Public long-term care insurance and the housing and living arrangements of the elderlyEvidence from medicare home health benefits

Public long-term care insurance and the housing and living arrangements of the elderly

Evidence from medicare home health benefits

Engelhardt

Gary V.

Engelhardt, Gary V.

Author

Greenhalgh-Stanley

Nadia

Greenhalgh-Stanley, Nadia

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20082008monographic

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2008

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

We provide empirical evidence on the extent to which long-term care insurance affects the housing and living arrangements of the elderly by examining plausibly exogenous changes in the supply of long-term care insurance through the Medicare program that occurred in the late 1990s. Prior to 1997, Medicare reimbursed home health care agencies on a retrospective-cost basis. Then, starting in October, 1997, as a result of the Balanced Budget Act of 1997 (BBA97), Medicare switched to a system of prospective payments for home health care, which induced state-by-calendar-year variation in the supply of this type of public long-term care insurance. We exploit this variation to econometrically identify the impact on the housing and living arrangements of the elderly, using CPS data from 1995-2000 (before and after the law change). Our estimates indicate that living arrangements are quite responsive to home health care benefits. The estimated elasticity of shared living to benefits is -0.7 over all elderly and -1 for widowed elderly. However, these benefits have little impact on household headship among the elderly. This suggests that the bulk of the shared-living response occurred through co-residents living in elderly households. There is some weak evidence that increases in benefits raised elderly homeownership.

Gary V. Engelhardt and Nadia Greenhalgh-Stanley.

CRR WP2008-15

CRR WP

2008-15

http://crr.bc.edu/images/stories/Working_Papers/2008-15.pdf

MChBEnglisheng

MChB

Englisheng

English

eng