5 Reasons Kansas Shouldn’t Cut Home and Community Based Services

Kansas is facing tough economic times, as we confront budget shortfalls, some are looking to cut Medicaid benefits, including home and community based services (HCBS). Home and community based services are vital to helping seniors and people with disabilities stay in their communities and out of institutions. If home and community based services cuts are on the table, please consider the following:

1. Cutting HCBS would cost Kansas more in the long run.
   • Home and community based care costs less than institutional care. On average, HCBS care costs one-fifth as much per person per year as nursing home care. In addition, average costs for HCBS are rising at a slower pace than costs for institutional care.
   • Cutting HCBS can increase the use of more costly institutional care. Higher state spending on home and community based services reduces the use of institutional care among childless seniors.
   • States that spend more on HCBS see a decrease in Medicaid long-term care spending over time. A 2009 study of Medicaid long-term care spending found that, over a 10-year period, states that offered few Medicaid HCBS options experienced an average increase of nearly 9 percent in Medicaid long-term care spending, while states with well-established home and community based care programs saw an 8 percent reduction in spending.
2. Cutting home and community based services can be bad for Kansas economies.
   • Cutting HCBS can reduce or eliminate jobs and hurt economic growth. Medicaid brings new money into states in the form of federal matching dollars. These new dollars create jobs and stimulate economic growth. Cuts to home and community based services reduce the amount of federal matching dollars that states receive, resulting in lost jobs and reduced business activity.
3. Cutting home and community based services increases the burden on informal caregivers, which has implications for U.S. businesses and state economies.
   • Demands on caregivers already affect their financial stability and health. Over the course of a year, it is estimated that more than 50 million people nationwide provide informal care to those who need long-term services. They are vital sources of support for people needing care and a critical supplement to existing care delivery systems. These informal caregivers—mostly family members and friends of those who require long-term care—often risk their own financial stability and health in performing care-giving functions. The typical family caregiver, who already has a job, loses approximately $110 per day in wages and health benefits due to care-giving responsibilities. More than one-third of caregivers cut back on household spending, one-third limit their work hours, and approximately one-quarter postpone personal medical care.
   • Cutting home and community based services increases the burden on caregivers. Medicaid home and community based services such as adult day care can provide essential support to caregivers and give them an opportunity for respite. These services can also reduce caregivers’ stress and help them to participate more fully in the workforce. Cutting HCBS takes away valuable support for informal caregivers and increases their medical, emotional, and financial stress, which can negatively affect state economies.
   • The demands of care-giving cost U.S. businesses billions annually. The workplace accommodations that caregivers must make, such as reducing hours or taking unpaid leave, affect businesses as well. Costs to employers include increased absenteeism, workday interruptions, reduced employee hours, reduced productivity, and costs associated with replacing workers who leave the workforce because of care-giving responsibilities. Businesses lose an estimated $33.6 billion annually because of the demands that care-giving places on full-time employees.
   • The burden on caregivers also has implications for state economies. Demands of care-giving affect caregivers themselves, the businesses they work for, and, in turn, state economies. Economic activity is reduced because caregivers earn and spend less, and their medical costs end up being higher because they postpone their own medical care until their health problems are more advanced and more expensive to treat. Lost business productivity affects business receipts and, ultimately, state revenue.
4. Cutting home and community based services runs counter to consumer preferences.
   • Most consumers who need long-term care prefer to remain in their homes or in the community. About 80 percent of people needing long-term services would prefer community-based care over institutional care.
   • Kansas can both serve their residents better and save money by shifting their service focus to home and community based care. Kansas has actively shifted their long-term care delivery from institutional to HCBS care have not only given their residents better choices, they have also been able to serve more people at lower overall cost.
5. Cutting HCBS may violate the Supreme Court’s Olmstead decision.
   • Kansas must have a plan for placing individuals with disabilities in the least restrictive care setting. In the 1999 case Olmstead v. L.C., the Supreme Court held that unjustified institutionalization of people with disabilities who were able to function in the community constituted a form of discrimination that violates the Americans with Disabilities Act (ADA). To comply with Olmstead, states must have a working plan for placing individuals in the least restrictive setting that is appropriate to their needs.
   • Recent court cases challenge state cuts to home and community based services that violate Olmstead. The Obama Administration is taking action to enforce Olmstead. As part of its enforcement activities, the Department of Justice has recently filed briefs in several cases arguing that state reductions in HCBS or failure to provide sufficient home and community based services violate Olmstead and the Americans with Disabilities Act because they place individuals at risk of institutionalization.
   • Patients and their advocates can challenge state HCBS cuts based on Olmstead. Final decisions have not yet been reached in the cases noted above. However, when cuts in home and community based services limit services to the point that individuals are placed at risk of institutionalization, patients and their representatives can argue that the cuts may constitute an Olmstead violation and could consider a court challenge.

Conclusion
State cuts to HCBS in Medicaid can be shortsighted. While they might produce some short-term cost savings, those savings can result in higher costs to states in the long term, including increased use of higher-cost institutional care, lost caregiver wages and the associated negative economic effects, and lost Medicaid matching funds.

In addition to being a bad idea from an economic perspective, cuts are contrary to the wishes of the majority of constituents who need these services, and, in addition, they may violate the Supreme Court’s Olmstead decision.

There are better options for states. Among them is the option to expand home and community based services through new opportunities that are available in health reform. These include improvements to the Medicaid state plan option for HCBS(section 1915(i) of the Social Security Act) as well as two new programs that will start in October 2011.

The new programs, the Community First Choice Option and the State Balancing Incentives Payments Program, include added federal matching dollars to help states expand HCBS. (For more information on these programs, see Families USA’s publication, Helping People with Long-Term Care Needs: Improving Access to Home- and Community-Based Services in Medicaid, available online at http://www.familiesusa.org/assets/pdfs/health-reform/help-with-long-term-health-needs.pdf.)
Rather than cutting home and community based care programs, states should maintain their current programs and explore health reform’s new options to expand home and community based care. This could save money in the long term, provide economic benefits, and better serve state residents.