nach oben

International Journal of Health Economics and Management

Erschienen in:

30.03.2021 | Research article

Wealth and the utilization of long-term care services: evidence from the United States

verfasst von: Jing Dong, Daifeng He, John A. Nyman, R. Tamara Konetzka

Erschienen in: International Journal of Health Economics and Management | Ausgabe 3/2021

Einloggen, um Zugang zu erhalten

Abstract

Long-term care (LTC) provision and financing has become a major challenge for policymakers in the United States and worldwide. To inform associated policies and more efficiently allocate LTC resources, it is important to understand how demand for different types of LTC services responds to increased wealth. We use data from the United States Health and Retirement Study to examine the use of LTC services following plausibly exogenous positive shocks to wealth. We further account for time-invariant household-level characteristics, including the expectation of a wealth shock at an unknown future time, by employing household fixed effects. We find that large positive wealth shocks lead to a greater probability of purchase of paid home care but not of nursing home care. Our results imply that expanding home and community-based services and insurance coverage of home care for people without sufficient wealth is likely to be efficient and welfare improving and should be considered by policymakers.Please confirm if the author names are presented accurately and in the correct sequence (given name, middle name/initial, family name). Author 4 Given name: [R. Tamara] Last name: [Konetzka]. Also, kindly confirm the details in the metadata are correct.confirmedPlease confirm the city are correct and amend if necessary in Affiliations 1, 2, 3, 4.confirmed

Nur mit Berechtigung zugänglich

Medicare is a federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease.

Medicaid is a federal and state health insurance program for people with limited income and resources.

The Social Security “notch” refers to the difference between Social Security benefits paid to people born between 1917 and 1926 and those born before or after them. The difference resulted from the 1977 amendments to the Social Security Act, which created discontinuities in the calculation for Social Security benefits.

A large number of literature has used inheritances or lottery winnings as exogeneous wealth shocks to study the impact of wealth on economic outcomes (for example, Bø et al., 2018; Brown et al., 2010; Cesarini et al., 2017; Picchio et al., 2018).

The Health and Retirement Study asks questions on respondent’s expectation of receiving an inheritance in the next 10 years and the expected amount. By comparing individual’s inheritance expectation information in the 2000 survey against their actual inheritance receipt in the 2002–2010 surveys, we find that, among the 4,461 individuals who expected an inheritance in the next 10 years, only 1,082 individuals (24%) actually received one; and among the 441 individuals who expected an inheritance of $50,000 + , only 97 individuals (22%) received an inheritance of $50,000 + . On the other hand, among the 12,420 individuals who did not expect an inheritance in the next 10 years, 518 individuals (4%) actually received one; and among the 1,125 individuals who expected an inheritance of 0-$50,000, 118 individuals (10%) actually received an inheritance of $50,000 + . Overall, these findings suggest that the receipt, the timing, and the amount of inheritances are largely unpredictable.

We implement our fixed-effects logit model using the conditional logit model. Conceptually, fixed-effects logit model is the same as conditional logit model since the data are grouped and the likelihood is calculated relative to each group.

We choose our paid home care variable to be consistent with Goda et al. (2011) and Costa-Font et al. (2019). We acknowledge that this variable may include some care episodes covered by Medicare, which tend to bias our results toward zero.

The $50,000 threshold is chosen because it is roughly the cost of one year’s home care services or half year’s nursing home services. A smaller threshold (e.g., $5,000 or $10,000) may not be meaningful given how expensive the LTC services are.

We adapted the ADL & memory status measure from Guo, Konetzka, Magett, & Dale (2014): state 0: no ADL or memory problem; state 1: need help with bathing but no memory problem; state 2: state1 and need help with dressing; state 3: state 2 and need help with toileting and transferring; state 4: state 3 and memory problem; state 5: state 4 and need help with eating.

Most private LTCI policies pay benefits when beneficiaries need help with two or more ADLs or when they have a cognitive impairment. We use the same criteria to define individuals who have greater needs for LTC.

For individuals that received multiple wealth shocks, we drop their observations after the first wealth shock.

We control for the same set of variables in this falsification test as in our base model.

One may argue that the $50,000 threshold is still too small for using nursing home care, and the lack of significant findings for nursing home care may be caused by not looking at larger wealth shocks. Therefore, we examined the impact of receiving wealth shocks of $100,000 + and $200,000 + . Our results show that receiving wealth shocks of $100,000 + or $200,000 has a negative but statistically insignificant impact on nursing home use.

Bernard, D. M., Banthin, J. S., & Encinosa, W. E. (2009). Wealth, income, and the affordability of health insurance. Health Affairs (Project Hope), 28(3), 887–896. https://doi.org/10.1377/hlthaff.28.3.887CrossRef

Bø, E. E., Halvorsen, E., & Thoresen, T. O. (2018). Heterogeneity of the Carnegie effect. Journal of Human Resources. https://doi.org/10.3368/jhr.54.3.0915.7366R1CrossRef

Brown, J. R., Coile, C. C., & Weisbenner, S. J. (2010). The Effect of inheritance receipt on retirement. The Review of Economics and Statistics, 92(2), 425–434. https://doi.org/10.1162/rest.2010.11182CrossRef

Cesarini, D., Lindqvist, E., Notowidigdo, M. J., & Östling, R. (2017). The effect of wealth on individual and household labor supply: Evidence from Swedish lotteries. American Economic Review, 107(12), 3917–3946. https://doi.org/10.1257/aer.20151589CrossRef

Congressional Research Service. (2018). Who pays for long-term services and supports?

Costa-Font, J., Frank, R. G., & Swartz, K. (2019). Access to long term care after a wealth shock: Evidence from the housing bubble and burst. The Journal of the Economics of Ageing, 13, 103–110. https://doi.org/10.1016/j.jeoa.2018.07.001CrossRef

Finkelstein, A., & McGarry, K. (2006). Multiple dimensions of private information: Evidence from the long-term care insurance market. American Economic Review, 96(4), 938–958. https://doi.org/10.1257/aer.96.4.938CrossRef

Genworth. (2018). 2018 cost of care report. Genworth. https://www.genworth.com/aging-and-you/finances/cost-of-care.html.

Goda, G. S., Golberstein, E., & Grabowski, D. C. (2010). Income and the utilization of long-term care services: Evidence from the social security benefit notch (Working paper no. 16076). National Bureau of Economic Research. https://doi.org/10.3386/w16076.

Goda, G. S., Golberstein, E., & Grabowski, D. C. (2011). Income and the utilization of long-term care services: Evidence from the Social Security benefit notch. Journal of Health Economics, 30(4), 719–729. https://doi.org/10.1016/j.jhealeco.2011.04.001CrossRefPubMed

Guo, J., Konetzka, R. T., Magett, E., & Dale, W. (2014). Quantifying Long-Term Care Preferences. Medical Decision Making: An International Journal of the Society for Medical Decision Making. https://doi.org/10.1177/0272989X14551641CrossRef

Kane, R. A., Kane, R. L., & Ladd, R. C. (1998). The heart of long term care. Oxford University Press.

Konetzka, R. T., He, D., Dong, J., & Nyman, J. A. (2019). Moral hazard and long-term care insurance. The Geneva Papers on Risk and Insurance - Issues and Practice, 44(2), 231–251.CrossRef

Li, Y., & Jensen, G. A. (2011). The impact of private long-term care insurance on the use of long-term care. Inquiry: A Journal of Medical Care Organization, Provision and Financing, 48(1), 34–50.CrossRef

Picchio, M., Suetens, S., & van Ours, J. C. (2018). Labour supply effects of winning a lottery. The Economic Journal, 128(611), 1700–1729. https://doi.org/10.1111/ecoj.12465CrossRef

RAND Center for the Study of Aging. (2014). RAND HRS Data File (v.N). http://www.rand.org/labor/aging/dataprod/hrs-data.html.

Stone, R. I. (2000). Long-term care for the elderly with disabilities: Current policy, emerging trends, and implications for the twenty-first century. Milbank Memorial Fund. https://www.milbank.org/publications/long-term-care-for-the-elderly-with-disabilities-current-policy-emerging-trends-and-implications-for-the-twenty-first-century/.

The Center for Insurance Policy and Research. (2016). The state of long-term care insurance: The market, challenges and future innovations.

Tsai, Y. (2015). Social security income and the utilization of home care: Evidence from the social security notch. Journal of Health Economics, 43, 45–55. https://doi.org/10.1016/j.jhealeco.2014.10.001CrossRefPubMedPubMedCentral

Werner, R. M., & Konetzka, R. T. (2018). Trends in post-acute care use among medicare beneficiaries: 2000 to 2015. JAMA, 319(15), 1616–1617. https://doi.org/10.1001/jama.2018.2408CrossRefPubMedPubMedCentral

Titel: Wealth and the utilization of long-term care services: evidence from the United States
verfasst von: Jing Dong
Daifeng He
John A. Nyman
R. Tamara Konetzka
Publikationsdatum: 30.03.2021
Verlag: Springer US
Erschienen in: International Journal of Health Economics and Management / Ausgabe 3/2021
Print ISSN: 2199-9023
Elektronische ISSN: 2199-9031
DOI: https://doi.org/10.1007/s10754-021-09299-1

Springer Medizin

Abstract

Bitte loggen Sie sich ein, um Zugang zu diesem Inhalt zu erhalten

Weitere Artikel der Ausgabe 3/2021

Cost-efficiency in the patient centered medical home model: New evidence from federally qualified health centers

Determinants of prepaid systems of healthcare financing: a worldwide country-level perspective

Providers preferences towards greater patient health benefit is associated with higher quality of care

Public–private differentials in health care delivery: the case of cesarean deliveries in Algeria