The impact of state Medicaid nursing home policies on utilization and expenditures

State Medicaid programs must pay for a substantial proportion of overall nursing home costs--43% in 1984--and are likely to have to bear substantially more of these costs in the future. In an attempt to understand the extent to which state Medicaid policies and other factors influence nursing home utilization and expenditures, we undertook a cross-section time-series regression, using three sets of independent variables: state Medicaid policies, provider supply, and macrocontextual variables. We found that the state Medicaid nursing home reimbursement rate for intermediate care facilities was the strongest predictor of expenditures for all Medicaid recipients.