The Nursing Home Market

Supply and Demand for the Elderly

Jeffrey A. Rhoades

• Publisher: Routledge
• Year: 2018
• eBook ISBN: 9781317733096
• Edition: 1
• Topic: Politica e relazioni internazionali
• Subtopic: Politica sociale

First published in 1998. While previous studies have explored factors affecting the utilization of nursing home care by the elderly, few have used a nationally representative sample, and fewer still have investigated how price as well as supply affects utilization. The major purpose of this study is to model the effects of supply and demand for nursing home care on the utilization of such care by the elderly. A price elasticity of demand for nursing home care is estimated and factors affecting the supply and demand for nursing home care, and ultimately its utilization, are elucidated.

Acknowledgments

There are numerous persons who provided guidance, support, and encouragement while I pursued my Ph.D. degree at The Johns Hopkins University, School of Hygiene and Public Health.

I would like to thank my committee members, Richard Frank, Pearl German, George Rebok, and Rebeca Wong for their helpful suggestions and their sincere interest in my progress. I especially want to thank Richard Frank for his insightful suggestions and guidance within the realm of economics as well as his common sense approach to research. Also, I am most appreciative of Pearl German's concern for me and my family's well being from the very beginning of my matriculation. I would also like to extend a special thank you to Barbara Starfield who saw fit to provide me with financial support during my second year of matriculation.

To Social and Scientific Systems, who provided programming support throughout this research project, I am most grateful. Specifically I wish thank Jane Faulman, Kathy McMillan,, Gary Moore, Sophie Nemirovsky, Maria Nicholson, Richard Stoll, Charlotte Whittington, and Chao-Sung Yu. I give special thanks and praise to Kathy McMillan, who helped me get started in this endeavor, Chao-Sung Yu who provided an extra push towards the end, and most of all to Richard Stoll who put up with me and my many models for the longest period of time. I am grateful for Richard's patience and willingness to run the model one more time and for his encouragement and words of wisdom.

Finally, I am grateful for the love and support provided by my family. To my parents for their love and understanding as well as financial assistance during my first year of matriculation. To my brother, David, my sister-in-law, Barbara, and Robert and Doris Hammond, for their genuine interest in my progress. Most of all I am indebted to my wife, Deborah, for her initial support and encouragement to start this challenge and for her patience, despite the toll it took on our relationship and family. For this I will always be grateful.

Chapter I
Introduction

With increasing life expectancy, an aging population, and the functionally impaired population growing, how best to meet long-term care needs continues to challenge policy makers. Legislation introduced in Congress reflects a wide range of views. Some take an incremental approach, while others propose a comprehensive public sector approach. Still others seek to expand the role of private long-term care insurance in the financing of nursing home care as is evidenced by the recent passage of the Kassebaum-Kennedy tax provisions for long-term care insurance (Reschovsky 1996). The issue of financing nursing home care is and will remain a major health and social issue in the decades to come; evaluation of nursing home care policy is urgently needed (Phillips and Gaylord 1985; Rivlin and Wiener 1988; Soldo and Agree 1988).

Changes in nursing home care financing would in all likelihood change the way individuals and families plan for, purchase and utilize nursing home care (EOA 1991). Unfortunately insufficient research has been conducted on the impact of induced demand on the utilization of nursing home care (Fama and Kennell 1990; Headen 1993; Pepper Commission 1990). The few existing studies of nursing home care demand have found a highly elastic response to price; an increase in price has been shown to have a significant negative effect on the quantity of nursing home services demanded. An increase of 10 percent has resulted in an decrease in demand ranging from 7 to 23 percent (Chiswick 1976; Headen 1993; Nyman 1989a; Scanlon 1980).

Additionally there is the issue of increased demand in the face of a constrained nursing home bed supply (Fama and Kennell 1990). Induced demand becomes less pertinent when access to nursing home beds is restricted (Pepper Commission 1990). Lowering price for nursing home care would not necessarily lead to increased nursing home care utilization when supply is constrained (EOA 1991).

Using various policies, states have acted to constrain the nursing home bed supply, and thus control utilization and in turn expenditures (Doty et al. 1985; Nyman 1989b). For nursing home care, the process of adjusting price to equate demand and utilization does not take place. The nursing home market is in disequilibrium (Harrington and Swan 1987; Harrington et al...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Figures
• Tables
• Preface
• Acknowledgments
• Appendices
• Bibliography
• Index