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. 1998 Fall;20(1):83–126.

Figure 20. Expenditures for Freestanding Nursing Homes, by Source of Funds: Calendar Year 1997.

Figure 20

Public sources financed three-fifths of nursing home care.

  • Expenditures for nursing home care provided by freestanding nursing facilities reached $82.8 billion in 1997, an increase of 4.3 percent over the previous year. Growth in nursing home spending slowed from 13.3 percent in 1990 to 4.3 percent in 1997. Contributing to this deceleration is slowing growth in nursing home personnel work-hours and in nursing home input prices.
  • Public programs, primarily Medicaid, funded more than 60 percent of annual expenditures for nursing home care. Medicare's share of spending increased from 3.4 percent in 1990 and 1991 to 12.3 percent in 1997. Offsetting the increase in Medicare's share, the private share has declined from 49.0 percent in 1990 to 37.8 percent in 1997. Private funding is predominately direct out-of-pocket payments by patients or their families.
  • Because Medicaid is the major payer for nursing home care, covering nearly one-half of such costs, changes in State Medicaid payment and coverage policies affect spending for all nursing home care. Part of the reason for the deceleration in total spending for nursing home care may be efforts by the States to use lower cost home and community-based care instead of more costly institutional care. The share of total Medicaid spending allocated to nursing home care declined from 30.7 percent in 1990 to 24.7 percent in 1997.