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Medicaid and the Cost of Improving Access to Nursing Home Care

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  • Gertler, Paul J

Abstract

The Medicaid program can improve the access of Medicaid patients in nursing home care by raising the rate of return on Medicaid patients care. However, increases in the return also induce nursing homes to lower quality. To quantify this tradeoff, the author derives expressions for three elasticities: (1) the elasticity of access with respect to Medicaid expenditures, (2) the elasticity of access with respect to quality, and (3) the elasticity of Medicaid expenditures with respect to the rate of return. Using New York State data, he finds that a 10 percent increase in Medicaid expenditures induces a 4.1 percent increase in Medicaid patient care and a reduction in nursing home expenditures on services provided patients by about 3.4 percent. Copyright 1992 by MIT Press.

Suggested Citation

  • Gertler, Paul J, 1992. "Medicaid and the Cost of Improving Access to Nursing Home Care," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 338-345, May.
  • Handle: RePEc:tpr:restat:v:74:y:1992:i:2:p:338-45
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    1. Michael Rothschild, 1971. "On the Cost of Adjustment," The Quarterly Journal of Economics, Oxford University Press, vol. 85(4), pages 605-622.
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    4. Robert F. Engle & Ta-Chung Liu, 1972. "Effects of Aggregation Over Time on Dynamic Characteristics of an Econometric Model," NBER Chapters,in: Econometric Models of Cyclical Behavior, Volumes 1 and 2, pages 673-737 National Bureau of Economic Research, Inc.
    5. Card, David, 1986. "Efficient Contracts with Costly Adjustment: Short-run Employment Determination for Airline Mechanics," American Economic Review, American Economic Association, pages 1045-1071.
    6. Stephen Nickell, 1984. "An Investigation of the Determinants of Manufacturing Employment in the United Kingdom," Review of Economic Studies, Oxford University Press, vol. 51(4), pages 529-557.
    7. Hamermesh, Daniel S., 1990. "Aggregate employment dynamics and lumpy adjustment costs," Carnegie-Rochester Conference Series on Public Policy, Elsevier, pages 93-129.
    8. P. K. Trivedi, 1985. "Distributed Lags, Aggregation and Compounding: Some Econometric Implications," Review of Economic Studies, Oxford University Press, vol. 52(1), pages 19-35.
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