Consider the latest update from State Comptroller Kevin Lembo: Another state budget deficit is in the making because of rising spending in part fueled by an expanding Medicaid caseload in Connecticut.

Baby boomers are making Connecticut older faster, medically speaking, which means more and more people are, and will be, tapping into Medicaid for long-term care.

Consider it a huge demographic wave about to hit our fiscal shores.

This year alone, says the comptroller, Connecticut “will likely run $100 million over budget” for Medicaid. And that’s just the first spray from the wave.

Over the next 20 years the number of Connecticut residents age 65 and older is expected to increase by more than 300,000, rising to nearly 23% of our state’s population (AARP, Across the States 2012: Profiles of Long-Term Services and Supports). 

How can we possibly handle that surge (especially if our economy continues to struggle)?

We can’t do much to change our demographics, but there are ways to help control Medicaid spending.

It’s time, for example, to take a serious look at the work of the Connecticut Regional Institute for the 21st Century on long-term healthcare reform. For the last several years, the Institute has been offering well-developed ideas on state spending reform, from the corrections system to the delivery of state services to state employee retirement benefits.

Last year, the Institute released its report on long-term healthcare reform. In it they said that making some changes to how the state does long-term healthcare now could save the state nearly a billion dollars annually.

How?

Primarily by rebalancing our long-term care equation to deemphasize institutional care and emphasize less-expensive, but quality home-based care.

It makes sense because most people prefer staying in their homes and the dollars look much better that way, too.

In fact, home- and community-based care is on average about half the cost of institutional care. (For example, in 2009, 53% of Medicaid long-term clients in Connecticut were receiving community-based care at a total cost of $886 million. The other 47% received traditional care at a tab of more than $1.6 billion.)

If we were to rebalance the equation to 75% home- and community-based care by 2025, says the Institute, it would produce $900 million in annual savings to the state.

And it would achieve three big public policy goals: cutting state spending, improving customer satisfaction, and upgrading the delivery of state services.

But there would have to be a dedicated change in approach.   

Connecticut’s “Money Follows the Person” initiative—designed to promote personal independence and save money--has had some early success. According to the Institute’s 2011 report, average monthly client costs decreased from $2,651 for institutional care to $963 for home and community-based care.

However, because Medicaid is geared to filling institutional beds, rebalancing will be difficult, says the Institute.  Bureaucratic red tape would have to be streamlined and cut back.

It can be done, and now is the time to commit to change, with the wave still offshore a bit.