Report: Cuts to Home Care for Elderly Will Cost State More

Report: Cuts to Home Care for Elderly Will Cost State More

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Cuts to home care services for the elderly proposed by Gov. Arnold Schwarzenegger to save the state money would actually end up costing California’s budget billions more for nursing home care, according to a new study.

California's low-income seniors and people with disabilities are facing widespread budget cuts to the state’s In-Home Support Services (IHSS) program, the governor seeks to reduce or eliminate benefits for 444,000 recipients.

The Legislative Analyst's Office (LAO), a nonpartisan organization that provides fiscal and policy advice to the Legislature, studied the governor's 2010-2011 budget proposal and reported earlier this year that the program may require downsizing to prevent state deficit from increasing.

But economist Candace Howes found the LAO severely underestimated how many IHSS patients would be forced prematurely into far more costly nursing homes.

According to Howes' study, published by the Institute for Women's Policy Research, the LAO estimate that only one-third of those now receiving IHSS services would enter nursing homes--or 140,000 people--is unrealistically low. She found the figure would likely be closer 300,000 people.

Howes calculated that the additional nursing home admissions would cost California another $2.87 billion annually.

She added that if California continues providing home care to one in three current recipients, “The other 300,000 would be left with no services whatsoever, and their families would have to take care of them.”

As a Medicaid program, IHSS is paid for through a combination of federal, state and county funds. According to the LAO study, if no more than 32 percent of IHSS recipients entered a nursing facility after having their services cut and stayed an average of 1.75 years, the state would be able to save more than $732 million of its general budget.

Bruce Chernof, president and CEO of the SCAN Foundation in Long Beach, noted the potential taxpayer cost of rapidly filling long-term care facilities. “If you look at the history of California,” Chernof said, “we don't have a successful track record of getting individuals out of nursing homes when they want to go back to the community.”

The SCAN Foundation, a senior health policy organization, released a survey in April showing that a majority of Californians at all income levels are worried about being able to pay the escalating costs of long-term care.

According to the U.S. Department of Health and Human Services, at least 70 percent of Americans over the age of 65 will need long-term care services at some point in their lives.

“The people who would need nursing home assistance exceeds the amount of beds available,” said Chernof. Over time, he said, emergency rooms will become the only option for elderly and disabled people. “They can't go home, but there's no room for them in nursing homes, so they're sitting in acute care hospital rooms. It gets extremely expensive, and there's a high risk of infection.”

Howes proposes re-transitioning one-third of people currently in nursing homes into home and community-based care. It would save the state $300 million annually.

“A year in a nursing home in California costs about $60,000, whereas the average annual expenditure for IHSS is about $10,000,”she said. “Even assuming that the people you're transitioning out of nursing homes were the most disabled, the amount of money that would be spent on IHSS would still be considerably lower.”

Marty Lynch, executive director of the nonprofit LifeLong Medical program in Berkeley, believes that cutting services could also have negative long-term effects on health care workers.

There are currently 360,000 IHSS providers in California. Budget cuts could eliminate 214,000 of those jobs. “It's the economic multiplier,” Lynch said. “If your care-giving system breaks down,” he said, “chronic medical problems will get worse.” LifeLong Medical provides safety-net medical services to uninsured East Bay residents.

Despite potential threats, California's $20 billion deficit weighs heavily on legislative decisions. Howes emphasized that California’s decisions about how to handle the growing demands for long-term care services reflects the national political landscape.

“Long-term care is usually a large proportion of Medicaid,” Howes said. “States are, not surprisingly, looking at the part of the budget that seems to be growing the fastest and looking for ways to reduce cost.”

Ginni Bella Navarre, LAO senior fiscal and policy analyst, acknowleged limitations in the LAO report, such as the lack of attention to patients’ quality of life or differing assumptions about the average length of stay in nursing homes. Her office is studying different proposals, including Howes' report, to determine the more accurate measure of need for in-home services.

The question of nursing home capacity is unclear. “Our organization is silent on if there's space available,” Navarre said. “It's difficult to predict what would happen. But the LAO is recommending against complete elimination of the program.”