Does long-term care subsidization reduce hospital admissions and utilization?

Area of Science:

• Health Economics
• Public Policy
• Healthcare Management

Background:

• Rising healthcare costs necessitate exploring interventions that reduce hospital utilization.
• The affordability of long-term care significantly impacts healthcare delivery patterns.
• Coordination between health and social care services is crucial for effective resource allocation.

Purpose of the Study:

• To determine the causal impact of enhanced public subsidization of long-term care on hospital care utilization.
• To analyze the effects of caregiving allowances and publicly funded home care on hospital admissions and length of stay.
• To investigate the role of regional health and social care coordination in amplifying these effects.

Main Methods:

• Utilizing quasi-experimental evidence from a reform expanding long-term care subsidies.
• Analyzing data on hospital admissions (internal and external margins) and length of stay.
• Conducting falsification and robustness checks to validate findings.

Main Results:

• A significant reduction in hospital admissions and utilization was observed for recipients of caregiving allowances.
• Beneficiaries of publicly funded home care also showed reduced hospital utilization, though less intensely.
• These reductions in hospital care amounted to an estimated 11% of total healthcare costs.
• The positive effects were amplified in regions with established health and social care coordination plans.
• A subsequent reduction in subsidies led to a significant attenuation of these cost-saving effects.

Conclusions:

• Publicly subsidized long-term care, through allowances and home care, effectively reduces hospital care utilization and associated costs.
• The integration of health and social care services enhances the impact of long-term care policies.
• Policy adjustments, such as subsidy reductions, can significantly alter the observed effects, highlighting the sensitivity of healthcare utilization to financial incentives.