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Policy Options for Long-Term Care

In: Studies in the Economics of Aging

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  • David M. Cutler
  • Louise Sheiner

Abstract

This paper examines the effect of government nursing home policies on institutionalization rates and support for the elderly in the community. We combine data from the National Long Term Care Survey with information on state policies to estimate these effects. We examine two state policies for nursing home care: the ability of some high income elderly to receive Medicaid support, and the price differential between Medicaid and the private market. Both policies strongly affect aggregate nursing home utilization. as well as the composition of nursing home residents. In states with more liberal Medicaid rules. the high income elderly are more likely to use a nursing home. while in states with larger underpayments. the poor suffer reduced access. The marginal source of community care for the institutionalized elderly appears to be support from children or other helpers, rather than living alone. Almost all of the elderly in nursing homes would have lived with children or others had they been in the community. In addition, as the ease of acquiring Medicaid increases or Medicaid payments become more generous, fewer elderly receive substantial day-to-day help from their children.

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Bibliographic Info

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This chapter was published in:

  • David A. Wise, 1994. "Studies in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise94-1, July.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 7352.

    Handle: RePEc:nbr:nberch:7352

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Chris Carroll & Lawrence H. Summers, 1989. "Consumption Growth Parallels Income Growth: Some New Evidence," NBER Working Papers 3090, National Bureau of Economic Research, Inc.
    2. Ettner, Susan L., 1993. "Do elderly Medicaid patients experience reduced access to nursing home care?," Journal of Health Economics, Elsevier, vol. 12(3), pages 259-280, October.
    3. Alan M. Garber & Thomas E. MaCurdy, 1989. "Predicting Nursing Home Utilization Among the High-Risk Elderly," NBER Working Papers 2843, National Bureau of Economic Research, Inc.
    4. Glenn R. Hubbard & Jonathan Skinner & Stephen P. Zeldes, . "Precautionary Saving and Social Insurance," Rodney L. White Center for Financial Research Working Papers 3-95, Wharton School Rodney L. White Center for Financial Research.
    5. David M. Cutler, 1993. "Why Doesn't the Market Fully Insure Long-Term Care?," NBER Working Papers 4301, National Bureau of Economic Research, Inc.
    6. Feldstein, Martin, 1987. "Should Social Security Benefits Be Means Tested?," Scholarly Articles 2770498, Harvard University Department of Economics.
    7. repec:fth:stanho:e-89-1 is not listed on IDEAS
    8. Jane Sneddon Little, 1992. "Lessons from variations in state Medicaid expenditures," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 43-66.
    9. Feldstein, Martin S, 1987. "Should Social Security Benefits Be Means Tested?," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 468-84, June.
    10. Alan M. Garber & Thomas E. MaCurdy, 1991. "Nursing Home Discharges and Exhaustion of Medicare Benefits," NBER Working Papers 3639, National Bureau of Economic Research, Inc.
    11. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1985. "The Strategic Bequest Motive," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1045-76, December.
    12. Diamond, P. A., 1977. "A framework for social security analysis," Journal of Public Economics, Elsevier, vol. 8(3), pages 275-298, December.
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    Cited by:
    1. 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.
    2. Grabowski, David C. & Gruber, Jonathan, 2007. "Moral hazard in nursing home use," Journal of Health Economics, Elsevier, vol. 26(3), pages 560-577, May.
    3. Orsini, Chiara, 2010. "Changing the way the elderly live: Evidence from the home health care market in the United States," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 142-152, February.
    4. Agnès Gramain, 1997. "Décisions de recours au système de soins dans la prise en charge des personnes âgées dépen­ dantes : un modèle de choix discret dynamique," Économie et Prévision, Programme National Persée, vol. 129(3), pages 239-254.
    5. Joan Costa Font & Juan Rovira Forns, 2004. "Willigness to Pay for Long-Term Care Coverage: the Role of Private Information and Self-Insurance," Working Papers in Economics 124, Universitat de Barcelona. Espai de Recerca en Economia.
    6. 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.
    7. Darius Lakdawalla & Tomas Philipson, 1999. "Aging and the Growth of Long-Term Care," NBER Working Papers 6980, National Bureau of Economic Research, Inc.
    8. Steven Stern & Bridget Hiedemann, 1999. "Strategic Play Among Family Members When Making Long-Term Care Decisions," Virginia Economics Online Papers 321, University of Virginia, Department of Economics.
    9. David M. Cutler, 1993. "Why Doesn't the Market Fully Insure Long-Term Care?," NBER Working Papers 4301, National Bureau of Economic Research, Inc.
    10. James M. Poterba, 1996. "Government Intervention in the Markets for Education and Health Care: How and Why?," NBER Chapters, in: Individual and Social Responsibility: Child Care, Education, Medical Care, and Long-Term Care in America, pages 277-308 National Bureau of Economic Research, Inc.
    11. David C. Grabowski & Jonathan Gruber, 2005. "Moral Hazard in Nursing Home Use," NBER Working Papers 11723, National Bureau of Economic Research, Inc.
    12. Walter M. Cadette, 2000. "Financing Long-Term Care: Options for Policy," Macroeconomics 0004030, EconWPA.
    13. Hirth, Richard A., 1999. "Consumer information and competition between nonprofit and for-profit nursing homes," Journal of Health Economics, Elsevier, vol. 18(2), pages 219-240, April.
    14. 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.
    15. 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.).

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