Institutional and Community-Based Long-Term Care: A Comparative Estimate of Costs

As long-term care policy makers struggle with competing challenges including state budget deficits and pressures to expand home and community-based services (HCBS), there is a pressing need for information on the comparative cost of Medicaid HCBS and institutional care. This paper uses the most recent available data (2007) to present three per participant expenditure comparisons between Medicaid HCBS waivers (which require that participants have an institutional level of care need) and institutional care: 1) program expenditure (waivers vs. the comparable level of institutional provision); (2) total Medicaid expenditure (program plus other Medicaid expenditure); and (3) estimated total public expenditure (Medicaid expenditures plus state and federal supplemental income payments). Additional estimates are produced for different waiver target populations (e.g., elderly/disabled and physically disabled) and for the different levels of care offered by waivers (e.g., nursing facility and ICF/MR). This analysis estimates that when compared with Medicaid institutional care in 2007, HCBS waivers produced a national average public expenditure saving of more than $57,000 per participant. When multiplied by total waiver participants, this gives an estimated annual saving of more than $57 billion.