NCPA - National Center for Policy Analysis


May 10, 2006

Federal funding decisions have been tilted toward putting old people into nursing homes for the past 40 years, but recently have begun changing, driven both by cost and longer life spans, says the Wall Street Journal.

For example:

  • According to AARP, between 1975 and 2004, Medicaid spent about $600 billion on long-term care of elderly beneficiaries, and institutional care accounted for almost 90 percent of those expenditures.
  • A 2004 Congressional Budget Office analysis also found that Medicaid spent $36.5 billion on institutional care, compared with $10.8 billion for home and community care.
  • However, a 2005 study of about 530,000 elderly Medicaid beneficiaries conducted by researchers at the University of California-San Francisco found that Medicaid saved an average of $15,000 annually per beneficiary who received home care rather than institutional care.

Under a new law with provisions that will take effect in 2007, states will have the ability to seek federal approval to spend Medicaid funds to provide home and community care for elderly beneficiaries. In addition, some states -- such as Georgia, New Jersey, Texas and Vermont -- have begun programs to help elderly patients obtain home and community care.

Elizabeth Clemmer, associate director of the AARP Public Policy Institute, said, "We have asked people where they want to grow old. They say they want to stay where they are, in their own homes." Susan Feeney, a spokesperson for the American Health Care Association, said that the group has "long supported" choice for elderly patients, but added that, in some cases, "it could be more cost effective and appropriate to have them in a nursing facility" rather than at home.

Source: Lucette Lagnado, "Staying Put at 96; As Americans live longer, a rethinking of old-age care aims to keep people at home. A son watches nervously," Wall Street Journal, May 6, 2006.

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