Abstract

The relationship between the intent and the outcome of legislated social policy is discussed. Specifically, this study documents some effects of federal health reimbursement and income policy in the late 1960s and early 1970s on health care behavior and expenditures in the decade 1970-1980. The Longitudinal Retirement History Study (LRHS), containing information on a panel of 6,270 men and unmarried women aged 58 to 63 in 1969, was used to provide information on the personal health expenditures in this decade. Medicare and Medicaid and the indexing of Social Security became operational at the beginning of the study, which permitted the exploration of intended and observed effects of legislation designed to make health care more accessible and affordable for older adults. As policy intended, utilization increased over the decade as indicated by both increases in the number of panelists with health care bills and increases in the size of total bills (constant dollars). Consistent with federal policy to reduce personal costs, out-of-pocket expenditures and the proportion of total bills paid out of pocket decreased. However, the effects of these federal policy initiatives were constrained by reimbursement rules and the social location of users. For instance, even at the end of the 1970s, out-of-pocket health care expenditures across subpopulations persisted. The 1980s and early 1990s have brought increased concern over the cost of health care and renewed concern over access. Data suggest that future proposals aimed at providing universal coverage along with high out-of-pocket costs may not result in equitable programs, and are likely to have a limited impact on constraining health care costs. The LRHS data indicate that utilization increased despite continued high out-of-pocket costs for all except the lower-income groups, who may be limited in their ability to purchase increasingly costly care.

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