If I were a state Medicaid official looking for areas to save some money (and what state isn’t?), I’d start seriously considering investing in home- and community-based services (HCBS).

We’ve all known for some time that Medicaid long-term services and supports (LTSS) in a home care setting are cheaper than Medicaid nursing home care. A new study in the Journal of the American Geriatrics Society confirms it. The investigation, which examined Medicaid LTSS data from 1999–2017 in 45 states and the District of Columbia, found that a $1 increase in Medicaid HCBS spending was associated with a $0.74 increase in LTSS spending. In other words, each dollar directed to HCBS was offset by $0.26 savings for decreased nursing home use.

Does the argument get any clearer than that? A dollar in Medicaid HCBS stretches further than a dollar for Medicaid nursing home care. (Important to note is that the study focused on HCBS spending for personal care, home health, the Program of All-Inclusive Care for the Elderly and waiver spending for older adults and/or people with disabilities.)

While the study offers some concrete evidence of the financial benefits of Medicaid HCBS, judging by the trend among states in recent years, this savings is not exactly a secret. States already are spending well over 50% of their Medicaid LTSS budgets on HCBS. In fiscal year 2020, over 5.6 million people received Medicaid HCBS at a total cost of nearly $116 billion, according to the study. Still, it’s not consistent across the country, with some states acting more aggressively to expand HCBS than others.

One theory holding back states — which the study debunked — is that if they grow Medicaid HCBS they’ll unearth a bunch of people who just want these services. The study found this “woodwork effect” not to be true.

So, given the evidence, what else could be holding states back? Try money. Clearly, they still need Medicaid funds to pay home care workers livable wages.

Still, it’s worth trying to venture in this direction — for the sakes of older adults and state coffers.

Liza Berger is editor of McKnight’s Home Care. Email her at [email protected].