)00515-2 %0 Journal Article %J The Journals of Gerontology, Series B: Psychological Sciences and Social Sciences %D 1997 %T Transfer Behavior Within the Family: Results from the Asset and Health Dynamics Survey %A Kathleen McGarry %A Robert F. Schoeni %K Adult children %K Public Policy %X This paper provides new empirical evidence on the relationship between the income of the recipients and the likelihood and magnitude of cash transfers. Results offer strong evidence that respondents are more likely to make transfers and more likely to transfer larger amounts to their children who are less well off. These findings are consistent with recent studies that support the altruistic model of behavior. This study also presents descriptive statistics which cast some doubt on the exchange model of behavior, which views financial transfers as a payment for services. %B The Journals of Gerontology, Series B: Psychological Sciences and Social Sciences %I 52B %V 52B %P 82-92 %G eng %N Spec %L pubs_1997_McGarry_KJGSeriesB.pdf %4 Family/Transfers/Wills/Welfare/Altruism %$ 8082 %0 Report %D 1996 %T Measurement and the Redistribution of Resources Within the Family %A Kathleen McGarry %A Robert F. Schoeni %K Adult children %K Income %X Recent work by a number of economists has opened a debate about the role played by intergenerational transfers. Using the new Health and Retirement Study (HRS), we are better able to address the issues involved. Contrary to the current literature on bequests, we do not find that parents give transfers, respondents give greater financial assistance to their less well off children than to their children with higher incomes. %I RAND, Reprint Series 96-11 %G eng %U http://ideas.repec.org/p/fth/randrs/96-11.html %4 Income Distribution/Intergenerational Transfers %$ 10332 %0 Journal Article %J Journal of Human Resources %D 1995 %T Evaluation of the Subjective Probabilities of Survival in the Health and Retirement Study %A Michael D Hurd %A Kathleen McGarry %K Consumption and Savings %K Disabilities %K Health Conditions and Status %X In the Health and Retirement Study respondents were asked about the chances they would live to 75 or to 85. We analyze these responses to determine if they behave like probabilities of survival, if their averages are close to average probabilities in the population, and if they have correlations with other variables that are similar to correlations with actual mortality outcomes. We find that generally they do behave like probabilities and that they do aggregate to population probabilities. most remarkable, however, is that they covary with other variables in the same way actual outcomes vary with the variables. For example, respondents with higher socioeconomic status give higher probabilities of survival, whereas respondents who smoke give lower probabilities. We conclude that these measures of subjective probabilities have great potential use in models of intertemporal decision-making under uncertainty. %B Journal of Human Resources %I 30 %V 30 %P S268-92 %G eng %L pubs_1995_Hurd_MJHR.pdf %4 Health Production/Nutrition/Mortality/Morbidity/Disability/Disability/Economic Behavior/Health/Mortality %$ 1080 %R 10.2307/146285 %0 Journal Article %J Journal of Human Resources %D 1995 %T Transfer Behavior in the Health and Retirement Study: Measurement and the Redistribution of Resources within the Family %A Kathleen McGarry %A Robert F. Schoeni %K Adult children %K Demographics %B Journal of Human Resources %I 30 %V 30 %P S184-226 %G eng %N Suppl. %L pubs_1995_McGarry_KJHR.pdf %4 Household Behavior--General/Demographic Trends and Forecasts/Family/Transfers %$ 1216 %R DOI: 10.2307/146283 %0 Report %D 1995 %T Transfer Behavior Within the Family: Results From the Asset and Health Dynamics Survey %A Kathleen McGarry %A Robert F. Schoeni %K Adult children %K Public Policy %X If an individual falls on hard times, can he rely on his family for financial support? In view of proposed reductions in public assistance programs, it is important to understand the mechanisms through which families provide support for their members. In this paper we provide evidence that intra-family transfers are compensatory, directed disproportionally to less well-off members. These results hold both for the incidence of transfers and for the amounts. Within a given year, adult children in the lowest income category are 6 percentage points more likely to receive a financial transfer from their parents, and on average they receive over 300 more than siblings in the highest income category. The data used in this study, the new Asset and Health Dynamics Survey (AHEAD), contain information on all children in the family. Thus we are able to estimate models which control for unobserved differences across families. Our results are robust to these specifications. Additionally, we do not find evidence that parents provide financial assistance to their children in exchange for caregiving. %I National Bureau of Economic Research %G eng %U https://www.nber.org/papers/w5099 %4 Family/Transfers/Wills/Welfare/Altruism %$ 1078 %0 Report %D 1994 %T Transfer Behavior: Measurement and the Redistribution of Resources within the Family %A Kathleen McGarry %A Robert F. Schoeni %K Adult children %K Methodology %I NBER %G eng %U https://www.nber.org/papers/w4607 %4 Family transfers, structure/Methodology %$ 6654 %0 Report %D 1993 %T Evaluation of Subjective Probability Distributions in the HRS %A Michael D Hurd %A Kathleen McGarry %K Consumption and Savings %K Health Conditions and Status %K Methodology %X In the Health and Retirement Survey respondents were asked about the chances they would live to 75 or to 85, and the chances they would work after age 62 or 65. We analyze the responses to determine if they behave like probabilities, if their averages are close to average probabilities in the population, and if they have correlations with other variables that are similar to correlations with actual outcomes. We find that generally they do behave like probabilities and they do aggregate. Most remarkable, however, is that they covary with other variables in the same way actual outcomes vary with the variables. For example, smokers give lower probabilities of living to 75 than nonsmokers. We conclude that these measures of subjective probabilities have great potential use in models of intertemporal decision making under uncertainty. %I National Bureau of Economic Research %G eng %U https://www.nber.org/papers/w4560 %4 Microeconomic Data Management/Economics of the Elderly/Health Production--Nutrition, Mortality, Morbidity, Disability, and Economic Behavior %$ 1014 %R 10.3386/w4560 %0 Report %D 1993 %T The Relationship Between Job Characteristics and Retirement %A Michael D Hurd %A Kathleen McGarry %K Consumption and Savings %K Employment and Labor Force %K Pensions %K Time Use %X We study the influence of job characteristics on prospective retirement as measured by the probability of working past age 62 or 65. The characteristics fall into three broad classes: physical and mental requirements, job flexibility including employer accommodation to older workers, and financial aspects such as pensions and health care insurance. Using data from the Health and Retirement Survey, we find that physical and mental job requirements have a rather small influence on prospective retirement, whereas measures of job flexibility and financial aspects of the job are important determinants. %I National Bureau of Economic Research %G eng %U https://www.nber.org/papers/w4558 %4 Time Allocation--Work Behavior/Time Allocation--Labor Supply/Economics of the Elderly/Older Workers/Pension %$ 1016 %R 10.3386/w4558