The Impact of Public Policies on the Nursing Home Market

摘要

The purpose of this study was to investigate the contributions of public policy to expansion of the nursing home industry, changes in its composition, and the adequacy of the supply of nursing home beds relative to the demand for care. Stimulated by public policies, particularly the growth of the Medicaid program, the nursing home bed supply expanded slightly more than necessary to keep pace with population growth during the past two decades. Nevertheless, conflict between policies affecting supply and policies affecting demand have allowed demand to expand beyond supply. The bed shortage results from a conflict between two independently-determined policies. Medicaid eligibility policies, which determine the demand for care, encourage large numbers of people to seek admission to a nursing home. At the same time, states have been unable or unwilling to support the demanded quantity of care, and have tried to constrain rates of expenditure by using their reimbursement and certificate-of-need policies to keep bed supplies below the level needed to satisfy demand. In the absence of effective rationing mechanisms, however, creation of a shortage of beds encourages less, rather than more, appropriate use of beds. As long as eligibility policies encourage more people to demand nursing home care than government is willing to support, mechanisms are needed to assure that available beds are allocated according to need. Reimbursement policy is the most effective mechanism for promoting efficient allocation of beds.