Medicare As a Last Resort Caregiver
For many older Americans, the first line of long-term care (whether post-dementia or other diagnoses) is not a nursing home or paid personal care. It’s a spouse. But what happens when that spouse is suddenly not able to provide that care anymore? A recently published paper from Boston University economist and professor Tal Gross and his colleagues offers some insight.
The paper, “The Protective Effects of a Healthy Spouse: Medicare as the Family Member of Last Resort,” was released by the National Bureau of Economic Research in September 2026. Gross, a professor of Markets, Public Policy, and Law at BU Questrom, wrote it alongside Itzik Fadlon, Alex Hoagland, and Timothy Layton. Using Medicare claims and a new method for linking spouses, the team found that when one spouse is suddenly incapacitated, the probability of their partner entering a nursing home rises by 30%.
“We also possessed novel data that allowed us to identify couples in Medicare claims, which no one has been able to do before,” Gross said. He stressed that the topic matters beyond the data. “Spousal caregiving is a huge issue! And it’s going to be even more of an issue in the years to come as the population ages and more Americans need help with the activities of daily living.”
Do those partners enter nursing homes simply because they have gotten sicker? “That’s exactly one of the key empirical challenges we face in the paper,” Gross said. The authors’ evidence suggests that the majority of the increase is attributed to a substitution rather than a decline in the person’s health. In other words, formal care replaces the home care a spouse once provided. The team also found that these Medicare recipients become less sensitive to the price of professional care. From these patterns, the authors estimate a lower bound on what a spouse’s informal care is worth.
The team also found that the partner’s own health suffers. “Caregiving is definitely an enormous burden, especially when there’s dementia involved,” he said, pointing to other studies that document the toll on caregivers. Dementia appears in the paper through only one data stratification, and the study focuses on sudden events, in Gross’s words a cardiac event, for example, rather than gradual decline. Still “we suspect that much of the mechanism still applies: when someone’s partner cannot care for them, they are more likely to turn to formal care.”
So what paths can policymakers take based on this? Gross sees two possible approaches. “One approach is what some European governments are doing, which is to condition premiums or eligibility for long-term care insurance on the availability of informal care. That is certainly a valid approach and it is consistent with our paper. Another approach would be to institute family-specific deductibles or out-of-pocket maximums as a way to account for some of the spillovers we are documenting.”
The findings also raise questions about fairness for people without a spouse or nearby family. For them, Gross said, “the co-payments and cost sharing that they face should be lower. So, perhaps Medicare could adjust its plan to be more generous for those who have no potential caregivers.”
Ultimately, the message to take away is that public policy “ought to become more sophisticated and address not just individuals but households.” For the families of Alzheimer’s and Related Dementia patients, it is a reminder that care is rarely the burden of just one person.
post by BU-SHARP Writing Fellow Lindsay Griesman