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Targeting with In-kind Transfers: Evidence from Medicaid Home Care

Ethan M.J. Lieber, Lee M. Lockwood

NBER Working Paper No. 24267
Issued in January 2018, Revised in March 2019
NBER Program(s):Program on the Economics of Aging, Health Care Program, Public Economics Program

Making a transfer in kind reduces its value to recipients but can improve targeting. We develop an approach to quantifying this tradeoff and apply it to home care. Using randomized experiments by Medicaid, we find that in-kind provision significantly reduces the value of the transfer to recipients while targeting a small fraction of the eligible population that is sicker and has fewer informal caregivers than the average eligible. Under a wide range of assumptions within a standard model, the targeting benefit exceeds the distortion cost. This highlights an important cost of recent reforms toward more flexible benefits.

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Document Object Identifier (DOI): 10.3386/w24267

Published: Ethan M. J. Lieber & Lee M. Lockwood, 2019. "Targeting with In-Kind Transfers: Evidence from Medicaid Home Care," American Economic Review, vol 109(4), pages 1461-1485. citation courtesy of

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