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Elderly Assets, Medicaid Policy, and Spend-Down in Nursing Homes

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  • Norton, Edward C

Abstract

Recent economic research has suggested that Medicaid long-term insurance may reduce the personal savings levels of elderly citizens. This analysis shows that the opposite behavior. due to welfare aversion, actually happens. Barring any behavioral effects, personal wealth and income alone should determine the length of time an individual must stay in a nursing home until spend-down occurs. Wealth and income data from two different samples of the elderly are used to predict the distribution of time until spend-down, which is then compared with the actual distribution of the time until spend-down among residents of nursing homes. Contrary to expectations, it appears that the elderly receive transfers to avoid Medicaid eligibility. This result cannot be explained away by sample selection, demographics, or uncertainty about prices. One implication of this result is that Medicaid could expand eligibility by raising the asset limit without dramatically increasing expenditures or the number of residents who spend-down. Copyright 1995 by The International Association for Research in Income and Wealth.

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Bibliographic Info

Article provided by International Association for Research in Income and Wealth in its journal Review of Income & Wealth.

Volume (Year): 41 (1995)
Issue (Month): 3 (September)
Pages: 309-29

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Handle: RePEc:bla:revinw:v:41:y:1995:i:3:p:309-29

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Cited by:
  1. Michelle Goeree & Bridget Hiedemann & Steven Stern, 2011. "Will You Still Want Me Tomorrow? The Dynamics of Families' Long-Term Care Arrangements," Working Papers 2011-035, Human Capital and Economic Opportunity Working Group.
  2. Michelle Sovinsky & Steven Stern, 2012. "Dynamic Modelling of Long-Term Care Decisions," Working Papers 2012-019, Human Capital and Economic Opportunity Working Group.
  3. Susan L. Ettner, 1997. "Medicaid participation among the eligible elderly," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(2), pages 237-255.
  4. Edward C. Norton & Lauren Hersch Nicholas & Sean Sheng-Hsiu Huang, 2013. "Informal Care and Inter-vivos Transfers: Results from the National Longitudinal Survey of Mature Women," NBER Working Papers 18948, National Bureau of Economic Research, Inc.
  5. Jonathan Gruber, 2000. "Medicaid," NBER Working Papers 7829, National Bureau of Economic Research, Inc.
    • Jonathan Gruber, 2003. "Medicaid," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 15-78 National Bureau of Economic Research, Inc.
  6. Philippe De Donder & Pierre Pestieau, 2013. "Private, Social and Self-Insurance for Long-Term Care in the Presence of Family Help - A Political Economy Analysis," CESifo Working Paper Series 4352, CESifo Group Munich.
  7. David C. Grabowski & Jonathan Gruber, 2005. "Moral Hazard in Nursing Home Use," NBER Working Papers 11723, National Bureau of Economic Research, Inc.
  8. Grabowski, David C. & Gruber, Jonathan, 2007. "Moral hazard in nursing home use," Journal of Health Economics, Elsevier, vol. 26(3), pages 560-577, May.
  9. Darius N. Lakdawalla & Robert Schoeni, 2003. "Is nursing home demand affected by the decline in age difference between spouses?," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 8(10), pages 279-304, May.
  10. Lara Gardner & Donna Gilleskie, 2006. "The Effects of State Medicaid Policies on the Dynamic Savings Patterns of the Elderly," NBER Working Papers 12208, National Bureau of Economic Research, Inc.
  11. Gopi Shah Goda & Ezra Golberstein & David C. Grabowski, 2010. "Income and the Utilization of Long-Term Care Services: Evidence from the Social Security Benefit Notch," NBER Working Papers 16076, National Bureau of Economic Research, Inc.
  12. William F. Bassett, 2004. "Medicaid's nursing home coverage and asset transfers," Finance and Economics Discussion Series 2004-15, Board of Governors of the Federal Reserve System (U.S.).
  13. Cremer, Helmuth & Pestieau, Pierre, 2014. "Means-tested long term care and family transfers," TSE Working Papers 14-492, Toulouse School of Economics (TSE).
  14. Kristin J. Kleinjans & Jinkook Lee, 2006. "The link between individual expectations and savings: Do nursing home expectations matter?," Economics Working Papers 2006-05, School of Economics and Management, University of Aarhus.
  15. Michelle Sovinsky & Steven Stern, 2013. "Dynamic modelling of long-term care decisions," ECON - Working Papers 113, Department of Economics - University of Zurich.

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