Too Few Seniors Get Home Care: AARP Report Finds Medicaid Limits Access

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Published July 11, 2008

Even though most older Americans would prefer to receive care at home rather than in nursing homes, many states have been slow to reform their Medicaid programs to make that choice widely available. Instead, most states have done a much better job of using Medicaid dollars to help people with developmental disabilities remain in their homes and communities than to help older people and adults with physical disabilities.

Those are among the findings in A Balancing Act: State Long-Term Care Reform, a report released July 11 by the AARP Public Policy Institute. The report is the first ever to examine Medicaid spending specifically for older people and adults with physical disabilities, as distinct from other groups needing long-term care.

The study yielded surprising data. “We really didn’t realize how far behind services for older people were, compared to services for people with developmental disabilities,” says Enid Kassner, the institute’s director of independent living and long-term care, and lead author on the report.

For years AARP researchers had examined annual data from the federal Centers for Medicare & Medicaid Services showing the extent to which states were balancing Medicaid dollars between nursing home care and home- and community-based services. It appeared that states were making steady progress toward offering alternatives. “But when we broke out the numbers,” Kassner says, “there were pretty dramatic differences in serving different populations.”

Seventy-five percent of Medicaid spending on long-term care for older people and adults with physical disabilities goes to nursing home care. In contrast, most Medicaid dollars for people with developmental disabilities go toward services that can help them live independently.

A major barrier to leveling the playing field is Medicaid’s institutional bias. Medicaid is required to provide nursing home care for ailing older adults who are impoverished. The program is not required to provide home- and community-based care, even though it is often less expensive than nursing home care.

“This is backwards,” Susan Reinhard, senior vice president of the Public Policy Institute, said in a statement when releasing the report. “People are entitled to more costly nursing home care, but not to care in their homes.”

Despite federal rules that hinder states’ ability to balance Medicaid funds between nursing home care and home- and community-based services, a handful of states have succeeded in tipping the scales. In 2006 Alaska, Oregon, Washington and New Mexico spent more than half of their Medicaid long-term care budgets for older people and adults with physical disabilities on services that allow them to live at home or in the community.

These successes, Kassner says, “have shown that it can be done. It is not mission impossible. But it really takes a lot of work, and it takes a commitment from state officials. They have to embrace the philosophy that people have the right to control their own care. If the state doesn’t believe that, they’re not going to make it happen.”

Nationwide Medicaid spending on home- and community-based services for older people and adults with physical disabilities increased by 65 percent from 2001 to 2006, while Medicaid spending on nursing home care increased 16 percent. But nursing home funding began at higher levels, and the rate of change was not evenly distributed among the states. Indeed, more than half the states boosted funding for nursing home care more than for home-based services. If recent rates of change continue, the nation will not reach a 50-50 spending balance between the two types of care until 2020.

Changes in funding are not the only indicator of progress, however, because of differences in cost. The amount of Medicaid dollars that can pay for home care for nearly three people on average can only pay for nursing home care for one.

AARP researchers therefore also looked at changes in participant data over a five-year span, from 1999 to 2004. A state might be behind the national average in terms of spending yet may have reduced the number of people in nursing homes while boosting the number receiving in-home care. “We would call that a partial success,” Kassner says.

The report includes a two-page profile of every state, with pie charts showing how the state compares to the national average in terms of balancing funds and a table showing changes in participant data. Each profile describes programs and progress within that state.

AARP will host an Innovations Roundtable in August, inviting state officials and advocates to use the report and share information on best practices.

Because Medicaid is the primary payer for long-term care, how a state uses those funds can affect its long-term care infrastructure. If most of a state’s Medicaid budget goes to nursing home care, the market for entrepreneurs to develop businesses offering in-home care may be inadequate. As a result, even people who pay for long-term care out of their own pockets may have a hard time finding in-home services.

On the other hand, among states that have invested in home-based care, several have established a “single point of entry” to the long-term care system, providing one place where state residents can go to get all the information they need about options for care, whether they are eligible for Medicaid or not.

The national trend toward apportioning some Medicaid funds for home- and community-based services—which began in the 1980s—got a boost from the U.S. Supreme Court in its 1999 Olmstead decision. The high court rejected the state of Georgia’s appeal to keep two women with mental illness and mental retardation in a state psychiatric hospital long after treatment professionals recommended their transfer to a less restrictive community-based setting.

“Older people don’t want to be in institutions, either,” Kassner says. “AARP will have to ramp up its advocacy to remove the disparity in services for different populations. If we’re not going to fight for this, who will?”

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