Changing the state”™s approach to long-term health care could save the state hundreds of millions of dollars a year ”“ an idea that should be welcome news to policymakers anxious to solve Connecticut”™s long-term state budget crisis.
Giving more people the resources to receive care at home ”“ versus more expensive alternatives ”“is not only what people want, but it also can reduce the demand on state Medicaid spending, according to a recently released report by the Connecticut Regional Institute for the 21st Century, an alliance of public, private and institutional leaders. Medicaid is the largest line item of state spending in Connecticut”™s annual budget.
Two factors are propelling the issue to the forefront. One, the demographic writing on the wall is not good: Connecticut”™s population continues to gray, with the number of people age 65 and above expected to increase by 40 percent over the next 15 years. If no changes to elderly care are made, annual Medicaid spending on long-term care will explode to $5.8 billion ”“ an increase of more than $3 billion from today.
Second, Connecticut is facing multibillion-dollar state budget deficits in the next few years and billions more in long-term liabilities in benefit obligations for state employees and retirees that will ultimately come due.
With an economy that was downsized in revenue-generating power by the recession, and with the graying population that will further cut tax revenues and increase the demand for state services, the state has to find ways to significantly cut spending.
While home and community-based care is, on average, about 50 percent less than institutional care, Connecticut”™s system is tilted far toward the more-expensive option. It only makes sense to find a way to rebalance the system.
Rebalancing can slow the growth of long-term care spending, says the institute. If Connecticut were to achieve its goal of 75 percent of care provided in-home by 2025, the state could save $900 million per year ”“ and give people the choice they want.
Getting there will be difficult, says the institute, because Medicaid is geared to filling institutional beds. It”™s much harder to arrange home- or community-based care, even though the quality of care is just as high and the costs are lower. The bureaucratic red tape would have to be streamlined and cut back.
The state 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. Other states such as Oregon, New Mexico and Vermont are already doing this ”“ it can be done here, too.
Peter Gioia is vice president and economist at the Connecticut Business & Industry Association. Reach him at Pete.Gioia@cbia.com.
