Trends in Nursing Home Expenditures: Implications for Aging Policy

Nursing home care has become a major governmental responsibility. Public expenditures for nursing home care amounted to $7.3 billion in 1977. They represented 57.2 percent of the $12.8 billion nursing home bill nationally and 12 percent of public spending on all personal health care. Nursing home care absorbs more than one-third of all Medicaid expenditures. This paper explores expenditure patterns in recent years and discusses some of the factors that will influence these patterns in the future. First we analyze recent trends over the five-year period ending 1977. Then we project future utilization based on current age-specific use rates. Finally, we review recent studies on the potential cost savings of noninstitutional alternatives to nursing home care.