Is Expanding Public-Financed Home Care Cost-Effective?

As American Baby Boomers retire and age, questions about how to deliver long-term care efficiently and control health care costs grow more important with each projected increase in health care needs. Developing and expanding home- and community-based services  alternative to institutional long-term care has long been a priority for many state Medicaid programs in addressing these challenges. Can this approach help save money and improve quality of life?

Answering this question requires examinations of both costs and outcomes. This brief examines recent research on both, exposes fault lines in previous approaches to assessing consumer preferences in long-term care, and provides new evidence on the cost-effectiveness of current long-term care policy.

Key findings include the following:

• Expanding home care is not a silver-bullet solution to controlling high long-term care costs.
• Customer satisfaction and preferences need to be taken into account in planning for long-term care.
• People’s preference for home- or community-based long-term care depends on how much care they need.