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Changing the way the elderly live: Evidence from the home health care market in the United States

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  • Orsini, Chiara
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    Abstract

    I examine how decreases in government coverage of home health care visits to the elderly in the United States have affected their living arrangements. Specifically, I exploit geographic variation in the Medicare Home Health Care reimbursement rate that arose as a result of legislation passed in 1997 and I identify its impact on the living arrangements of older Medicare beneficiaries. I find that less generous reimbursement policies lead to a greater fraction of elderly giving up independent living. Baseline-model estimates suggest that a decline in reimbursement of one visit per user leads to a 0.98% increase in the fraction of elderly Medicare beneficiaries living in shared living arrangements, that is, living with somebody else, rather than alone or with only the spouse. This estimate implies that a decline in reimbursement of 5.1 visits per Medicare beneficiary increases the fraction of elderly that live in shared living arrangements by 1.12 percentage points. Such an increase is consistent with the time-series increase in the fraction of elderly that live in shared living arrangements between 1997 and 2000.

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    File URL: http://www.sciencedirect.com/science/article/B6V76-4XJWD0W-1/2/4b41df79d079fa87522d062511ebbce9
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    Bibliographic Info

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

    Volume (Year): 94 (2010)
    Issue (Month): 1-2 (February)
    Pages: 142-152

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    Handle: RePEc:eee:pubeco:v:94:y:2010:i:1-2:p:142-152

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    Web page: http://www.elsevier.com/locate/inca/505578

    Related research

    Keywords: Home health care Medicare Living arrangements of the elderly;

    References

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    1. Browning, M. & Chiappori, P.A., 1994. "Efficient Intra-Household allocations: A General Characterization and Empirical Tests," DELTA Working Papers 94-16, DELTA (Ecole normale supérieure).
    2. Liliana E. Pezzin & Robert A. Pollak & Barbara S. Schone, 2007. "Efficiency in Family Bargaining: Living Arrangements and Caregiving Decisions of Adult Children and Disabled Elderly Parents," CESifo Economic Studies, CESifo, vol. 53(1), pages 69-96, March.
    3. Angrist, Joshua D & Krueger, Alan B, 1995. "Split-Sample Instrumental Variables Estimates of the Return to Schooling," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 225-35, April.
    4. Gary V. Engelhardt & Jonathan Gruber & Cynthia D. Perry, 2005. "Social Security and Elderly Living Arrangements: Evidence from the Social Security Notch," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
    5. McKnight, Robin, 2006. "Home care reimbursement, long-term care utilization, and health outcomes," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 293-323, January.
    6. Julie Lee & Mark McClellan & Jonathan Skinner, 1999. "The Distributional Effects of Medicare," NBER Chapters, in: Tax Policy and the Economy, volume 13, pages 85-108 National Bureau of Economic Research, Inc.
    7. Stabile, Mark & Laporte, Audrey & Coyte, Peter C., 2006. "Household responses to public home care programs," Journal of Health Economics, Elsevier, vol. 25(4), pages 674-701, July.
    8. Audrey Light & Kathleen McGarry, 2003. "Why Parents Play Favorites: Explanations for Unequal Bequests," NBER Working Papers 9745, National Bureau of Economic Research, Inc.
    9. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2003. "Welfare Reform and Children's Living Arrangements," Working Papers 111, RAND Corporation Publications Department.
    10. Thomas S. Dee & William N. Evans, 2003. "Teen Drinking and Educational Attainment: Evidence from Two-Sample Instrumental Variables Estimates," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 178-209, January.
    11. 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.
    12. Susan L. Ettner, 1996. "The Opportunity Costs of Elder Care," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 189-205.
    13. Dora L. Costa, 1999. "A House of Her Own: Old Age Assistance and the Living Arrangements of Older Nonmarried Women," NBER Working Papers 6217, National Bureau of Economic Research, Inc.
    14. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
    15. Dora L. Costa, 1996. "Displacing the Family: Union Army Pensions and Elderly Living Arrange- ments," NBER Working Papers 5429, National Bureau of Economic Research, Inc.
    16. Hoerger, Thomas J. & Picone, Gabriel & Sloan, Frank, 1995. "Public Subsidies, Private Provision of Care, and Living Arrangements of the Elderly," Working Papers 95-22, Duke University, Department of Economics.
    17. David M. Cutler & Louise M. Sheiner, 1993. "Policy Options for Long-Term Care," NBER Working Papers 4302, National Bureau of Economic Research, Inc.
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    Cited by:
    1. Haizhen Mou & Stanley L. Winer, 2012. "Fiscal Incidence when both Individual Welfare and Family Structure Matter: The Case of Subsidization of Home-Care for the Elderly," CESifo Working Paper Series 3731, CESifo Group Munich.
    2. M. Lippi Bruni & C. Ugolini, 2013. "Delegating home care for the elderly to external caregivers? An empirical study on Italian data," Working Papers wp905, Dipartimento Scienze Economiche, Universita' di Bologna.

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