1. 1 Effects of Medicaid Policy on Long-Term Care Decisions and Medical Services Utilization among the Low-Income Elderly Song Gao SUNY-Stony Brook

2. 2 Background Long-Term Care (LTC) LTC choices --Formal LTC -- nursing home -- formal home (community) -based care --Informal home (community) -based LTC --Mixed Care Heavy financial burden →low income families

3. 3 Background (continued) Medicaid Program Target group --low-income people Policy concern --improve health status with a limited budget --primary payer for LTC (nursing home) --high expenditures of nursing home

4. 4 Motivation Aging population Increasing demand for LTC Burden for social welfare systems↑ → Implications for poor elderly? --scarcity → efficiency --encourage low costs alternatives for elder care to keep costs low Contribution

5. 5 Questions What are the effects of Medicaid on LTC choices? Does Medicaid participation increase the total utilization of formal LTC? (exogenous) Formal Care & Informal Care: -- Does Medicaid crowd out informal home care? Nursing Home Care & Formal Home Care: -- Do Medicaid home care benefits reduce the use of nursing home care?

6. 6 Hypotheses -- Medicaid participation has positive effects on formal LTC and medical services utilization -- Medicaid coverage has negative effects on informal home care -- Medicaid-subsidized home care substitutes the use of nursing home

7. 7 Data Description The Health and Retirement Study (HRS) & Asset and Health Dynamics Among the Oldest Old (AHEAD)

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10. 10 Econometric Approach Multivariate probit --Simulated Maximum Likelihood --Individual-specific error term and assuming a joint distribution across LTC choices OLS

11. 11 Variables Dependent Variable -- LTC Choices -- Health care utilization Explanatory Variable -- Demographic Variables -- Economic Variables -- Health Status -- Medicaid policy rules & LTC Prices

12. 12 Future Work Endogeneity Issue of Medicaid Participation What factors drive Medicaid participation of the elderly?