Solving the Budget Crisis: ‘When We’re Sixty-Four’

02.04.2011
Issues & Policies

A New Approach to An Aging Demographic

Baby boomers love the Beatles’ “When I’m Sixty-Four” because it’s a fun song. Now it’s becoming their “long-and-winding-road” reality—and another budget headache for Connecticut.

Over the next 15 years, the number of Connecticut residents age 65 and older is expected to increase by more than 207,000—a staggering 40%. That spells trouble for the state’s healthcare budget, with annual Medicaid spending on long-term care projected to explode to $5.8 billion, an increase of more than $3 billion over today’s levels.

But making some adjustments to how the state does long-term healthcare now could save the state nearly a billion dollars annually, down the road. And that should be a welcome concept to policymakers anxious to solve Connecticut’s long-term state budget crisis and concerned about providing the care people prefer.

What Connecticut needs to do is rebalance its long-term care, says the Connecticut Regional Institute for the 21st Century, an alliance of public, private and institutional leaders. Rebalancing means increasing the number of people receiving home- and community-based care and decrease the number of people using more expensive alternatives.

The cost of home and community-based care is, on average, about half the cost of institutional care. Two years ago, 53% of Medicaid long-term clients in Connecticut were receiving community-based care for a total cost of $886 million. The remainder (47%) received institutional care–at a tab of more than $1.6 billion.

Enabling more people to receive care at home is what most people want and will reduce the demand on state Medicaid spending, the largest line item of state spending in Connecticut’s annual budget.

If we were to achieve a 75% /25% split favoring home- and community-based care by 2025, the state could save $900 million per year. This would achieve three big public policy goals—cutting state spending, improving customer satisfaction and upgrading the delivery of state services. 

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

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

Other States

Vermont, Georgia, Oregon, Iowa, Washington, and Indiana are among the states that have committed to rebalancing and have achieved success. In some cases it has led to an effective reorganization of government, too.

According to the report Profiles in State Innovation by the Center for Health Care Strategies, Oregon developed a uniform approach in 1981 to merge of all its aging-related program responsibilities. The state was guided by the philosophy that every beneficiary should have the choice of care. It is still referred to as a “visionary piece of work,” says the Center.

In Vermont, rebalancing home- and community-based care has led to “a great deal of … cross-divisional work,” and the state continues to refine the program, capitalizing on the model of cooperation.

Most of the states truly committed to rebalancing started many years ago, so Connecticut has a lot of catching up to do–and a lot to learn from those states. Connecticut needs to act with urgency and set a strategy on long-term care that will rebalance institutional and home care. There is no other huge sum of savings the state could achieve in a few years which does not cut, but merely redirects, services.

For more information, contact CBIA’s Pete Gioia at 860.244.1945 or pete.gioia@cbia.com.

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