Medicaid and Nursing Home Choice: Why Do Duals End Up in Low-Quality Facilities?

Abstract

We provide empirical evidence on the relative importance of specific observable factors that can explain why individuals enrolled in both Medicare and Medicaid (duals) are concentrated in lower quality nursing homes, relative to those not on Medicaid. Descriptive results show that duals are 9.7 percentage points more likely than nonduals to be admitted to a low-quality (1-2 stars) nursing home. Using the Blinder-Oaxaca decomposition approach in a multivariate framework, we find that 35.4% of the difference in admission to low-quality nursing homes can be explained by differences in the distribution of observable characteristics. Differences in education and distance to high-quality nursing homes are important drivers, as are health status and race. Our findings highlight the need for creative policy solutions targeting the modifiable factors to reduce the disparity.

Keywords: disparity; duals; nursing home; quality of care.

Figure 1:. Determinants of Nursing Home Quality Disparity between Duals and Non-duals – Linear Decomposition Analysis

Note: As described in Equation 2, the percentage of disparity explained by the differences in characteristics is obtained using two components: differences in the prevalence of a characteristic in each population and the effect of that attribute on the choice of a nursing home. For example, in Figure 1 above, difference in education explains 4.9% of the disparity in low-quality (1–2 star) nursing home choice: fewer duals have higher education (Table 1) and higher education is associated with a lower likelihood of being admitted to low-quality nursing homes (Appendix Table A). In the case of gender, these two components combine to narrow the disparity in low-quality nursing home choice (hence, the negative percent explained): duals are more likely to be women and women are less likely to be admitted to low-quality nursing homes.

Figure 2:. Determinants of Nursing Home Quality Disparity between Duals and Non-duals – Non-Linear Fairlie Decomposition Analysis

Note: In the non-linear decomposition above, observed characteristics explain about 37.1% of the 9.7 percentage point difference in admission to low-quality facilities. Education and distance play a meaningful role in explaining the difference in admission to low-quality facilities for duals vs. non-duals.