Labour and Public Policy Seminar: R. Vincent Pohl, University of Georgia

Title: Patient vs. Provider Incentives in Long Term Care

2017.08.09 | Bodil Krog

Date Fri 17 Nov
Time 12:15 13:00
Location Fuglesangs Allé 4, 8210 Aarhus V, building 2621(B), room 04

Speaker: R. Vincent Pohl, University of Georgia

Title: Patient vs. Provider Incentives in Long Term Care (joint with Martin Hackmann)

Abstract: Rising health care expenditures pose a growing policy concern, but it is difficult to assess if medical provider or patient incentives are responsible for overuse of medical services. In this paper, we provide the first evidence on the joint effect of consumer and provider incentives on overspending in the long term care industry, which accounts for 1.8% of U.S. GDP. Our research design explores changes in residents’ Medicaid coverage and variation nursing homes’ financial incentives regarding the discharge timing of relatively healthy elderly residents, who can return to the community. Using resident micro data from California, New Jersey, Ohio, and Pennsylvania, we find that nursing home residents prolong their stays immediately after becoming covered by Medicaid. Moreover, nursing homes are less likely to discharge Medicaid beneficiaries at low occupancies, but as occupancy rises, we see an increase in discharge rates among Medicaid beneficiaries. Nursing homes prefer to occupy beds with more profitable private payers as they approach their capacity limit. We also find that longer nursing home stays among Medicaid beneficiaries do not lead to improved health outcomes, suggesting that the extended stays can contribute to LTC overspending of up to $10 billion per year. We then develop and estimate a dynamic model of nursing home discharges to quantify the relative contributions of patient and provider incentives. These structural estimates can inform policymakers how to effectively design policies that reduce prolonged nursing home stays.

Organizer: Niels Skipper

Labour and Public Policy Seminars