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Nursing Home Discharges and Exhaustion of Medicare Benefits

  • Alan M. Garber
  • Thomas E. MaCurdy
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    The price sensitivity of demand for nursing home care is a subject of considerable policy interest. Standard methods for measuring price responsiveness are difficult to apply to nursing home care, since accurate price information is usually unavailable and prices may reflect unmeasured quality characteristics. We estimate price sensitivity by exploiting the dynamic price variation implicit in Medicare payment rules for nursing home care. We determine whether the hazard rate for nursing home discharge shifts in response to the price changes that occur when Medicare coverage diminishes or ends. Our findings provide strong evidence that the duration of nursing home admissions is sensitive to price.

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    File URL: http://www.nber.org/papers/w3639.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3639.

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    Date of creation: Mar 1991
    Date of revision:
    Publication status: published as Journal of the American Statistical Association, Volume 88, pp. 727-736, 1993.
    Handle: RePEc:nbr:nberwo:3639
    Note: AG HE
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
    Phone: 617-868-3900
    Web page: http://www.nber.org
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    1. Phelps, Charles E & Newhouse, Joseph P, 1974. "Coinsurance, the Price of Time, and the Demand for Medical Services," The Review of Economics and Statistics, MIT Press, vol. 56(3), pages 334-42, August.
    2. Nyman, John A., 1989. "The private demand for nursing home care," Journal of Health Economics, Elsevier, vol. 8(2), pages 209-231, June.
    3. Joseph P. Newhouse & Charles E. Phelps, 1976. "New Estimates of Price and Income Elasticities of Medical Care Services," NBER Chapters, in: The Role of Health Insurance in the Health Services Sector, pages 261-320 National Bureau of Economic Research, Inc.
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