Author

For over sixty years, the U.S. Department of Housing and Urban Development (HUD) has insured loans to nursing homes with the aim of supporting infrastructure improvements that can promote quality of care, especially for marginalized populations. Yet although HUD’s mortgage insurance program (termed “Section 232” in reference to the portion of the code of federal regulations in which it appears) has been in continual operation since 1959 and represents a substantial public investment, there has been little research on its impact. This Essay fills that gap by providing the first systematic analysis of the extent to which Section 232’s subsidies reach nursing homes with the greatest financial need and whether the program drives improvements in quality of care. Concerningly, we find that as a whole, Section 232 neither supports those homes most in need of capital nor drives improvements in quality of care at nursing homes. Rather, we find that Section 232 serves primarily as a refinancing tool for larger for-profit facilities and is underutilized by facilities serving vulnerable populations, with loans primarily going to facilities that disproportionately serve Medicare-covered residents in census tracts that are more white. In fact, not only do we find no evidence of improved quality in nursing homes that receive Section 232 loans, we find that such receipt is associated with practices that correlate with lower quality of care, including reduced nursing staff time. We conclude by considering the implications of these findings for federal long-term care policy, and propose specific reforms to better align Section 232’s operational approach with its underlying objective of expanding marginalized populations’ access to quality long-term care.

The supplemental appendix for this piece can be found here.