The causal effects of home care use on institutional long-term care utilization and expenditures

Health Economics
Jing GuoWillard G Manning

Abstract

Limited evidence exists on whether expanding home care saves money overall or how much institutional long-term care can be reduced. This paper estimates the causal effect of Medicaid-financed home care services on the costs and utilization of institutional long-term care using Medicaid claims data. A unique instrumental variable was applied to address the potential bias caused by omitted variables or reverse effect of institutional care use. We find that the use of Medicaid-financed home care services significantly reduced but only partially offset utilization and Medicaid expenditures on nursing facility services. A $1000 increase in Medicaid home care expenditures avoided 2.75 days in nursing facilities and reduced annual Medicaid nursing facility costs by $351 among people over age 65 when selection bias is addressed. Failure to address selection biases would misestimate the substitution and offset effects.

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Citations

Mar 12, 2015·Health Economics·Claudine de MeijerMarc Koopmanschap
Jul 1, 2017·Health Economics·Quitterie Roquebert, Marianne Tenand
Mar 30, 2018·Inquiry : a Journal of Medical Care Organization, Provision and Financing·Megan Shepherd-BaniganCourtney Harold Van Houtven
Mar 23, 2021·European Journal of Ageing·Mark Kattenberg, Pieter Bakx
Jun 5, 2021·Health Services Research·Josephine C JacobsCourtney H Van Houtven
Jun 24, 2021·Journal of Aging & Social Policy·France Weaver, April Temple
Feb 6, 2020·Journal of the American Medical Directors Association·Heidi J WelberryLouisa R Jorm

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