Assisted living: will it reduce long-term care costs?

Area of Science:

• Health Economics
• Public Policy
• Gerontology

Background:

• States aim to reduce nursing home expenditures by exploring assisted living for Medicaid patients.
• Assisted living is viewed as a potentially lower-cost alternative to traditional nursing home care.

Purpose of the Study:

• To analyze the cost implications of utilizing assisted living as a substitute for nursing home care.
• To evaluate the potential for cost savings and identify factors influencing these savings.

Main Methods:

• The study discusses the "woodwork effect" – new clients entering the system from private residences.
• Analysis considers the impact of nursing home reimbursement systems on overall cost substitution.

Main Results:

• The "woodwork effect" in assisted living is predicted to be smaller than in previous home and community care demonstrations.
• Predicting the exact number of new clients is challenging due to potential divestiture and varying state policies.

Conclusions:

• True cost savings from substituting assisted living for nursing home care are contingent upon the prevailing nursing home reimbursement structure.
• Policymakers must account for potential cost increases from new assisted living residents not originating from nursing homes.