There’s No Place Like Home: Estimating the Impact of Medicaid’s Home and Community-Based Services Programs on Nursing Home Utilization

Abstract

Recent trends indicate that the United States population is aging at a rapid rate. The considerable increase in demand for long-term care (LTC) that will accompany this growth in the elderly population will likely result in Medicaid adopting an even more outsized role in the provision of long-term elderly care. This likelihood is amplified by the simultaneous shrinkage of the private long-term care insurance industry. To be able to effectively handle this increased cost burden, it is more important than ever for policymakers and administrators to understand how to fund and design LTC programs in an efficient manner. To form a better understanding of this, I examine the two major forms of LTC in Medicaid: Nursing Homes and Home and Community-Based Services (HCBS). In particular, I assess whether two specific HCBS programs are successful in achieving their goals of reducing nursing home care in favor of HCBS. Ultimately, due to issues from multicollinearity and potential omitted variable bias, I find no strong evidence in either direction. I take these findings and pinpoint specific pitfalls in methodology that researchers may encounter later on with the same subject. The discussion of these limitations is instructive for future research to help build on the methodology and results from this paper.