Venue: The Fuqua School of Business, Duke University, 1 Towerview Drive, Durham, NC 27708-0120
Presentation
Does Substituting Home Care for Institutional Care Lead to a Reduction in Medicaid Expenditures: Evidence from Home and Community Based Services Waivers
In 1981 Congress introduced Home and Community Based Services (HCBS) waivers in an attempt to contain Medicaid long-term care expenditures. This paper analyzes the efficacy of the waiver program. To date, little is known about its impact on cost containment. Using state-level Medicaid data on expenditures and the number of individuals participating in HCBS waivers between 1992 and 2001, I estimate the impact of HCBS waivers on total Medicaid expenditures as well as on Medicaid institutional, home health, physician, hospital and pharmaceutical expenditures. I use a difference-in difference model which compares Medicaid expenditures using variation from both the implementation of an HCBS waiver program and the size of an HCBS waiver program across states and over time. The results, robust across multiple specifications, show increases rather than decreases in total Medicaid spending as well as increases in the other Medicaid spending categories analyzed. This implies that there is no evidence of substitution from institutional care to the HCBS waiver program or that cost-shifting is occurring. In fact the large magnitude of the estimated spending increases suggests the waivers induce more people to enter the Medicaid program.