Aging in Place and Elderly Well-Being: A Causal Examination of Medicaid HCBS Expansion

Emma Zai, Max-Planck-Institute for Demographic Research

This study investigates the causal effects of aging in place on older adults' well-being by analyzing the expansion of Medicaid's Home and Community-Based Services (HCBS) from 1998 to 2018. Using a two-way fixed effects difference-in-differences (TWFE DiD) approach, the research explores how increased access to in-home formal care influences physical, mental, and behavioral health. The findings reveal that HCBS expansion results in overall negative self-reported health outcomes, including greater limitations in Activities of Daily Living (ADL) and Instrumental ADL (IADL), and a decline in cognitive function, with no significant effect on depression. Preventive healthcare utilization, such as cholesterol tests and cancer screenings, decreases, while risky behaviors, particularly alcohol consumption, improve. However, healthcare utilization, including hospital stays, nursing home use, and doctor visits, significantly increases, leading to higher out-of-pocket medical costs. These negative health effects are most pronounced among older, unmarried, and low-income individuals, highlighting disparities in the program's impact across different demographic groups. This study contributes to policy discussions by providing robust evidence on the consequences of aging in place, emphasizing the need for more nuanced LTC policies that consider the diverse effects on vulnerable elderly populations.

Keywords: Econometrics , Population Ageing, Older Adults and Intergenerational Relations, Health and Morbidity

See extended abstract.