The Impact of Income on the use of Medical Care: Evidence from the Social Security Notch Cohort
I examine the impact of permanent changes in Social Security income on the use of medical care using the 1977 Social Security Act as a quasi-experiment. Using data from the Study of Assets and Health Dynamics among the Oldest Old (AHEAD), a longitudinal survey of community-based older adults born in 1923 or earlier and their spouses irrespective of age, I compare the use of medical care by individuals who received lower Social Security benefits compared to older cohorts due to the Social Security Act of 1977.
The estimates suggest a heterogeneous impact of income on the use of medical care. I find that the positive permanent income shock induced by the Social Security Act of 1977 increases the number of doctors’ visits but has meaningful impact on outpatient surgeries or dental visits.