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Staffing Subsidies and the Quality of Care in Nursing Homes

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Abstract

Concerns about the quality of state-financed nursing home care has led to the wide-scale adoption by states of pass-through subsidies, in which Medicaid reimbursement rates are directly tied to staffing expenditure. We examine the effects of Medicaid pass-through on nursing home staffing and quality of care by adapting a two-step FGLS method that addresses clustering and state-level temporal autocorrelation. We find that pass-through increases staffing by 4.4% in higher quality nursing homes and improves quality of care in lower quality nursing homes by an amount equivalent to one sixth the inter-quartile range of the quality distribution.

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Bibliographic Info

Paper provided by Department of Economics, Williams College in its series Department of Economics Working Papers with number 2013-16.

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Length: 37 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:wil:wileco:2013-16

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Keywords: Medicaid; wage pass-through; nursing home; direct care staff; quality of care; FGLS;

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  1. Gertler, Paul J., 1989. "Subsidies, quality, and the regulation of nursing homes," Journal of Public Economics, Elsevier, vol. 38(1), pages 33-52, February.
  2. Amemiya, Takeshi, 1978. "A Note on a Random Coefficients Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 793-96, October.
  3. Cawley, John & Grabowski, David C. & Hirth, Richard A., 2006. "Factor substitution in nursing homes," Journal of Health Economics, Elsevier, vol. 25(2), pages 234-247, March.
  4. John Cawley & David C. Grabowski & Richard A. Hirth, 2004. "Factor Substitution and Unobserved Factor Quality in Nursing Homes," NBER Working Papers 10465, National Bureau of Economic Research, Inc.
  5. John A. Nyman, 1988. "Excess Demand, the Percentage of Medicaid Patients, and the Quality of Nursing Home Care," Journal of Human Resources, University of Wisconsin Press, vol. 23(1), pages 76-92.
  6. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  7. Janet Currie & Mehdi Farsi & W. Bentley MacLeod, 2003. "Cut to the Bone? Hospital Takeovers and Nurse Employment Contracts," NBER Working Papers 9428, National Bureau of Economic Research, Inc.
  8. Cohen, Joel W. & Spector, William D., 1996. "The effect of Medicaid reimbursement on quality of care in nursing homes," Journal of Health Economics, Elsevier, vol. 15(1), pages 23-48, February.
  9. David C. Grabowski, 2001. "Does an Increase in the Medicaid Reimbursement Rate Improve Nursing Home Quality?," Journals of Gerontology: Series B, Gerontological Society of America, vol. 56(2), pages S84-S93.
  10. Hansen, Christian B., 2007. "Generalized least squares inference in panel and multilevel models with serial correlation and fixed effects," Journal of Econometrics, Elsevier, vol. 140(2), pages 670-694, October.
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Cited by:
  1. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2009. "Measuring Economic Growth from Outer Space," NBER Working Papers 15199, National Bureau of Economic Research, Inc.

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