In the market for nursing home services, after reaching the quantity where the private market's willingness-to-pay matches the Medicaid reimbursement rate, demand becomes essentially perfectly elastic at the Medicaid reimbursement rate, as all remaining beds can typically be filled with Medicaid patients.

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This is because once the price reaches the Medicaid reimbursement rate, any additional beds can be filled by Medicaid patients who are willing to pay this rate, making the demand at this price level highly elastic as the nursing home can fill all available beds at the reimbursement rate.

In the Market for Nursing Home Services, After Reaching the Quantity