Spending-down to Medicaid in the nursing home and in the community. A longitudinal study from Monroe County, New York.

Medicaid spend-down continues to be of considerable interest in public policy discussions regarding long-term care financing reforms. Yet, "measuring" of spend-down has been difficult because of data limitations. This study focuses on patterns of spend-down affecting those who become Medicaid eligible both in nursing homes and in the community. The study uses a longitudinal, person-specific, merged Medicare and Medicaid claims and eligibility file constructed for Monroe County, New York. The analyses show that 27% of those who enter nursing homes as private pay can be expected to spend-down to Medicaid while in a nursing home. The spend-downers remain in nursing homes for a prolonged time, with 63% staying for more than 3 years. On admission, spend-downers appear somewhat more likely than those who remained private pay or Medicaid throughout to have been less disabled in terms of activities of daily living (ADL). The community-based spend-down group is larger, younger, and more heavily represented by those who are poor or marginally poor, than the nursing home-based spend-down population. Their spend-down to Medicaid appears to have been triggered principally by the cost of acute medical care not covered by Medicare or another third-party payer. It is this population of the elderly that would have been the principal beneficiary of the short-lived 1989 Medicare Catastrophic Coverage Act. The results of this study indicate that neither the existing private long-term care insurance policies nor the currently circulating public coverage proposals alone are sufficient to protect older persons, at risk of spend-down to Medicaid, from impoverishment. Effective long-term care financing reform will need to create partnerships between public and private insurance, rather than look at them as competing options.