State Policy Choices and Medicaid Long-Term Care Expenditures

Abstract

State long-term care policies are directed toward a variety of goals. Concerns with expenditure control are primary. Certain states are also seeking to increase the availability of community-based care. A more balanced system would assist consumers in attaining valued goals, while being consonant with federal policy initiatives and legal rulings. The authors examine the relationship between state policies and Medicaid long-term care expenditures. These relationships are tested by multiple regression analysis, using a random effects model for 1991 through 1997. Prospective payment may moderate nursing facility expenditure growth and total long-term care expenditures. Institutional supply constraints demonstrated a positive relationship to both forms of community-based care expenditures. The authors found no evidence of Medicare maximization as a policy to constrain Medicaid expenditure growth. Finally, the authors note the importance of additional work in exploring the dynamics between state long-term care policies and expenditures for individuals with differing disabilities.