Medicaid: The Long-Term Costs of Short-Term Savings

The Rauner Administration’s decision to cut $1.5 billion in Medicaid spending to balance the state budget is like the proverbial cutting off the nose to spite the face. Central to the Rauner “plan” is to tighten eligibility for people with disabilities and older adults to access long-term care services and supports (LTSS). The Administration is proposing to increase the minimum eligible level of something called the “Determination of Need” score. The DON eligibility process determines how many hours of assistance an older adult or person with a disability can get in order to stay in their own home.

While the Administration views this as an appropriate cost-cutting measure, in reality such a move will ultimately reduce needed community-based services for people with significant disabilities, and will spread those costs to other parts of the healthcare delivery system.

Where the costs go

What happens to those costs? They get passed on to hospitals and urgent care providers, taxpayers (in the form of other social programs), and family members who are either under-employed or unemployed in order to help a loved one.

Persons who are aging or living with a disability require access to long-term care to live independently, and do not have other options to find support for their medical needs. Reducing access to home and community-based services means individuals who are at risk of living in more costly nursing facilities become desperate to find any help with activities of daily living, through friends or family members who may be able to assist with financial or personal healthcare needs.

This is easier said than done, however, as family members or friends who can volunteer to assist are often being forced to choose between their own employment and assisting their family member or a loved one. Creating a further burden is Rauner’s proposed elimination of funding for developmental disabilities respite care, a program that provides assistance for people who care for persons with disabilities,

Medicaid is not only the payer of last resort, but the program of last resort, for persons with significant medical needs – paying for as much as 49% of the country’s long-term care services.

How to save the state money

Keeping people out of emergency rooms and nursing homes ultimately saves the state money. Progress Center for Independent Living released data showing that home services remove pressure from Medicaid spending on nursing homes, saving the state more than $17,500 per person, per year in the Home Services Program for people with disabilities.

The cost savings for seniors in the Community Care Program are even greater, at more than $24,150 per person, per year. Consider the fact that the Home Services Program serves 30,000 people with disabilities, and the Community Care Program serves more than 80,000 people year round (based on the FY 2014 Public Accounting Report for both HSP and CCP from the Illinois Office of the Comptroller), and you have staggering numbers for cost savings. According to the Service Employees International Union, more than a third of people with disabilities now in the Home Service Program – some 10,000 people – will lose access to care in their homes, thereby creating a dependence on hospitals and institutions to address their long-term care needs. The Community Care Program will be losing more than 38,700 seniors.

Debate surrounding the state budget should be aimed at taking concrete strategic actions, rather than cutting low-cost and money-saving programs. Governor Rauner appears bent on forging ahead despite opposition from the Illinois house and senate.

The facts are clear. The cuts to the Medicaid budget are not cost-effective, and they isolate vulnerable populations. The notion that diminishing social safety nets is a good way to control state budget deficit is at best misguided, and we need to move on from this policy.

Related reading:

• Community-Based Long-Term Services & Supports at Medicaid.gov
• Gov. Rauner's Health Benefits for Workers with Disabilities site
• Kansas to break new ground in demeaning the poor? column by Michael Hiltzik in the LA Times
• ACA, Medicaid and Unintended Consequences for People with Disabilities post at the IHM blog
• Disability Rights Advocates Deliver Coffin To Rauner, Decry 'Deadly' Human Services Cuts in Progress Illinois