Effect of proximity to death on participation in the long-term care market
- Presenter:
Chair: Willard Manning; Discussant: TBA Tue June 6, 2006 15:30-17:00 Room 226
Increasing longevity raises concerns about the growth in the per capita demand for health care services. However, the aging of the population may not increase nursing home and paid home care use to the extent that proximity to death rather than age determines use at the end of life. As the elderly get closer to death, their use of long-term care (LTC) changes, not because they become older, but because their health deteriorates irreversibly. This study examines the effect of proximity to death on the participation in the nursing home and paid in-home care markets and how it interplays with availability of informal care that is a substitute to market-based LTC.
Proximity to death is hypothesized to increase the use of LTC. But availability of spousal care and support from children is hypothesized to mitigate this effect. Linear probability models estimate the effect of being within two years of death on the probabilities of nursing home and paid home care use. Proximity to death is interacted with availability of spousal care (being married) and available support from children (co-residence with an adult child). Unobserved heterogeneity is addressed by using individual and time fixed effects. The potential simultaneity between proximity to death, residing with an adult child and LTC use is addressed by using instrumental variables. Instruments for co-residing with an adult child are a set of characteristics of the person’s children. No valid instruments were found for proximity to death. The analysis is conducted on the 1993-2002 Health and Retirement Study data, the target sample being the 70+ elderly. The final five-wave data set has 27,879 observations.
Results indicate that proximity to death significantly increases the likelihood of nursing home and paid home care use, while age 85+ has a positive but smaller effect. Furthermore, proximity to death has significantly different effects by marital status for both types of LTC, and by co-residence with children for nursing home use only. Among married elderly, being within two years of death significantly reduces nursing home use, from 1.0 to 0.2 percent. This effect is similar among elderly co-residing with children. In contrast, for non-married elderly, nursing home use increases significantly from 4.9 to 16.6 percent in the last two years of life. For paid home care, proximity to death has a significant effect only among non-married elderly, the likelihood of use going from 6.9 to 9.6 percent. Proximity to death does not significantly affect paid home care use among married elderly or elderly co-residing with an adult child.
Proximity to death affects participation in the LTC market, but it plays a significantly different role whether the elderly persons have spousal care or children support available to them. The aging of the population may not substantially increase LTC use, not only if proximity to death rather than age is one of the main determinants of use, but also if the proportion of married elderly continues to increase, as observed over the last decade.
