NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Moral Hazard in Nursing Home Use

David C. Grabowski, Jonathan Gruber

NBER Working Paper No. 11723
Issued in October 2005
NBER Program(s):   AG   HE   PE

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.

download in pdf format
   (159 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (159 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w11723

Published: Gruber, Jonathan and David Grabowski. “Moral Hazard in Nursing Home Use.” Journal of Health Economics 26 (2007): 560-577. .

Users who downloaded this paper also downloaded these:
Grabowski, Gruber, and Angelelli w12361 Nursing Home Quality as a Public Good
Brown, Coe, and Finkelstein Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey
Lane and Shambaugh w14909 The Long or Short of it: Determinants of Foreign Currency Exposure in External Balance Sheets
Kapteyn, Smith, and van Soest w15245 Work Disability, Work, and Justification Bias in Europe and the U.S.
Finkelstein and McGarry w9957 Private Information and its Effect on Market Equilibrium: New Evidence from Long-Term Care Insurance
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us