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INTRODUCTION

One of the greatest challenges facing state legislators is constructing a high-quality, cost-effective long-term care system that will meet the needs of the growing numbers of older and disabled people. Today, Medicaid spends roughly $60 billion on long-term care and, according to Congressional Budget Office estimates, that figure will rise to more than $75 billion by 2020. Of the $60 billion, $3 of every $4 dollars go to institutional care, primarily in nursing homes and facilities for the mentally retarded. Aware of the intensifying cost crunch, however, states have moved during the last decade to reform their long-term care systems by shifting more resources into less-costly home and community-based services such as assisted living, adult day care, home health and personal care.

Although the bulk of funds spent for long-term care goes toward institutions, the percentage of Medicaid spending on institutional care decreased by roughly 15 percent during the last 12 years, from 90 percent in 1987 to 75 percent in 1999. Among the drivers in the push toward community-based care: cost pressures in the states, consumer preferences and changes in the marketplace. Today, three-quarters of older Americans in need of long-term care live in noninstitutional settings, and family members and friends provide the majority of services. As a result, legislators have shown greater interest in providing home care for families to help sustain those invaluable, informal systems of care.

Under Medicaid, nursing home care is a covered benefit, while home and community-based services are optional. (Most states fund personal care as an optional state plan benefit.) When states want to offer community options through Medicaid that are not available through their individual state plans, they must apply for federal waivers to cover the services. Many states also fund community services outside the Medicaid program, but generally only a small number of people who need community-based care are eligible to receive them.

Despite the expansion of home and community-based care, state legislators are concerned that more options could lead to new demands for services and, in the process, drive up long-term care costs. At the same time, they also worry about assuring quality of care in alternative long-term care settings. The balancing act for legislators-protecting vulnerable populations without overregulating businesses like assisted living and board and care homes that provide them with care-is thus a difficult one. Providers want the flexibility to meet residents' needs and keep the facilities more home-like. At the same time, states are striving to ensure that people in long-term care settings are protected.

To address those and other issues, Forum staff pored over piles of research on long-term care. Abstracts of some of the best papers available are contained on the next two pages. The research attempts to answer the following questions.

• Is home and community-based care cost-effective?
• What tools and resources can state policymakers use to assess existing long-term care systems?
• How can quality of care be assured?
• How are states paying for and regulating assisted living?  
• Given that family and friends provide the bulk of long-term care services, how can states best support them and possibly delay institutionalization of their loved ones?
• Which states can serve as models of care?

WHAT ARE HOME AND COMMUNITY-BASED SERVICES?

Home and community-based services encompass long-term support services for elderly or disabled people who need help with activities of daily living (ADL) such as eating, bathing and dressing. By definition, they are provided outside large institutions or nursing homes and in the person's own home and community. Home and community-based care includes the of following types of services: 

• Adult day care programs, which provide activities, meals and therapy. 
• Respite care for family caregivers, including help on weekends, evenings and emergencies and even short stays for the patient in long-term care facilities. 
• Residential services and assisted living facilities, including community-based residential placements in board and care homes. 
• Home health for nursing care. 
• Personal assistance services, including a range of human and mechanical assistance for those people of any age who require help with routine ADL and health maintenance. 
• Care planning and case management, including a comprehensive assessment by a case manager and the network of professionals and programs appropriate for providing care.
• Other quality of life services, such as recreation, transportation and early intervention programs.

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