Proposed Cuts Likely to Increase Medicaid Spending
Alex
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The Michigan Senate’s decision to slash home care funding last week will likely lead to increased Medicaid costs in the long run, based on a recent report by the Anderson Economic Group.
Moving funds away from a program that provides quality long-term care at lower cost than other options does nothing to help solve the state’s structural deficit problem. In fact, it will likely worsen the state’s budget problems as more expensive Medicaid programs must expand to take care of beneficiaries who could be served by Michigan’s Home Help program.
The Michigan Quality Home Care Campaign commissioned Anderson Economic Group to analyze the impact of increasing the wages of home care workers in Michigan. The Anderson Economic Group report found that pay increases for Home Help workers – which the Senate voted to eliminate on March 22 – would save at least $276 million in Medicaid costs over the next six years.
The state budget last year set a minimum $7.00 per hour floor for home care workers’ wages and raised wages already above that level by $0.50 an hour – the first raises in over a decade aimed at helping curb a 35 percent turnover rate in the workforce. The Senate’s action last week eliminates the $0.50 increase, while cutting wages further for caregivers in over a dozen counties. In addition, the Senate proposal will make cuts to the number of hours of care that seniors and persons with disabilities receive.
Patrick Anderson of Anderson Economic Group (AEG) said that the nearly $8 million in proposed cuts to Michigan’s Home Help program will actually end up costing taxpayers millions of dollars more by preventing seniors from staying in their own homes and instead pushing them into more costly nursing facilities.
“Underpaying home care workers is likely to worsen the structural budget deficit because it leads to the substitution of nursing home care that is more expensive for taxpayers. This is not a smart thing to do,” Anderson said of the Senate’s proposed home care cuts. “We should be putting more money into home care – not less.”
According to the AEG report, which analyzed data provided by the Department of Community Health, the average cost per beneficiary for the Home Help program was only $4,496 in FY 2005. This is $43,121 less than the average cost per beneficiary of nursing facility care, which was $47,616 in FY 2005.
Caroline Sallee, principal author of the Anderson Economic Group report, added that maintaining the wage increases for Home Help workers in Michigan will result in net savings to Medicaid of $48 million in FY 2010, and that the annual savings increase to $70 million by 2012. “Increasing wages for Home Help workers saves the state money in the long-run. As more beneficiaries are diverted away from nursing facilities and into Home Help, the cost savings grow,” Sallee said.
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