The joint implications of Medicaid and Social Security for savings and welfare

between social security and Medicaid. As a result of these interactions, we find that the US social security significantly lowers the cost of financing Medicaid and other welfare programs for the elderly as it reduces the fraction of households who choose to rely on means-tested transfers to finance medical care and consumption in old-age. Despite this, we find that households, on average, prefer an economy with no social security program. Finally we find that when old-age health expenses and their risk are taken into account the welfare gain from removing social security is reduced due to a smaller effect of the removal on prices.