Home Care Reimbursement, Long-term Care Utilization, and Health Outcomes

Robin McKnight

No 10414, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Long-term care currently comprises almost 10% of national health expenditures and is projected to rise rapidly over coming decades. A key, and relatively poorly understood, element of long-term care is home health care. I use a substantial change in Medicare reimbursement policy, which took the form of tightly binding average per-patient reimbursement caps, to address several questions about the market for home care. I find that the reimbursement change was associated with a large drop in the provision of home care. This drop was concentrated among unhealthy beneficiaries, which is consistent with the incentives for patient selection inherent in the per-patient caps. I find that the decline in home health utilization was not offset by increases in institutional long-term care or other medical care and that there were no associated adverse health consequences. However, approximately one-quarter of the decline in Medicare spending was offset by increases in out-of-pocket expenditures for home health care, with the offset concentrated in higher income populations. Despite the value of home health care implied by the out-of-pocket expenditures, I find that the welfare implications of the reimbursement change were ambiguous.

JEL-codes: I1 (search for similar items in EconPapers)
Date: 2004-04
New Economics Papers: this item is included in nep-hea
Note: AG EH
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Citations: View citations in EconPapers (5)

Published as McKnight, Robin. "Home Care Reimbursement, Long-Term Care Utilization, And Health Outcomes," Journal of Public Economics, 2006, v90(1-2,Jan), 293-323.

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Journal Article: Home care reimbursement, long-term care utilization, and health outcomes (2006)
Working Paper: Home Care Reimbursement, Long-term Care Utilization,And Health Outcomes (2004)
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