Relation between State HCBS Investment and Medicaid Long-Term Care Expenditures

Objective: There continues to be considerable state variability in dollars allocated to Medicaid HCBS as a share of all long-term care dollars. In 2007, the share ranged from 1.3% in Tennessee to 60.7% in New Mexico. Given continued state variability, driven in part by limited evidence related to the state level effect of HCBS expansion on Medicaid long-term care costs, this study examines the relation between states' investment in HCBS and long-term care expenditures for working-age and older adults. Methods: Multivariate fixed effects models examined associations between state sociodemographic, economic, supply, programmatic, political and external characteristics and per capita long-term care expenditures for the period 2000-2007. Results: In 44 states and the District of Columbia, the share of Medicaid long-term care dollars supporting HCBS increased, averaging 27.18% in 2007. Descriptively, 14 states expanded HCBS while lowering total per capita costs. In multivariate analysis, states' increased allocation of dollars to HCBS was associated with lower long-term care expenditures. Fewer per capita nursing facility beds were associated with lower long-term care expenditures. States with a Democratic governor experienced lower per capita long-term care expenditures over the study period. As the state level lack of affordable housing increased, per capita long-term care expenditures increased. Conclusion: These findings suggest that policy efforts to encourage the expansion of HCBS should continue, as greater HCBS investment is associated with lower total per capita long-term care expenditures. Strategies to reduce institutional capacity and associated costs appear critical to moderating total expenditures while increasing the availability of HCBS.