Home Or Nursing Home: America’s Empty Promise To Give Elderly, Disabled A Choice

In a study in the journal Health Affairs, that expansion of home-based care can save states money over the long run. The paper  looked at Medicaid data from 1995 to 2005. States incurred extra cost when they spent to create new social service programs to care for people at home, but that expense, over time, paid for itself because it was cheaper to care for people at home.

Policymakers often cite the "woodwork effect" as a reason to worry about expanding home-based care. This is the argument that if states provided people what they want — home-based care — then more people will demand the services and costs will go up. Currently, nursing home care is the one thing states are required to provide. But many people fear going into a nursing home. So their family members provide the care at home, states the NPR article.

State policymakers know that they benefit from this "free" care (although it comes at a cost to the caregiver in lost wages and retirement savings, in stress and poor health care). And policymakers worry that if a more attractive alternative is available, then people will come out of the "woodwork" to demand this new service, and that, as a result, the state's costs would rise. (Even the term, "the woodwork effect," is now controversial. Joann Lamphere of the AARP notes: "AARP doesn't think people are cockroaches.")

But Kaye, LaPlante and Harrington found that states "largely" were able to avoid the "feared" growth in costs. For one thing, federal rules allow states to put limits on the costs of home-based-care programs. States can create waiting lists. Another study by Harrington found that, across the country, there are 400,000 people on state waiting lists for home- and community-based care. That number doubled over 10 years.

States can't, however, keep waiting lists for people who are eligible for nursing home care. This reflects what's called Medicaid's "institutional bias." Nursing home care is an entitlement, but home-based care is not. In 1999, the year of the Olmstead decision, states spent about 25 percent of their Medicaid long-term-care budgets on home-based care. There's been a steady increase since. Now states spend 66 percent of their long-term-care for the disabled and elderly on nursing homes and 34 percent on home-based care. But that's still not enough to keep waiting lists from growing.

There have been failed attempts in Congress to end this "institutional bias" in Medicaid. The Community Choice Act would make it mandatory for state Medicaid programs to pay for eligible people to live at home instead of in a nursing home. The Congressional Budget Office estimates this would cost about $5 billion a year. Congress rejected a push to make the bill part of the health care overhaul. But the final bill did dangle enhanced funding for states that expand home-based care.