A Longitudinal Analysis of State Variation in Expenditures and Utilization

As states face challenges posed by budget crises and pressures to develop Medicaid home and community-based services (HCBS), this paper provides a longitudinal analysis of state variation in expenditures and utilization for three HCBS programs (waivers, home health and personal care), and for total Medicaid HCBS. The first part of the analysis describes the nature and scope of state variation for each program in 1999, using such measures as participants per 1,000 population and expenditures per capita. The second part of the analysis presents time-series regression models that estimate sociodemographic, state policy, and market factors associated with intra-state variation in waiver participants and expenditures, and home health, personal care and total HCBS expenditures for the period 1992–99. Among the results, positive state-level factors related to HCBS participants and expenditures include: higher percentages of aged people, greater incomes per capita, and a larger supply of home health agencies. In 2000, U.S. spending on long-term care (LTC) totaled $123 billion; of that amount, $90 billion (73%) went toward institutions such as nursing homes, and $33 billion (27%) was spent on home and community-based services (HCBS) such as personal care (Heffler, Levit, and Smith 2001). A similarly skewed distribution of resources was replicated in the federal-state Medicaid pro-gram, which paid for $68 billion (55%) of total LTC expenditures (Burwell 2001). Increasingly, however, states face three pressures to develop HCBS: 1) consumers ’ preference for LTC ser-vices provided in the community (The NewsHour with Jim Lehrer et al., 2001); 2) concerns about the cost and quality of institutional care (Institut