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Home health care and the housing and living arrangements of the elderly

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Author Info

  • Engelhardt, Gary V.
  • Greenhalgh-Stanley, Nadia

Abstract

Home health care is long-term care, primarily skilled nursing, delivered in a home setting. Its provision may increase the likelihood that the elderly, the vast majority of which are homeowners, can live independently and maintain their desired residential status even if in relatively poor health. We provide empirical evidence on the extent to which home health care benefits affect the housing and living arrangements of the elderly by examining plausibly exogenous changes in the supply of long-term care insurance through the Medicare program that occurred in the late 1990s. Prior to 1997, Medicare reimbursed home health care agencies on a retrospective-cost basis. Then, starting in October, 1997, as a result of the Balanced Budget Act of 1997 (BBA97), Medicare switched to a system of prospective payments for home health care, which induced state-by-calendar-year variation in the supply of this type of insurance. We exploit this variation to econometrically identify the short-run impact on the housing and living arrangements of the elderly, using CPS data from 1995 to 2000 (before and after the law change). Our estimates indicate that living arrangements are quite responsive to home health care benefits for the widowed, but not for the married elderly. The estimated elasticity of shared living to benefits is -0.9 for the widowed. However, these benefits have little impact on homeownership, at least in the short run, which suggests that the moderately adverse health events toward which public home health care benefits are targeted are not those that drive housing mobility and tenure transitions at advanced ages.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 67 (2010)
Issue (Month): 2 (March)
Pages: 226-238

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Handle: RePEc:eee:juecon:v:67:y:2010:i:2:p:226-238

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Web page: http://www.elsevier.com/locate/inca/622905

Related research

Keywords: Housing Living arrangements Elderly Home Health Care;

References

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  1. Donald Haurin & Stuart Rosenthal, 2007. "The Influence of Household Formation on Homeownership Rates across Time and Race," Working Papers 07-01, Ohio State University, Department of Economics.
  2. Jonathan Feinstein & Daniel McFadden, 1989. "The Dynamics of Housing Demand by the Elderly: Wealth, Cash Flow, and Demographic Effects," NBER Chapters, in: The Economics of Aging, pages 55-92 National Bureau of Economic Research, Inc.
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  4. Axel Borsch-Supan & Vassilis Hajivassiliou & Laurence J. Kotlikoff, 1992. "Health, Children, and Elderly Living Arrangements: A Multiperiod-Multinomial Probit Model with Unobserved Heterogeneity and Autocorrelated Errors," NBER Chapters, in: Topics in the Economics of Aging, pages 79-108 National Bureau of Economic Research, Inc.
  5. Jeffrey R. Brown & Norma B. Coe & Amy Finkelstein, 2007. "Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey," NBER Chapters, in: Tax Policy and the Economy, Volume 21, pages 1-34 National Bureau of Economic Research, Inc.
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  12. Jeffrey R. Brown & Amy Finkelstein, 2008. "The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market," American Economic Review, American Economic Association, vol. 98(3), pages 1083-1102, June.
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  15. Charles, Kerwin Kofi & Sevak, Purvi, 2005. "Can family caregiving substitute for nursing home care?," Journal of Health Economics, Elsevier, vol. 24(6), pages 1174-1190, November.
  16. Engelhardt, Gary V., 2008. "Social security and elderly homeownership," Journal of Urban Economics, Elsevier, vol. 63(1), pages 280-305, January.
  17. Green, Richard K. & Vandell, Kerry D., 1999. "Giving households credit: How changes in the U.S. tax code could promote homeownership," Regional Science and Urban Economics, Elsevier, vol. 29(4), pages 419-444, July.
  18. Jeffrey R. Brown & Amy Finkelstein, 2007. "Why is the market for long-term care insurance so small?," NBER Chapters, in: Trans-Atlantic Public Economics Seminar (TAPES), Public Policy and Retirement, pages 1967-1991 National Bureau of Economic Research, Inc.
  19. Liliana E. Pezzin & Peter Kemper & James Reschovsky, 1996. "Does Publicly Provided Home Care Substitute for Family Care? Experimental Evidence with Endogenous Living Arrangements," Journal of Human Resources, University of Wisconsin Press, vol. 31(3), pages 650-676.
  20. Robert Michael & Victor Fuchs & Sharon Scott, 1980. "changes in the propensity to live alone: 1950–1976," Demography, Springer, vol. 17(1), pages 39-56, February.
  21. Axel Borsch-Supan & Daniel McFadden & Reinhold Schnabel, 1993. "Living Arrangements: Health and Wealth Effects," NBER Working Papers 4398, National Bureau of Economic Research, Inc.
  22. Thomas Davidoff, 2009. "Housing, Health, and Annuities," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(1), pages 31-52.
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Cited by:
  1. Greenhalgh-Stanley, Nadia, 2012. "Medicaid and the housing and asset decisions of the elderly: Evidence from estate recovery programs," Journal of Urban Economics, Elsevier, vol. 72(2), pages 210-224.

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