Creative Financing and Public Moral Hazard: Evidence from Medicaid and the Nursing Home Industry

Martin B. Hackmann, Juan S. Rojas and Nicolas Ziebarth ()

No 34118, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the misallocation of Medicaid funds, its consequences for reimbursement rates, the quantity, and the quality of care provided. Combining two decades of administrative, audit, and survey data on U.S. nursing homes, we show that states employ creative financing schemes to divert federal matching funds from their intended purposes. Our theoretical and empirical analysis demonstrates that, to increase federal matching funds, such schemes distort the quality-quantity tradeoff. In Indiana, exploiting plausibly exogenous variation in the rollout of a creative financing scheme, we find a disproportionate expansion of Medicaid-funded care for dementia patients in the lowest-quality nursing facilities.

JEL-codes: H51 H75 I11 I13 I18 J14 (search for similar items in EconPapers)
Date: 2025-08
New Economics Papers: this item is included in nep-hea
Note: AG EH PE POL
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w34118.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:34118

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34118
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().