One idea is to provide additional funding for both formal and informal caregiving services. For instance, one could subsidize nursing homes or home health agencies on the formal side; for informal caregiving, one could give stipends to individuals to care for their elderly parents. The question is, does this implementation actually work?
This is the question that Costa-Font et al. (2018) attempt to answer. They find:
We use quasi-experimental evidence on the expansion of the public subsidization of long-term care to examine the causal effect of a change in caregiving affordability on the delivery of hospital care. More specifically, we examine a reform that both introduced a new caregiving allowance and expanded the availability of publicly funded home care services, on both hospital admissions (both on the internal and external margin) and length of stay. We find robust evidence of a reduction in both hospital admissions and utilization among both those receiving a caregiving allowance and, albeit less intensely, among beneficiaries of publicly funded home care, which amounts to 11% of total healthcare costs. These effects were stronger when regions had an operative regional health and social care coordination plan in place. Consistently, a subsequent reduction in the subsidy, five years after its implementation, is found to significantly attenuate such effects.
An interesting study. Future work should consider whether the additional funds are worth the cost. Although avoiding hospitalizations is clearly a positive, these interventions have non-trivial costs associated with them and may or may not be cost-saving in the long run even if they do improve patient outcomes.
Costa-Font, Joan, Sergi Jimenez-Martin, and Cristina Vilaplana. “Does long-term care subsidization reduce hospital admissions and utilization?” Journal of health economics 58 (2018): 43-66.