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Patient vs. Provider Incentives in Long-Term Care

Author

Listed:
  • Martin Benjamin Hackmann
  • R. Vincent Pohl
Abstract
How do patient and provider incentives affect mode and cost of long-term care? Our analysis of 1 million nursing home stays yields three main insights. First, Medicaid-covered residents prolong their stays instead of transitioning to community-based care due to limited cost-sharing. Second, nursing homes shorten Medicaid stays when capacity binds to admit more profitable out-of-pocket payers. Third, providers react more elastically to financial incentives than patients, so moving to episode-based provider reimbursement is more effective in shortening Medicaid stays than increasing resident cost-sharing. Moreover, we do not find evidence for health improvements due to longer stays for marginal Medicaid beneficiaries.

Suggested Citation

  • Martin Benjamin Hackmann & R. Vincent Pohl, 2018. "Patient vs. Provider Incentives in Long-Term Care," CESifo Working Paper Series 7373, CESifo.
    • Handle: RePEc:ces:ceswps:_7373
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    References listed on IDEAS

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    Cited by:

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    2. Karmann, Alexander & Sugawara, Shinya, 2022. "Comparing the German and Japanese nursing home sectors: Implications of demographic and policy differences," CEPIE Working Papers 02/22, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    3. Marianne Tenand & Pieter Bakx & Eddy van Doorslaer, 2020. "Equal long‐term care for equal needs with universal and comprehensive coverage? An assessment using Dutch administrative data," Health Economics, John Wiley & Sons, Ltd., vol. 29(4), pages 435-451, April.
    4. Dillender, Marcus & Jinks, Lu & Lo Sasso, Anthony T., 2023. "When (and why) providers do not respond to changes in reimbursement rates," Journal of Public Economics, Elsevier, vol. 217(C).
    5. Marianne Tenand & Pieter Bakx & Bram Wouterse, 2021. "The impact of co-payments for nursing home care on use, health, and welfare," CPB Discussion Paper 430, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Yang, Ou & Chan, Marc K. & Cheng, Terence C. & Yong, Jongsay, 2020. "Cream skimming: Theory and evidence from hospital transfers and capacity utilization," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 68-87.
    7. Bergeot, Julien & Tenand, Marianne, 2023. "Does informal care delay nursing home entry? Evidence from Dutch linked survey and administrative data," Journal of Health Economics, Elsevier, vol. 92(C).

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    More about this item

    Keywords

    long-term care; nursing homes; patient incentives; provider incentives; cost-sharing; episode-based reimbursement; medicaid;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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