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Report: Home care could save millions in health costs

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Keith M. Phaneuf
March 8, 2010

Connecticut can reduce a huge projected increase in long-term health care costs if it can place more patients into home care over the next 15 years, according to a report being released today by an alliance of public, private and institutional leaders.

The study, commissioned by the Connecticut Regional Institute for the 21st Century, projects that a dramatic shift toward non-institutional care would knock more than $900 million off the nearly $3.4 billion increase in annual costs state government faces between now and 2025.

The report also calls for a new cabinet-level state post to lead the transition, tougher budget policies to insulate funds designated for the home care, streamlining and improved marketing of existing home- and community-based programs, and increasing the share of costs born directly by patients.

"Connecticut's long-term care system has many positive elements and has made great strides over the last several years in providing choices and options for older adults and individuals with disabilities," wrote BlumShapiro, the Connecticut-based accounting and business consultant firm that prepared the report. "Despite these gains, the system is still fundamentally out of balance."

State government dedicated just over half of its Medicaid funding and 13.6 percent of its entire budget, almost $2.5 billion, to long-term care last fiscal year. That huge outlay was spent on just 40,000 Medicaid clients, roughly 1 percent of the population and 11 percent of those receiving long-term care here, according to state government's Long Term Care Advisory Council.

And out of that sliver of the population, more residents received care at home or in the community than in nursing homes or other institutions - roughly 21,300 to 18,700.

But while more than half of the state's clients received care outside of institutions, over 65 percent of Connecticut's long-term care budget went for those in nursing homes, chronic disease hospitals or other facilities. State government spent $32,902 per client served at home or in the community in 2006 compared to $74,637 per institutional patient.

That's not to say Connecticut only has 40,000 residents receiving long-term care. The actual number is closer to 365,000. Another 9,000 pay for their own nursing home care and 116,000 others cover the cost of their care at home.

But most long-term care recipients, about 200,000 of them, receive care at home at no cost, the report estimates - from family and friends.

"The importance of unpaid care provided by family and friends cannot be overemphasized," the report says, "as it constitutes the backbone of the long-term care system."

But that familial safety is threatened by two population trends Connecticut faces over the next 15 years.

Overall population is projected to grown a modest 3 percent, but residents ages 18 to 64 - the group that provides unpaid care to hundreds of thousands of elderly and disabled - is expected to shrink by 5 percent. Meanwhile, the over-65 population is set to jump by 40 percent, or 207,745 people.

The spiking Baby Boomer population "will drive a significant increase in demand for (long-term care) in Connecticut," the report says.

If long-term care patterns are unchanged, that increase in the aged population would push the annual Medicaid bill for long-term care from just under $2.5 billion to nearly $5.85 billion by 2025.

But if Connecticut can bump that home care client ratio up to 75 percent, the price tag drops by $907 million, according to the report. Half of most state Medicaid expenses are reimbursed by the federal government, but the net value of this projected annual savings still would exceed $450 million.

Connecticut could reach that mark by passing the states that currently top the list in terms of home care reliance. New Mexico and Oregon rank 1st and 2nd, respectively, each having nearly 73 percent of their long-term care patients served in the community.

Before Connecticut, which ranks 34th, can hit that mark, it has to overcome several hurdles, some inherent in the federal Medicaid system and some unique to the Nutmeg State.

"Historically, Medicaid did not pay for long-term care in the community except by waiver, hence it is institutionally-biased," the report states.

Over the past two decades, that waiver system has grown and Connecticut has developed a network of home- and community-care based programs funded through waivers. Money Follows the Person is a recent initiative that has moved 176 people from 84 different nursing homes into the community with various support services.

Still, "Connecticut has a fractured governance structure for providing long-term care that requires high levels of coordination between many state departments and groups," the report states. Fifteen departments and agencies coordinate some aspect of Medicaid funding or programs tied to long-term care. Twelve different waiver programs offer various services ranging from general homemaking, nursing, meal preparation, emergency health care and companionship.

One of the report's chief recommendations is creation of a cabinet-level post in the Executive Branch to lead a transition into more home-and community-based care, with the Office of Policy and Management, the branch's chief budget agency, streamlining various programs into a 'single-point of entry" care system.

Besides aggressively seeking federal grants, the report also recommends that safeguards be built into the state budgeting process to ensure that revenues dedicated for home and community care are not diverted for other purposes in tough fiscal times, though no specific mechanism was suggested.

The report also recommends that state government encourage more residents to fund at least a portion of their own long-term care costs, though it doesn't recommend specific government policies, such as tax incentives to encourage the purchase of supplemental insurance.




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