Microsimulation Paper No. 3

Individuals' Lifetime Use of Nursing Home Services: A Dynamic Microsimulation Approach

Sarah B. Laditka

April 1996

Abstract:  Despite the projected growth in the number of older Americans who will use nursing home services as the baby boom generation ages, there is little information about the total amount of time we can expect people to reside in nursing homes. I estimate individuals' lifetime use of nursing home services using data from the 1984-1990 Longitudinal Study of Aging and the 1982, 1984, and 1989 National Long-Term Care Survey. A Markov model of functional status was used to estimate monthly functional status transition probabilities. Discrete-time hazard models were estimated to determine characteristics that were associated with nursing home use. Microsimulation techniques were employed to impute monthly values of functional status, incorporate monthly information about individuals' functional status into the models that predict nursing home use, and examine the life-cycle implications of the nursing home use estimates. I find that substantially more women use nursing home services during their lifetimes than men (36 percent versus 18 percent). Nonwhite males use nursing homes significantly less than white males. Women who reside in states that have generous nursing home supply and demand factors use substantially more nursing home services than women living in states without these policies. With the projected large increase in the older population, these findings have important fiscal planning implications for the delivery of long-term care services.


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