Gradual rebalancing of Medicaid long-term services and supports saves money and serves more people, statistical model shows.

States are shifting Medicaid spending on long-term services and supports from institutional to home and community-based services, a process known as rebalancing. Using fifteen years of state expenditure data, a statistical model was developed to assess the effect of rebalancing on overall spending for long-term services and supports. The model indicates that spending is affected by the way rebalancing is implemented: Gradual rebalancing, by roughly two percentage points annually, can reduce spending by about 15 percent over ten years. More rapid rebalancing can save money, break even, or increase spending, depending on the pace and program specifics. Cuts to home and community-based services that hinder rebalancing are likely to increase, not decrease, overall spending on long-term services and supports as people who were receiving these services shift into nursing homes. Because many states continue to experience budget crises, policy makers must think carefully before altering spending patterns for long-term services and supports and adopt strategies that particular states have used to successfully reduce overall spending, such as gradually shifting expenditures toward home and community-based waiver programs.