Abstract
Over one-third of Medicaid dollars go to nursing homes, a share that is decreasing but that varies widely among the states. This paper examines demand, supply, and policy factors explaining interstate variation over time in the nursing home share of state Medicaid dollars. Nursing home bed stock shows strong effects; Medicaid expenditures for acute hospital and for ICF-MR care are important; and various demand factors also explain nursing home share. In this model, residual nursing home share of Medicaid declines over time, which is interpreted to reflect omitted state policy factors explaining state ability to constrain Medicaid nursing home utilization and expenditures.
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