Medicaid Reimbursement and the Quality of Nursing Home Care

An influential series of papers have found that an increase in Medicaid reimbursement decreases the level of nursing home quality in the presence of certificate-of-need (CON) and construction moratorium regulations. Using more recent national data, an outcome-oriented measure of quality, and an alternative methodology, this study finds a positive, albeit small, effect of reimbursement on quality. Although this paper does find some evidence of excess demand within the market for nursing home care, this new finding is attributed to a decline in nursing home utilization over the last two decades. (July 2001)