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Do noninstitutional long-term care services reduce Medicaid spending?
H Stephen Kaye1, Mitchell P LaPlante, Charlene Harrington
1Institute for Health and Aging at University of California, San Francisco, USA. steve.kaye@ucsf.edu
Health Affairs (Project Hope)
|January 7, 2009
Summary
Expanding home and community-based services (HCBS) may initially increase Medicaid spending but leads to long-term cost savings by reducing institutional care. States with robust HCBS programs show greater cost-efficiency in long-term care.
Area of Science:
- Health Economics
- Public Health Policy
- Gerontology
Background:
- Medicaid spending on home and community-based services (HCBS) has significantly increased.
- The impact of HCBS as alternatives to institutional long-term care on overall costs remains unclear.
Purpose of the Study:
- To analyze the effect of HCBS on overall long-term care costs.
- To compare spending trends in states with varying levels of HCBS availability.
Main Methods:
- Analysis of state Medicaid spending data from 1995 to 2005.
- Comparison of spending patterns for two distinct long-term care population groups across states.
Main Results:
- States with limited noninstitutional services experienced greater spending growth than those with extensive HCBS programs.
- Expansion of HCBS was associated with a short-term spending increase.
Conclusions:
- HCBS expansion may lead to initial cost increases but results in reduced institutional spending.
- Well-established HCBS programs appear to offer long-term cost savings for Medicaid long-term care.
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