Dr. Candace Howes

PHI, along with the Institute for Women and Policy Research (IWPR), released a report this week by Dr. Candace Howes, examining why California’s proposal to cut 444,000 elders and people with disabilities from the In-Home Supportive Services progam is short-sighted and fiscally irresponsible.

Below, Dr. Howes discusses her research.

I have spent several years studying California’s In-Home Supportive Services (IHSS) program, the state’s Medicaid long-term care program that provides in-home personal care services to 444,000 elderly persons and persons with disabilities.

My work has mainly looked at whether wage and benefit increases for many of the 360,000 IHSS workers have helped expand and stabilize the workforce.

Lately, I have been looking at how California’s program compares to other states. By pairing IHSS with nursing home services, California has taken its place among the top five states in terms of coverage, balance between nursing home and home- and community-based care, and cost effectiveness.

Severe Budget Cuts Proposed

Yet Governor Arnold Schwarzenegger, in his proposed Budget for 2010-2011, has recommended cutting the IHSS program for 444,000 people, leaving IHSS recipients with two options: to rely on unpaid family care or to enter a nursing facility.

The California Legislative Analyst’s Office (LAO) gave the Governor’s proposal a boost when, in a January 2010 report, it argued that IHSS is just barely cost-effective to the state (by keeping people out of more expensive nursing homes). The LAO suggested that the state replace IHSS with a program that provided personal care services only to the most impaired, while the other two-thirds of current IHSS consumers would get fewer services — or lose them altogether.

I thought, how can nursing home care compete on costs with home care, let alone on quality of life? I also, worried about the signal California’s action might send to other budget-challenged states.

Study Sharply Underestimates Fiscal Impact

Delving deeper, I found that once the LAO assumed, remarkably, that a nursing home stay really costs only slightly more than getting in-home care, and that, if the program were cancelled, no more than about 32 percent of current IHSS recipients would move to nursing homes. From there, it was a short step to finding that the IHSS program was costing the state more than it needed to spend on its long-term care.

Using more realistic assumptions, I found that instead of saving state taxpayers money if the state shut down the IHSS program, California taxpayers could end up spending $2.9 billion more each year. Even the scaled-down program proposed by the LAO would not save as much money as the LAO estimated.

If instead, California simply moved the people who were suitable candidates for home care services out of nursing homes, it could save taxpayers almost $300 million per year and improve the quality of life for seniors and persons with disabilities.

Candace Howes, Ph.D.
Hogate-Ferrin ’43 Professor of Economics, Connecticut College