Do Non-Institutional Long-Term Care Services Reduce Medicaid Spending?

1. Do Non-Institutional Long-Term Care Services Reduce Medicaid Spending? Steve Kaye Mitch LaPlante Charlene Harrington Funded by National Institute on Disability & Rehabilitation Research Grant H133B031102

3. PAS Center research on HCBS costs • HCBS saves money… • Kitchener, M., Ng, T., Miller, N., & Harrington, C. (2006). Institutional and community-based long-term care: a comparative estimate of public costs. J Health Soc Policy, 22(2), 31-50. • Adding up all public expenditures, HCBS saves $44,000 per participant (2002 $) compared to institutional care.

4. PRELIMINARY

5. PAS Center research on HCBS costs • HCBS doesn’t cost much… • LaPlante, M. P., Kaye, H. S., & Harrington, C. (2007). Estimating the expense of a mandatory home- and community-based personal assistance services benefit under Medicaid. J Aging Soc Policy, 19(3), 47-64. • Community Choice Act (aka MiCASSA) would cost $1.4–3.7 billion/year, not the $13–25 billion of CBO estimate, minus any cost savings.

6. Reaction: That’s nice, but… • Individual cost savings don’t necessarily mean program savings • How big is the “woodwork effect”? • Not enough to show that a program is affordable • Need to show cost neutrality or savings • We wondered: Have states with thriving HCBS programs controlled total LTC costs better than other states?

7. Our approach • Examine annual state Medicaid expenditures for nursing homes, ICF/MR, home health, personal care plan, and HCBS waivers • Source: CMS 64 & 372 reports from Burwell et al. • Separate costs for people with intellectual & developmental disabilities from other disabilities • Combine states with similar spending patterns and examine trends over a decade • Analysis details: See the Health Affairs article.

11. Population Served Non-MR/DD MR/DD Nursing homes Institutional ICF/MR Residential Setting Waivers exc. MR/DD Personal Care Plan Home Health MR/DD Waivers Non-institutional

12. Percent of Non-MR/DD LTC expenditures spent on HCBS, 2005 50% 54% 52% 53% 1%

16. Classifying the states • Low HCBS states: Less than median proportion of spending on HCBS in 2005 • High HCBS states • Expanding HCBS states: Inflation-adjusted HCBS spending more than doubled from 1995 to 2005 • Established HCBS states

18. Non-MR/DD Classification

21. Population Served Non-MR/DD MR/DD Nursing homes Institutional ICF/MR Residential Setting Waivers exc. MR/DD Personal Care Plan Home Health MR/DD Waivers Non-institutional

22. Percent of MR/DD LTC expenditures spent on HCBS, 2005 98% 99% 100% 98% 100% 14%

24. MR/DD Classification

28. What happens when states rapidly expand HCBS? • Expanding states have faster spending growth; established states contain spending • Examine states that introduced new or greatly expanded HCBS programs in late 1990s & follow subsequent LTC spending • Non-MR/DD: 9 such states • 15 comparison states w/o big increases • MR/DD: 11 states

35. Conclusions • HCBS programs do not break the budget • Nearly identical spending for low- and high-HCBS states confirms cost neutrality • States with well-established HCBS programs contained costs better than states with low HCBS • Institutional savings probably not automatic • HCBS expansion increases short-term spending but may cut long-term spending • Serve more people at equal or lower cost