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Effects of Medicaid Policy on LTC Decisions & Medical Services Utilization among Low-Income Elderly

This study examines the impact of Medicaid policy on long-term care decisions and medical services utilization among low-income elderly individuals. It investigates the effects of Medicaid participation on formal LTC, informal home care, and nursing home care. The econometric approach involves multivariate probit and OLS analysis using data from the Health and Retirement Study (HRS) and Asset and Health Dynamics Among the Oldest Old (AHEAD). The study also explores factors driving Medicaid participation among the elderly.

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Effects of Medicaid Policy on LTC Decisions & Medical Services Utilization among Low-Income Elderly

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  1. Effects of Medicaid Policy on Long-Term Care Decisions and Medical Services Utilization among the Low-Income ElderlySong GaoSUNY-Stony Brook

  2. Background Long-Term Care (LTC) • LTC choices --Formal LTC -- nursing home -- formal home (community) -based care --Informal home (community) -based LTC --Mixed Care • Heavy financial burden →low income families

  3. Background(continued) Medicaid Program • Target group --low-income people • Policy concern --improve health status with a limited budget --primary payer for LTC (nursing home) --high expenditures of nursing home

  4. Motivation • Aging population • Increasing demand for LTC • Burden for social welfare systems↑ → Implications for poor elderly? --scarcity → efficiency --encourage low costs alternatives for elder care to keep costs low • Contribution

  5. Questions What are the effects of Medicaid on LTC choices? • Does Medicaid participation increase the total utilization of formal LTC? (exogenous) • Formal Care & Informal Care: -- Does Medicaid crowd out informal home care? • Nursing Home Care & Formal Home Care: -- Do Medicaid home care benefits reduce the use of nursing home care?

  6. Hypotheses • Hypotheses -- Medicaid participation has positive effects on formal LTC and medical services utilization -- Medicaid coverage has negative effects on informal home care -- Medicaid-subsidized home care substitutes the use of nursing home

  7. Data Description • The Health and Retirement Study (HRS) & Asset and Health Dynamics Among the Oldest Old (AHEAD)

  8. Econometric Approach • Multivariate probit --Simulated Maximum Likelihood --Individual-specific error term and assuming a joint distribution across LTC choices • OLS

  9. Dependent Variable -- LTC Choices -- Health care utilization Explanatory Variable -- Demographic Variables -- Economic Variables -- Health Status -- Medicaid policy rules & LTC Prices Variables

  10. Future Work Endogeneity Issue of Medicaid Participation • What factors drive Medicaid participation of the elderly?

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