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.

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
Goda, Golberstein, and Grabowski w16076 Income and the Utilization of Long-Term Care Services: Evidence from the Social Security Benefit Notch
Card and Lewis The Diffusion of Mexican Immigrants During the 1990s: Explanations and Impacts
Edwards w11669 The End of Large Current Account Deficits, 1970-2002: Are There Lessons for the United States?
Abowd, Kramarz, and Margolis w6996 Minimum Wages and Employment in France and the United States
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

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

Contact Us