Estimating the Monetary Benefits of Medicare Eligibility for Reducing the Symptoms of Dementia

Abstract

We adopt a three component method based on the idea of cost-saving for estimating the monetary benefits of Medicare eligibility for reducing dementia symptoms. The method involves Medicare eligibility lowering dementia symptoms, which reduces the need for dependent living, which in turn lowers caregiving costs. We use the Regression Discontinuity approach first utilized by Card et al. (2008, 2009) to establish a causal link between Medicare eligibility and dementia. The novel aspect of the study comes from using a quality of life proxy measure for the utility function to derive the marginal rate of substitution between dementia symptoms reduction and dependent living arrangements.