The unintended effect of Medicaid aging waivers on informal caregiving

Medicaid aging waivers incentivize older adults who need long-term care to stay at home rather than move into a nursing facility. However, this policy may inadvertently shift care burdens onto informal caregivers. Using data on state-level waiver expenditure from 1998 to 2014 linked with the restricted access Health and Retirement Study (HRS), this paper investigates whether program funding is associated with the probability that an HRS respondent provides informal care to her older parents. Changes to state-level policy funding produce a quasi-experiment, which allows us to use two-way fixed effects models to estimate a causal relationship between the program and informal caregiving. The findings show that a 10 percent increase in aging waiver expenditure increases the overall likelihood that an adult child becomes an informal caregiver to her parents by 0.1 percentage points (0.3 percent). The overall estimate is composed of differential effects on different types of care. The results show that the Medicaid aging waiver funding is positively associated with the likelihood of being an errands caregiver and a non-intensive caregiver who spends fewer hours providing care, but unrelated to the likelihood of providing personal care and intensive care. The findings are mainly driven by the mechanism that aging-at-home is more attractive supported by the aging waivers.