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Quantifying the Impacts of Limited Supply: The Case of Nursing Homes

Andrew Ching (), Fumiko Hayashi and Hui Wang

No 150006, Working Papers from Canadian Centre for Health Economics

Abstract: This paper develops a new estimation method that accounts for excess demand and the unobserved component of product quality. We apply our method to study the Wisconsin nursing home market in 1999, and find that nearly 20% of elderly qualified for Medicaid were rationed out. However, our counterfactual experiment shows that the net welfare gain of fulfilling all nursing home demands may be small, because the welfare gain to Medicaid patients could be largely offset by the increase in Medicaid expenditures. We also find that a 1% increase in quality would crowd out 3.2% Medicaid patients in binding nursing homes.

Keywords: rationing; excess demand; capacity constraints; demand estimation; nursing homes; unobserved quality (search for similar items in EconPapers)
JEL-codes: C15 C35 D45 I11 I18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea
Date: 2015-06
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Forthcoming in International Economic Review

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http://www.canadiancentreforhealtheconomics.ca/wp- ... 5/06/Ching-et-al.pdf First version, 2014 (application/pdf)

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Journal Article: QUANTIFYING THE IMPACTS OF LIMITED SUPPLY: THE CASE OF NURSING HOMES (2015) Downloads
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