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Nursing Homes in Equilibrium: Implications for Long-term Care Policies

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Abstract

We build an equilibrium model of a nursing home market with decision-makers on both sides of the market. On the demand side, heterogeneous households with stochastic needs for long-term care solve dynamic optimization problems, choosing between in-home and nursing-home care. On the supply side, locally competitive nursing homes decide prices and intensities of care given the household demand. The government subsidizes long-term care of the poorest. The quantitative model successfully generates key empirical patterns. Evaluation of long-term care policies shows that the equilibrium approach is important for the welfare and distributional effects of policies targeting either side of the market.

Suggested Citation

  • Tatyana Koreshkova & Minjoon Lee, 2021. "Nursing Homes in Equilibrium: Implications for Long-term Care Policies," Working Papers 21001, Concordia University, Department of Economics.
    • Handle: RePEc:crd:wpaper:21001
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    File URL: https://drtatyana.github.io/NHs_in_equilibrium_2021Jan22.pdf
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    Cited by:

    1. Bertrand Achou & Philippe De Donder & Franca Glenzer & Minjoon Lee & Marie-Louise Leroux, 2023. "At Home versus in a Nursing Home: Long-term Care Settings and Marginal Utility," CIRANO Working Papers 2023s-14, CIRANO.
    2. Achou, Bertrand & De Donder, Philippe & Glenzer, Franca & Lee, Minjoon & Leroux, Marie-Louise, 2022. "Nursing home aversion post-pandemic: Implications for savings and long-term care policy," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 1-21.

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    More about this item

    Keywords

    Long-term Care; Nursing Home; Medicaid.;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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