Notes 03-21 - Lecture 15: Medicaid Expansion/Tax Credits I....

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Lecture 15: Medicaid Expansion/Tax Credits I. Choices in redistribution programs a. How do we determine eligibility? i. Means-tested (income or assets) 1. Free HC if you have an income below poverty line ii. Categorical 1. Eligible if in some category (ex. Blind, single mother, over 65) iii. Advantages of each 1. Means testing: reaches poor people a. Imperfect measure though, there is also a moral hazard problem because some people will earn less to qualify 2. Categorical: hard to change your category, less moral hazard a. May not line up with the needy b. Many US programs are both. Other developed countries have looser requirements—the US is particularly obsessive about moral hazard b. What should your benefits look like? i. Option: cash ii. Option: vouchers/in-kind benefits (give people stuff) iii. How will they affect consumer decisions? 1. Look at the two-good model; slope is determined by the relationship of relative prices, axis intercepts are determined by the extreme bundles (all money is put into
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Notes 03-21 - Lecture 15: Medicaid Expansion/Tax Credits I....

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