Spend-Down Study

"Spend-Down Patterns of Individuals Admitted to Nursing Homes in Connecticut" -- Discussion Paper 11-1999

Authors: Cynthia Gruman, Ph.D., and Leslie Curry, M.P.H.

Published as a Connecticut Partnership Research Institute Discussion Paper.


The Congressional Budget Office (1991) projects that the nursing facility population will double by 2030, and triple by 2050. Aggregate expenditures for long-term care are already sizable and are expected to increase exponentially in the coming decades. The total cost of long-term care in the United States in 1996 was $125.5 billion ($38 billion for home health care, and $87.5 billion for nursing facilities); (Levit et al., 1997). A substantial number of individuals become poor after they enter a nursing facility depleting their assets to meet their long-term care bills, eventually "spending down" and qualifying for Medicaid.

This study describes the spend-down phenomena in Connecticut, using longitudinal data from the Connecticut Nursing Facility Registry on 8,781 individuals. The majority of individuals (60%) continued to pay privately throughout their stay; the remaining 40% relied on Medicaid for some portion of their stay.  However, on any given day 66% of all persons residing in a nursing facility had Medicaid as a payment source.  Though the group of persons spending down was only one quarter of the entire nursing facility population, they accounted for 52% of total resident days. An individual's risk of spending down in paying for nursing facility care was 31%. As might be expected, there was a strong positive relationship between length of stay and spend-down. The mean length of stay for those spending down was four times greater than those paying privately (4.6 years as compared with 1.2 years).

The policy interest in Medicaid spend-down reflects both individual and governmental concerns. Individuals fear exhausting all of their assets in paying for care, resulting in loss of financial independence and the stigma of welfare, as well as concerns about the quality of care provided for Medicaid residents. Policymakers on federal and state levels have considerable interest in estimating rates of spend-down as Medicaid financing for long term care continues to increase exponentially. The prevalence of spend-down directly affects the number of people eligible for Medicaid benefits for nursing facility care. Spend-down estimates also offer some insight regarding affordability of nursing facility care to the older population; high rates of spend-down are reflective of less affordable care (Wiener et al., 1996).

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