How Paid Family Leave Policies Affects Nursing Home Utilization and Costs

While there is an extensive and growing research literature on the benefits of paid parental leave, few studies have examined the impacts of paid family leave on caring for elderly family members. Yet families that take advantage of these policies may actually be helping to lower state costs in other areas. Arora and Wolf (2018) estimate that paid family leave reduced elderly nursing home utilization by 11 percent in California relative to an empirically matched group of control states. IWPR will replicate and expand on the Arora and Wolf study to estimate the impact of paid family leave on cost savings for states and individual families. The research team will:

1. study the New Jersey’s paid family leave program and how it is used for elder care;
2. calculate the overall reduced spending on nursing home care primarily of the elderly that occurs because families are using paid leave (thus reducing nursing home use);
3. estimate reduced public health care spending through Medicaid and Medicare costs as a result of paid family leave; and,
4. conduct an analysis to make sure the resulting cost estimates are reliable.

The analysis will use health care spending data from 1991-2014 to cover the period when New Jersey and a few other states began providing paid family leave benefits. Results showing reduced nursing home spending, especially from public insurance, would strengthen the case in favor of paid family leave programs that provide partial wage replacement to low wage earners frequently left out of employer provided benefit programs. Estimating the anticipated cost savings from expanded access to family care leave and understanding how programs arrayed by benefit generosity might differentially reduce costs would be of great interest to policymakers, advocates, and other stakeholders in states with and considering paid family leave programs.

Principal Investigators: Jeffrey Hayes, Institute for Women's Policy Research