Household Size, Home Health Care, and Medical Expenditures

We document a robust negative correlation in which residing in a larger family is associated with lower consumption of medical care ceteris paribus. For men, an additional household member is associated with between $659.69 and $1039.97 fewer expenditures on health care and, for women, the estimates range between $391.28 and $728.66. Using quantile regression, the magnitude of the coefficients on household size increases monotonically with the quantile of medical expenditure. If household size is a proxy for home health care then these results suggest that home health care substitutes for medical care obtained on the market and that the degree of substitution increases with one's consumption of medical care and by implication decreases with one's health status. Finally, we provide suggestive evidence that the relative generosity of coverage for home health care by MEDICARE vis-a-vis private insurance may induce a crowdout of family care-giving by home care obtained through professional agencies.