Medicaid funds direct care for one in four dual-eligible older adults nationally, but state variation is 4-fold

Medicaid spent over 129 billion dollars on home- and community-based services (HCBS) in 2022. However, complex financing structures obscure which services are used, who uses them, and how use varies across states.

Using 100% of national Medicaid claims data from 2021, we characterize HCBS use among dual-eligible adults aged 65 and older, distinguishing between direct care services (services that provide hands-on assistance with functional needs) and non-direct care services (eg, transportation and case management), which are often grouped together in the literature.

We find that 38% of older duals used any Medicaid-funded HCBS in 2021, and 26% used direct care, with direct care users being older, sicker, and more likely to have dementia than non-users. We also find that the share of older duals using direct care varies more than 4-fold between the lowest and highest utilization states, with states that finance personal care as a State Plan benefit, rather than exclusively through waiver programs, generally having greater utilization.

In light of potential funding cuts, our findings highlight the large but uneven role that Medicaid plays in financing direct care for a vulnerable population of older adults, which can be critical for them to remain in their homes and communities.