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Department of Economics

Project Abstract

"Relationship Between State Long-Term Care Needs and Medicaid Expenditures"

Faina Kashtelyan

Long-term care has become an increasingly urgent policy issue. The number of elderly Americans and their proportion of the nation's population are growing, and Americans who reach age 65 are living longer. Debate over long-term care by policymakers and members of the public has ebbed and flowed during the past three decades. Because Medicaid is the primary public financing source for long-term care, and because there is considerable flexibility available to States in designing their Medicaid programs, States, much more than the Federal government, are the key actors in long-term care poliymaking. There is a large state level variation in expenditures for long-term care within Medicaid for people with disabilities.

The purpose of this paper was to explore the relationship between long-term care need and Medicaid expenditures. Following some multivariate analyses, the rate of disability does not affect the long-term care expenditures as it was predicted. It was concluded that there is not a strong link between the expenditures and the disability measure used to describe the need for care among the younger working population with disabilities. Aged people, espeically over age of 85, are in need for most long-term care that can be provided. Most of these people live in nursing homes or some other nursing facilities.

A state's per capita income, residential area, and the states' restrictions on nursing home bed supply have a significant impact on long-term care and community based care expenditures as well. There was a negative relationship between the share of population residing in a metropolitan area and long-term care dollars.

In this paper, the relationship between the state long-term care need and expenditures was studied. Measures that affect this need the most were primarily the share of population that is 85 years old or older, income, and states' policy constraints on nursing bed supply.

A number of factors shape the magnitude, scope, and nature of the demand for long-term care. An increase in the size of the elderly population as the large baby boom generation ages predicts an increase in the long-term care and community based care expenditures. While most elderly people are not disabled, the likelihood of their need in long-term and community based care increases with age.

Higher per capita income appears to be a strong factor that influences the need and demand for long-term care and community based care because of the greater ability to pay for care. Those states that are using the CON/Moratoria policies seem to have a direct effect on the long-term care and community based expenditures. By using the institutional supply constraint the states still view as an important in the ability to redirect dollars to community based care and to control the expenditures.

DEPARTMENT OF ECONOMICS • University of Maryland, Baltimore County
3rd floor Public Policy Building, Room 338
1000 Hilltop Circle • Baltimore Maryland 21250
phone: 410-455-2160 • email: Mrs. Kelly Hodges <>