Long-term care is expensive. It makes sense that it’s expensive, as it cares for individuals who need assistance in daily living activities. But this population makes up 48 percent of the total spending while only 6 percent of the Medicaid population uses long-term care services, according to a 2007 Kaiser Family Foundation study. In this economically fickle environment and as fiscal cliff negotiations continue to disappoint, Medicaid is likely to lose some revenue. With these revenue cuts, Medicaid will inevitably look to long-term care for potential savings.

Medicaid plays a vital role for low-income individuals with long-term services and support needs. The Medicaid population who utilize long-term care services is comprised of elderly and disabled people requiring great attention, help with life’s basic activities like bathing and grooming, and expensive durable medical equipment. This care is most likely received at home, or in a nursing facility.  These patients require a great amount of attention by nursing home staff or certified faculty who attend to the patient at home. This type of intense attention and care undoubtedly comes with a price tag, and that price tag has grown over the years.

As you can see from the graph above, the cost of these services has increased substantially in the past decade. At a time when budgets are being tightened in every government program, it is important that halt this growth.  Even more importantly, with the Affordable Care Act’s passage, and with it a massive expansion in Medicaid eligibility, resources must be allocated more efficiently in order to properly care for all beneficiaries.

Fortunately some positive solutions are being explored for cost reductions in delivering this type of care. For those who are stable enough to live alone or fortunate enough to receive basic care from a family member, home care has proven cost significantly less than institutionalized care. Here in Washington, DC, home care costs just a third of similar care provided in an institutional setting.

A recent shift in providing this care in community-based care centers has also shown promise in reducing costs.  These community centers provide transportation and meal delivery services, as well as general care for many elderly and disabled within a community at a central location. This transition of care has proven results. From 1982 to 1992, four states (Washington, Ohio, Oregon, and Wisconsin) who expanded the use of community-based care saw a 1.3 percent decrease in number of nursing home beds while the national average increased by 20.5 percent.