Association for Public Policy Analysis & Management

This study examines the effect of the housing market on nursing home diversion and /or transition.  We look at the success rate of Massachusetts’s Options Counseling program in helping its consumers achieve their goal of remaining in or transitioning back to their own homes from being placed in nursing facilities.  Previous research has focused on the characteristics of the customers—age, gender, income, level of frailty, etc., or the quantity of home and community based support provided.  Some formal evaluations of federally funded diversion/transition efforts indicate that lack of housing may be a significant impediment to diversion policy efforts.  However, there has been very little by way of quantitative study to support or refute this claim.   We test this charge by examining the transition rate of over 15,000 people from all 351 municipalities in Massachusetts between 2010 and 2014.  While accounting for key indicators of housing quality including crowding, incomplete kitchen facilities, and incomplete plumbing facilities, we focus primarily on housing burden.  According to federal standards, citizens begin to bear it when over 30 percent of their income is spent on housing.  We also control for some key demographic indicators as identified by previous studies of nursing home diversion efforts, which are age, level of frailty and whether seniors live alone.

Preliminary results suggest that, as expected, age is the most significant predictor of nursing home diversion success, where younger consumers are more likely to remain or transition home.  Housing burden, living alone, and inadequate plumbing correlated as expected, however when accounting for age, their statistical significance diminishes.  Only living alone remained robust in that context.  In addition, the results suggest that low to moderate levels of frailty are also positively associated with successful transition, while extreme frailty was not statistically significant.  The interpretation is that nursing home diversion efforts may be more effective in helping older adults with lower levels of frailty remain or transition home. 

We do not find a significant relationship between housing affordability or quality and nursing home diversion efforts.  This fact is very telling because it suggests that diversion consumers are not as cost sensitive as expected.  The policy implications pertain to program evaluation efforts as the population of adults in the United States aged 80 and older—the age group most likely to need nursing home care—is expected to triple between now and 2050.  In that same time period, the total cost of long-term care is expected to quadruple, to over $800 billion per year.   The bulk of costs are born by the public, with Medicaid and Medicare covering over 65 percent.  Given these facts, our findings have implications for benefit-cost analysis with respect to allocation priorities.  The results suggest that housing burden is not as strong of a deterrent to successful diversion as previously thought.  We discuss social and economic reasons as to why that may be and offer an analysis of net wealth trends among seniors.