Who benefits from public financing of home care for low-income seniors?

The past few decades have seen the emergence of a large formal home care industry as a
significant source of long-term care for the elderly and disabled, who previously relied heavily
on unpaid family members and nursing home care. Most formal home care is financed publicly through Medicaid programs, and this paper seeks to understand the implications of this
financing. Using data from the 2000-2016 waves of the Health and Retirement Study and a
difference-in-difference and triple-difference design, I investigate the effects of a policy adopted
at the state level that increased the use of formal home care among Medicaid-eligible seniors
by more than 50%. I show that rather than displace nursing home care or reach seniors who
would otherwise be going without care, the policy’s main effect is to replace informal care from
family members, particularly spouses and daughters. For daughters, I find that this decrease
in care supplied is accompanied by an increase in labor supply: for every 2.4-3 women whose
parent receives formal home care as a result of this policy, one additional daughter works fulltime. These results suggest that daughters who care for frail seniors may be a significant and
overlooked beneficiary of public efforts to increase access to home care for seniors.