State Medicaid programs traditionally have selected home-care workers. Cash and counseling offers an alternative by giving consumers a choice about who provides care. With the nation's long-term care costs mounting as Americans live longer, states are experimenting with such programs to encourage greater use of home care instead of more expensive nursing home care, one of the fastest growing costs in the taxpayer-funded Medicaid program.
Arkansas, Florida and New Jersey tried cash-and-counseling programs as an experiment in the 1990s. Because of the program's success in cutting Medicaid costs, the program spread last October to 11 more states: Alabama, Iowa, Kentucky, Michigan, Minnesota, New Mexico, Pennsylvania, Rhode Island, Vermont, Washington and West Virginia.
In all of those states, the program and participants' allowances rely on grants sponsored by the U.S. Department of Health and Human Services and the Robert Wood Johnson Foundation of Princeton, N.J., a philanthropy devoted exclusively to U.S. health care.
Twenty-one states competed for the grants last year. An advisory committee recommended finalists to foundation trustees and the federal government, who jointly selected grant recipients. Proposals were judged on how well they articulated a vision and targeted the elderly and on whether the governor and legislative leaders supported the program.
Illinois was turned down for a Robert Wood Johnson Foundation grant but appealed for and won a $350,000 grant from the Retirement Research Foundation, a Chicago philanthropy that funds programs for older adults, to start a cash-and-counseling program. Illinois, which will become the 15th state to start a program, will contract this year with the cash-and-counseling national program office at the Boston College Graduate School of Social Work to establish the program in accordance with federal Medicaid guidelines.
How states care for the elderly is increasingly important because baby boomers, now between the ages of 40 and 59, represent more than 30 percent of the populations of 17 states. By 2029, according to Census Bureau figures, all 78 million baby boomers will be age 65 or over. With growing numbers of elderly people, more Americans are expected to need long-term care.
A typical cash-and-counseling program recipient gets an allowance of $200 to $1,400 per month; the amount varies by state.
Allowing consumers to select their own caregivers was cheaper or no more expensive than Medicaid's traditional in-home services based on a review of all states' programs, said Kevin Mahoney, director of the cash-and-counseling national program office.
In Arkansas, the first state to try the program in 1998, about 75 percent of participants hired family members -- spouses are excluded -- to provide care. Most others hired friends, neighbors or acquaintances.
Arkansas participants were more satisfied with home-care services, had increased access to paid care, had fewer unmet needs and experienced improved quality of life, according to a study by Mathematica Policy Research Inc., a Princeton, N.J., group that conducts research and surveys for state governments.
The data so far have shown that "people who managed their own care ended up using hospitals and nursing homes at lower rates than people who received care from agencies, which produced cost savings," said Herb Sanderson, director of the Arkansas Division of Aging and Adult Services.
With traditional Medicaid personal care, patients more often ended up in hospitals or nursing homes because of worker shortages, Sanderson said. Allowing patients to hire family members expanded the worker pool, Sanderson said.
Last month Georgia Gov. Sonny Perdue (R) endorsed cash and counseling and a legislative proposal that would make the state eligible to participate in the program.