Medicaid is an importance source of funding for long-term care for the elderly. While Medicaid is the payer of last resort, contributing only after Medicare and private insurance pay their share and individuals spend their assets down to a relatively low “disregard” amount, the very high cost of nursing home care – on the order of $60,000 to $75,000 per year – means that Medicaid ends up financing care for seventy percent of nursing home residents. While most individuals on Medicaid qualify based on their low income and assets (the “cate-gorically needy”), some states also offer eligibility for those with higher income who face high medical expenses (the “medically needy”). Thus, the reach of the Medicaid program extends beyond the poorest elderly to include many middle-income and some higher-income families as well.
Despite the rising importance of Medicaid to an aging population and the program’s rising costs, relatively little is known about how Medicaid benefits are distributed among the elderly and about their value to older households.
– National Bureau of Economic Research