Evaluating the health outcomes of aging in place: the role of medicaid aging waiver program on US older adults

The Medicaid Aging Waiver program (MAW) subsidizes the cost of long-term care (LTC) at home or in communities to satisfy older people's increasing desire to age in place. The MAW program might be health improving for older people by allowing them to age at home. However, less quality and quantity of home-based care comparing to nursing home care could offset some of the potential benefits. I use policy expenditure across states over time linked with detailed health information from the Health and Retirement Study (HRS) to identify the associated effects of MAWs on health outcomes of older adults who are at risk of needing LTC and who are resources constrained to be potentially eligible for Medicaid. Overall, the findings suggest that the MAW program is beneficial to health: a $1,000 increase in MAW spending for each older person results is associated with a 1.4 percent improvement in self-reported health status, a 1.5 percent reduction in functional mobility limitations, a 1.6 percent decrease in Instrumental Activities of Daily Living (IADL) limitations, and a 1.7 percent improvement in negative psychological feelings. For older people who are most likely not eligible for MAWs, such as those who are wealthy or in good health and do not require LTC, these health-improving effects have not been observed.