The long-run effect of the Medicare Catastrophic Coverage Act

This study examines the long-run effect of the 1988 Medicare Catastrophic C overage Act (MCCA). Although most of the MCCA provisions were repealed afte r only one year, remaining in the law today are the provisions that directl y affected the ability of married people to live in the community when thei r spouses were in a nursing home. We use longitudinal data from the Nationa l Long-Term Care Survey and exploit the differential effect of the MCCA on single and married people to test for changes in the probability of going t o a nursing home, in wealth, and in the probability of living with others. Our study showed that the MCCA did not achieve its desired effect of preven ting spousal impoverishment in the aggregate, even when the sample was rest ricted to those people most likely to be affected.