Moral hazard in nursing home use
By: David C. Grabowski, Jonathan Gruber.
Contributors: Gruber, Jonathan.; National Bureau of Economic Research.
Series: NBER working paper paper series -- no. 11723.; Working paper series (National Bureau of Economic Research) -- working paper no. 11723.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 29
Subjects: Nursing homes -- Economic aspects -- United States; Nursing homes -- Government policy -- United States
Description: "Nursing home expenditures are a rapidly growing share of national health care spending with the government functioning as the dominant payer of services.  Public insurance for nursing home care is tightly targeted on income and assets, which imposes a major tax on savings; moreover, low state reimbursement for Medicaid patients has been shown to lower treatment quality, and bed supply constraints may deny access to needy individuals.  However, expanding eligibility, increasing Medicaid reimbursement, or allowing more nursing home bed slots has the potential to induce more nursing home use, increasing the social costs of long term care.  A problem in evaluating this tradeoff is that we know remarkably little about the effects of government policy on nursing home utilization.  We attempt to address this shortcoming using multiple waves of the National Long-Term Care Survey, matched to changing state Medicaid rules for nursing home care.  We find consistent evidence of no effect of Medicaid policies on nursing home utilization, suggesting that demand for nursing home care is relatively inelastic.  From a policy perspective, this finding indicates that changes in overall Medicaid generosity will not have large effects on utilization"--National Bureau of Economic Research web site.
Notes: "October 2005."

Includes bibliographical references (p. 27-29).

Also available in PDF from the NBER world wide web site (www.nber.org).