An Investigation of Interstate Variation in Medicaid Long-Term Care Use and Expenditures Across 40 States in 2006. Executive Summary


State long-term care (LTC) financing and delivery systems and, in particular, Medicaid funded LTC have long been criticized for being "institutionally biased." Shifting the balance in publicly-funded LTC provision away from institutional care (nursing homes, long-term hospitals, intermediate care facilities for people with intellectual or developmental disabilities [ICF/IID]) toward greater reliance on home and community-based services (HCBS) has been a federal goal for the past three decades -- a goal often referred to as "re-balancing" state LTC systems.

This report explores interstate variations in LTC expenditure and service use patterns, not only in terms of institutional and non-institutional services, but also by Medicaid LTC users' age and type of disability (e.g., intellectual and developmental disabilities [ID/DD] or other adult onset disabilities). Some states have re-oriented more toward HCBS than others. It also well known that greater progress has been made in serving certain subgroups within the LTC population in the community (those with ID/DD) compared to others and that reliance on institutional care remains greatest among the elderly, although here again there are interstate variations. This report seeks to quantify the magnitude of such differences.

Interstate variations in reliance on HCBS compared to institutional care are partly a function of some states having committed more strongly to the goal than others, and having accordingly made greater efforts to "re-balance." However, states also experience differential advantages or handicaps that make re-balancing easier or more difficult for some compared to others. The factors that make re-balancing easier or more difficult vary in malleability; that is, the extent to which state policymakers can exercise control over them. For example, states with colder, snowier climates, states with large areas classified as "rural" or "frontier" because of population density, as well as states with disproportionately high low-income aging populations may find it more difficult to "re-balance" because of the logistical challenges of providing primarily home-delivered services under these circumstances. These particular factors are largely outside a state government's ability to change. In contrast, other factors hypothesized to influence re-balancing toward greater reliance on HCBS are at least somewhat under state control. For example, states can use licensing and Certificate of Need legislation to limit nursing home bed supply and enable expansion of alternative services such as assisted living, other forms of residential care, and home health/home care agencies. States can also choose to offer consumer-directed alternatives to "traditional" modes of service delivery such as agency-delivered personal care services.

In this study, we use data from the Medicaid Analytic eXtract, the American Community Survey (ACS), and a variety of data sources describing state characteristics and policies to quantify interstate variations in Medicaid LTC systems performance, and to explore and begin to test hypotheses about the factors that explain greater or lesser use of HCBS across states and subpopulations. Our findings are based on data from 39 states and the District of Columbia, and represent Medicaid service use and expenditures in calendar year 2006.

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