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APHA Scientific Session and Event Listing

Monika Lopez Anuarbe, Economics, University of Connecticut, 1285 Route 163, Oakdale, CT 06370, 860-460-0095, monikauconn@yahoo.com and Dennis Heffley, PhD, Department of Economics, University of Connecticut, 349 Mansfield Road, Storrs, CT 06269.

In 1970 only 22.3% of total U.S. nursing home expenditure was covered by federal and state Medicaid payments. By 2004, Medicaid covered 46.1% of U.S. nursing home expenditure. Part of this growth in program commitments reflects conscious efforts by non-poor elderly to divest their assets before nursing home entry, in order to qualify for Medicaid coverage. If this does not occur, nursing home entrants must “spend-down” their assets to pay for nursing home care before they can meet Medicaid eligibility requirements. Previous studies have documented divestment and spend down behavior (GAO (2005), Bassett (2004), Hurd and Smith (2001), McGarry and Schoeni (1997), Gale and Scholz (1994), Cox (1990)), but there have been relatively few attempts to longitudinally model the process or to empirically isolate the factors associated with this behavior (Coe (2004), Aykan (2002), Lindrooth et.al. (2000)).

Medicaid's program rules vary across states and over time. These program differences, along with a person's health status, socioeconomic characteristics and family structure, affect asset divestment decisions. This paper offers a theoretical and empirical analysis of asset divestment as a precursor to nursing home entry and qualification for Medicaid support. Panel data (1993, 1995, 1998, 2000 and 2002) from the AHEAD (Asset and Health Dynamics Among the Oldest Old) study are used to empirically test the implications of the model. The study provides useful information about how personal characteristics and state specific Medicaid eligibility rules affect divestment.

Learning Objectives:

• Identify the main factors that determine family asset transfers.
• Describe how state Medicaid policies affect family asset transfers.

Presenting author's disclosure statement:

Not Answered