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Policy Options for Long-Term Care

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  • David M. Cutler
  • Louise M. 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

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4302.

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Date of creation: Mar 1993
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Publication status: published as Studies in the Economics of Aging, David A. Wise, ed. University of Chicago Press 1994.
Handle: RePEc:nbr:nberwo:4302

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  1. 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.
  2. Christopher D. Carroll & Lawrence H. Summers, 1991. "Consumption Growth Parallels Income Growth: Some New Evidence," NBER Chapters, National Bureau of Economic Research, Inc, in: National Saving and Economic Performance, pages 305-348 National Bureau of Economic Research, Inc.
  3. Ettner, Susan L., 1993. "Do elderly Medicaid patients experience reduced access to nursing home care?," Journal of Health Economics, Elsevier, Elsevier, vol. 12(3), pages 259-280, October.
  4. Jane Sneddon Little, 1992. "Lessons from variations in state Medicaid expenditures," New England Economic Review, Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, issue Jan, pages 43-66.
  5. Hubbard, R Glenn & Skinner, Jonathan & Zeldes, Stephen P, 1995. "Precautionary Saving and Social Insurance," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(2), pages 360-99, April.
  6. David M. Cutler, 1993. "Why Doesn't the Market Fully Insure Long-Term Care?," NBER Working Papers 4301, National Bureau of Economic Research, Inc.
  7. repec:fth:stanho:e-89-1 is not listed on IDEAS
  8. Shleifer, Andrei & Summers, Lawrence H. & Bernheim, B. Douglas, 1986. "The Strategic Bequest Motive," Scholarly Articles 3721794, Harvard University Department of Economics.
  9. Feldstein, Martin S, 1987. "Should Social Security Benefits Be Means Tested?," Journal of Political Economy, University of Chicago Press, 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. Diamond, P. A., 1977. "A framework for social security analysis," Journal of Public Economics, Elsevier, Elsevier, vol. 8(3), pages 275-298, December.
  12. Feldstein, Martin, 1987. "Should Social Security Benefits Be Means Tested?," Scholarly Articles 2770498, Harvard University Department of Economics.
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Cited by:
  1. 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.
  2. Grabowski, David C. & Gruber, Jonathan, 2007. "Moral hazard in nursing home use," Journal of Health Economics, Elsevier, Elsevier, vol. 26(3), pages 560-577, May.
  3. 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, Universitat de Barcelona. Espai de Recerca en Economia 124, Universitat de Barcelona. Espai de Recerca en Economia.
  4. Charles, Kerwin Kofi & Sevak, Purvi, 2005. "Can family caregiving substitute for nursing home care?," Journal of Health Economics, Elsevier, Elsevier, vol. 24(6), pages 1174-1190, November.
  5. Hirth, Richard A., 1999. "Consumer information and competition between nonprofit and for-profit nursing homes," Journal of Health Economics, Elsevier, Elsevier, vol. 18(2), pages 219-240, April.
  6. James M. Poterba, 1994. "Government Intervention in the Markets for Education and Health Care: How and Why?," NBER Working Papers 4916, National Bureau of Economic Research, Inc.
  7. Jonathan Gruber, 2003. "Medicaid," NBER Chapters, National Bureau of Economic Research, Inc, in: Means-Tested Transfer Programs in the United States, pages 15-78 National Bureau of Economic Research, Inc.
  8. Peter C. Coyte & Mark Stabile, 2001. "Household Responses to Public Home Care Programs," NBER Working Papers 8523, National Bureau of Economic Research, Inc.
  9. Darius Lakdawalla & Tomas Philipson, 1999. "Aging and the Growth of Long-Term Care," Working Papers, Harris School of Public Policy Studies, University of Chicago 9909, Harris School of Public Policy Studies, University of Chicago.
  10. David M. Cutler, 1993. "Why Doesn't the Market Fully Insure Long-Term Care?," NBER Working Papers 4301, National Bureau of Economic Research, Inc.
  11. 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, Programme National Persée, vol. 129(3), pages 239-254.
  12. William F. Bassett, 2004. "Medicaid's nursing home coverage and asset transfers," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2004-15, Board of Governors of the Federal Reserve System (U.S.).
  13. 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, Elsevier, vol. 94(1-2), pages 142-152, February.
  14. David C. Grabowski & Jonathan Gruber, 2005. "Moral Hazard in Nursing Home Use," NBER Working Papers 11723, National Bureau of Economic Research, Inc.
  15. Walter M. Cadette, 2000. "Financing Long-Term Care: Options for Policy," Macroeconomics, EconWPA 0004030, EconWPA.

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