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Taking the Long View: Investing in Medicaid Home and Community-Based Services Is Cost-Effective

The current fiscal crisis is causing most states to make deep budget cuts. In this climate, many state policymakers are targeting Medicaid home and community-based services (HCBS) because they are optional Medicaid benefits. However, this approach may be shortsighted. Recent evidence indicates that expanding HCBS can be cost-effective in the long run when combined with efforts that reduce reliance on nursing home care. Moreover, states that shift their mode of service delivery away from institutional services and toward HCBS can serve more beneficiaries with available dollars. With declining revenues, states should take the opportunity to focus on longer-term and more cost-effective reform options for their long-term care (LTC) systems, such as promoting HCBS over institutional care. Doing so has the dual benefit of not only slowing the growth in Medicaid LTC spending but also improving consumer choices. (8 pages)

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