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Access to long term care after a wealth shock: Evidence from the housing bubble and burst

Author

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  • Costa-Font, Joan
  • Frank, Richard G.
  • Swartz, Katherine

Abstract

Home equity is the primary self-funding mechanism for long term services and supports (LTSS). Using data from the relevant waves of the Health and Retirement Study, we exploit the exogenous variation resulting from the value of housing assets during the Great Recession to examine the effect of housing wealth on use of home health, unpaid help and nursing home care by older adults. Consistent with the idea that individuals consume part of their housing equity during an emergency, we find evidence of a significant increase in the use of paid home health care, nursing home and unpaid informal care. The intensity of unpaid care, however, was not affected. We conduct a placebo test on individuals who do not own property; their use of LTSS was not affected by the housing wealth changes. Taken together, the findings suggest that a housing wealth shock exerts a positive and significant effect on the uptake of home health and nursing home entry and some effect on the probability of unpaid care, but no significant effect on the intensity of unpaid care.

Suggested Citation

  • Costa-Font, Joan & Frank, Richard G. & Swartz, Katherine, 2019. "Access to long term care after a wealth shock: Evidence from the housing bubble and burst," The Journal of the Economics of Ageing, Elsevier, vol. 13(C), pages 103-110.
    • Handle: RePEc:eee:joecag:v:13:y:2019:i:c:p:103-110
    DOI: 10.1016/j.jeoa.2018.07.001
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    Cited by:

    1. Jingjing Xu, 2024. "Intergenerational transfers in China: What are the patterns of the transfers and when do the transfers occur?," International Studies of Economics, John Wiley & Sons, vol. 19(1), pages 117-150, March.
    2. Lovenheim, Michael F. & Yun, Jun Hyun, 2025. "The effect of housing wealth on health care spending," Journal of Health Economics, Elsevier, vol. 103(C).
    3. Moulton, Stephanie & Rhodes, Alec & Haurin, Donald & Loibl, Cäzilia, 2022. "Managing the onset of a new disease in older age: Housing wealth, mortgage borrowing, and medication adherence," Social Science & Medicine, Elsevier, vol. 314(C).
    4. repec:dem:wpaper:wp-2023-006 is not listed on IDEAS
    5. Hong Lee & Deokrye Baek & Joseph R. Mason, 2025. "Income and Health Care Consumption: Evidence From Mortgage Payment Shocks," Health Economics, John Wiley & Sons, Ltd., vol. 34(10), pages 1853-1868, October.
    6. Jing Dong & Daifeng He & John A. Nyman & R. Tamara Konetzka, 2021. "Wealth and the utilization of long-term care services: evidence from the United States," International Journal of Health Economics and Management, Springer, vol. 21(3), pages 345-366, September.
    7. Greenhalgh-Stanley, Nadia & Reynolds, C․Lockwood, 2025. "Housing wealth, bequests, risk aversion, and the elderly," Economics Letters, Elsevier, vol. 251(C).
    8. Cäzilia Loibl & Alec P. Rhodes & Stephanie Moulton & Donald Haurin & Chrisse Edmunds, 2022. "Food insecurity among older adults in the U.S.: The role of mortgage borrowing," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(2), pages 549-574, June.
    9. Tran, My & Gannon, Brenda & Rose, Christiern, 2023. "The effect of housing wealth on older adults’ health care utilization: Evidence from fluctuations in the U.S. housing market," Journal of Health Economics, Elsevier, vol. 88(C).
    10. Liu, Yinan & Zai, Xianhua, 2022. "The Unintended Effect of Medicaid Aging Waivers on Informal Caregiving," EconStor Preprints 249566, ZBW - Leibniz Information Centre for Economics.

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    Keywords

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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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