Nursing Homes in Equilibrium: Implications for Long-term Care Policies
82 Pages Posted: 15 Jul 2021
Date Written: September 2020
We build an equilibrium model of the market for nursing home care with decision-makers on both sides of the market. The nursing home demand arises as a result of stochastic dynamic optimizations by households heterogeneous in age, health, wealth; and the cost of home-and-community-based care. On the supply side, locally competitive nursing homes decide prices and care intensity. The government pays for the long-term care of the poorest. We estimate the model parameters using Health and Retirement Survey and simulate the model to quantitatively evaluate the effects of long-term care policies on prices, intensities, care allocation, and welfare.
Keywords: Long-term Care, Nursing Home, Medicaid
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