Income and the Utilization of Long-Term Care Services: Evidence from the Social Security Benefit Notch

40 Pages Posted: 14 Jun 2010 Last revised: 5 Dec 2024

See all articles by Gopi Shah Goda

Gopi Shah Goda

Stanford University

Ezra Golberstein

University of Michigan at Ann Arbor

David C. Grabowski

Harvard University - Department of Health Care Policy

Date Written: June 2010

Abstract

This paper estimates the impact of income on the long-term care utilization of elderly Americans using a natural experiment that led otherwise similar retirees to receive significantly different Social Security payments based on their year of birth. Using data from the 1993 and 1995 waves of the AHEAD, we estimate instrumental variables models and find that a positive permanent income shock lowers nursing home use but increases the utilization of paid home care services. We find some suggestive evidence that the effects are due to substitution of home care for nursing home utilization. The magnitude of these estimates suggests that moderate reductions in post-retirement income would significantly alter long-term utilization patterns among elderly individuals.

Suggested Citation

Goda, Gopi Shah and Golberstein, Ezra and Grabowski, David C., Income and the Utilization of Long-Term Care Services: Evidence from the Social Security Benefit Notch (June 2010). NBER Working Paper No. w16076, Available at SSRN: https://ssrn.com/abstract=1624117

Gopi Shah Goda (Contact Author)

Stanford University ( email )

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Ezra Golberstein

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

David C. Grabowski

Harvard University - Department of Health Care Policy ( email )

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Boston, MA 02115
United States

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