When Health Trumps Money: Economic Incentives and Health Equity in the Public Provision of Nursing Homes in Norway

The allocation of public care services should be determined by individual needs, but can be influenced by economic factors. This paper examines the impact of economic incentives on the allocation of public nursing home care in the Norwegian long-term care system. In Norway, municipalities and city districts have economic incentives for choosing nursing home care for high-income individuals in need of care and home-based care in sheltered housing for low-income individuals. The study uses a theoretical model and empirical data from the municipality of Oslo to determine if nursing home spots are allocated based on income, which would be financially advantageous for the city districts. We do not find evidence that the economic incentives of the care provider play a role in the allocation of nursing homes. Thus, in this setting, needs seem to be the dominant factor for allocation of nursing home care, while economic incentives seem to play no significant role. The clear legal mandate to provide services based on needs only is likely an important factor in this.