Home Care Before and After the Balanced Budget Act of 1997: Shifts in Financing and Services

Purpose: This article describes the pattern of change in home-care use and expenditures, the distribution of payments by source, and the mix of skilled versus nonskilled services before and after 1996. Design and Methods: The analysis is based on tabulations of the 1987 National Medical Expenditure Survey and the 1996, 1998, and 1999 Medical Expenditure Panel Surveys. Estimates are weighted to represent the U.S. civilian noninstitutionalized population. Results: After increasing dramatically between 1987 and 1996, formal home-care use and expenditures fell between 1996 and 1999. The decline was largely due to a decrease in funding under Medicare, which coincided with changes initiated in the Balanced Budget Act of 1997 (BBA). Declines in total spending were attenuated by increases in expenditures under state and local programs. After the BBA, fewer skilled services were provided to the elderly population and more unskilled services were provided to the nonelderly population. Implications: These findings highlight the increasing role of state governments in funding home care after the BBA. However, more recent pressure on state budgets and the institution of prospective payment under Medicare for home care may alter these trends.