President Obama’s 2016 budget would make important changes in the way personal care is delivered to older Americans and younger people with disabilities. The biggest: A plan that could be a major step towards ending Medicaid’s long-standing bias in favor of nursing homes. At the same time, the fiscal plan would modestly boost funding for some senior services programs.
While seniors will welcome the new funding, initiatives aimed at broadening access to home and community based could be much more far-reaching. Most consumers and many governors want to accelerate the shift of Medicaid long-term care services out of nursing facilities and into homes and communities.
Two proposals would expand eligibility and available services under existing state waiver programs. They’d make it easier for those with medical and personal care needs to receive Medicaid at home. A third would expand and make more flexible a program called Money Follows the Person that is aimed at moving people from nursing homes back to the community.
But the real blockbuster is the third proposed change. For the first time, it would move to end Medicaid’s structural bias toward nursing home care.
Since Medicaid was created a half-century ago, beneficiaries have been entitled only to long-term supports and services if they were delivered in nursing homes. States could fund care in home and community settings but only by first getting the federal government approval for specific changes in the way they deliver care.
Under a new pilot program, as many as five states could effectively skip that waiver process. Instead, they could assess a person’s care needs and simply determine where she could receive the most appropriate, cost- effective care. No longer would a nursing home be the default solution.
The experiment would run for eight years and participating states would get extra federal funding to operate the test.
The Administration has not yet made public many details of the proposal. For instance, it is not clear how much flexibility states would have to provide services that are not traditionally funded by Medicaid, such as transportation; or what protections enrollees would have against states that try to use the program to reduce benefits.
The White House estimates the experiment would increase federal spending by about $4 billion over 10 years. In part, that’s because the green-eyeshade types predict more low-income people would use Medicaid if they could get care at home. And that fear may discourage some governors from participating in the experiment.
However, that theory–unfortunately known as the woodwork effect (as in poor people will crawl out of the woodwork to participate if they can stay home)–is the subject of deep disagreement. Per-person costs are likely to fall in this model since home care is often (though not always) less costly than institutional care. The question is: What will happen to overall Medicaid costs when figuring both lower per-person expenses and the potential for more beneficiaries?
And the pilot could help answer another important question: Could it lower Medicare costs by improving the quality of supportive care and reducing the need for expensive medical treatment? Unfortunately, the proposal has no mechanism for states to share in any future savings in Medicare health care costs.
This plan would require congressional approval. However, it could pass. Many Republican lawmakers back both additional state flexibility under Medicaid and site-neutrality under the program.
The rest of Obama’s budget includes some modest spending increases for existing programs after years of flat-funding. They include about a 7 percent hike ($60 million) in Meals on Wheels and other nutrition programs; $14 million more for Aging and Disability Resource Centers, and $38 million more for home-based supportive services. Overall, the Administration for Community Living, which manages most programs for seniors and younger people with disabilities, would receive about a 7 percent more than this year. However, Obama’s budget is likely to face stiff headwinds in Congress and will almost certainly be scaled back.
Whatever happens to short-term funding for senior services, keep a close eye on the broader policy changes buried in this budget. They have the potential to fundamentally change the way low-income people with disabilities, including seniors, receive long-term services and supports.