LTC Bullet:  Olmstead Languishes

Monday, April 8, 2002


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The LTC Reader #13--Insider Information on Medicare's Alzheimer's Coverage

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The Data Base #14--Nursing Homes Approach Medicare "Cliff"

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LTC Bullet:  Olmstead Languishes

In an LTC Bullet published August 3, 2000 and titled "Will Olmstead Help or Hurt Long-Term Care?," we asked a provocative question.  We wondered whether the Supreme Court's Olmstead decision, requiring states to serve people with disabilities in community settings rather than in institutions (such as nursing homes), would increase or decrease the availability of home and community based services in the long run. 

We concluded "To the extent the Olmstead decision is successful in compelling state Medicaid programs to pay for HCBS 'not only to persons already in institutional settings but to those being assessed for possible institutionalization,' Medicaid long-term care eligibility, utilization and expenditures will explode.  Medicaid estate planning will expand.  Long-term care insurance will contract.  The tension between demand for publicly financed HCBS and the taxpayers' willingness to pay for such services will increase.  Skyrocketing Medicaid budgets will force lawmakers to restrict services to cut costs.  Access and quality will suffer even more than before.  The poor will bear the brunt of deficient care while the well-to-do will shoulder even higher out-of-pocket expenditures.  And, in the end, even fewer people will have access to high-quality, home and community-based long-term care than now."

You can read our original Bullet at, but here's an update on current conditions from an article titled "Massive New Spending Needed to Comply with Olmstead Ruling," published in the January 14, 2002 issue of "Aging News Alert."

"Financially strapped states need massive sources of new revenues to comply with the Supreme court's Olmstead ruling to house the elderly and disabled, if possible, in the community.

"The federal government recently released $64 million in new grants to 37 states and one territory to help with planning.  But that is only the beginning.  Compliance will require a major investment in the number of residential housing units suitable for the elderly and disabled."

"[W]hile the states are being called on to move the elderly into the community, many states, which managed to avoid cuts in Medicaid last year, are already considering reducing payments to nursing homes this year.

"In a yet to be released report, Fox-Grage [a senior policy analyst at the national Conference of State Legislatures] finds only three states have started implementing measures to move the elderly into the community more than two years after the Supreme Court decision."

"Only four states--Miss., Mo., Ohio and Texas--have developed plans with specific strategies and goals, designated the role of various state agencies, include time lines and budgets and meet CMS requirements.

"At the current rate, she says, it will be a 'long, long, long time' before states meet the Olmstead goals."

LTC Comment:  In the meantime, the points we made in our original Olmstead Bullet remain true.  Building up the false hope that Medicaid will pay for quality care in the community only anesthetizes the public to the real risk of long-term care, reduces their sense of urgency about the risk, impedes the market for privately financed home and community-based services, discourages the purchase of private long-term care insurance and, therefore, reduces Medicaid's capacity to provide for the needs of the poor.  This is just another example of how good intentions often pave the way to unintended negative consequences.