Journal of the Economics of Ageing

Introduction Informal home healthcare (IHH) is a primary source of long-term care for the US elderly population. However, its market value is largely unacknowledged. Objectives This paper focuses on the US population aged 65 and over to explore the hidden economics of IHH and its association with use and expenditure for other healthcare services. Methods Analyses are carried out on the 2000–2012 waves of the Medical Expenditure Panel Survey. Use of healthcare services and associated expenditure is calculated using logistic regressions and generalized linear models. The substitution cost of IHH is calculated by applying the proxy good method and using regression-predicted expenditures. Results Every year, about 680,000 individuals aged 65 and over are recipients of IHH. The expenditure to substitute IHH with formal home healthcare would be 17,367 USD per patient. Absence of IHH would be associated to an increased use of office-based visits (+1.70%) and outpatient visits (+13.03%). Each office-based visit would entail an additional expenditure of 12.70 USD. Discussion The pivotal role that IHH plays in the US healthcare system is largely based on the assumption that IHH comes at no cost. Conversely, our analyses suggest that its substitution costs may be considerable. It is crucial for policy-makers to support the provision of informal care as an affordable alternative to formal care.