Context and Issues in Research on Expenditures and Outcomes of Community Supports
Many factors influence the availability and quality of services and supports for people with intellectual disabilities and developmental disabilities (ID/DD). Economic issues should not be the primary basis for service planning and policy, but as Ashbaugh has observed, "Look behind any movement that secures a place for itself in the perennially underfunded world of developmental disabilities and you will find an economic engine" (2002, p. 417). Service provision does have an important economic dimension, and it is essential to understand as much as possible the associations among service approaches, individual needs, costs, and outcomes so that effective, equitable, and economically sustainable service systems can be developed.
In the United States, federal, state, and local governments spent almost $35 billion in fiscal year (FY) 2002 on noneducational services for people with ID/DD (Rizzolo, Hemp, Braddock, & Pomeranz-Essley, 2004; see also Chapter 2). Almost 80% of this amount was used to fund community services. In FY 2002, federal and state Medicaid Intermediate Care Facilities for Persons with Mental Retardation (ICFs/MR) and Home and Community-Based Services (HCBS) Waiver programs exceeded $24 billion in total long-term care expenditures (Prouty, Smith, & Lakin, 2003). Expenditures for home, community, and institutional services are enormous in size and highly varying 1) in the nature and quality of services they purchase (e.g., from a "bed" in an institution of several hundred residents, to companion support in a person's own home); 2) in the amounts spent for similar "models" of service in different states, communities, and/or agencies; and 3) in the methods of disbursement of expenditures (e.g., from government retrospective reimbursement of provider costs, to direct cash payments to families and/or individuals for purchasing their own services). Despite these numerous variations, there is only a limited and scattered literature on the nature and outcomes of expenditures for services for people with intellectual and developmental disabilities.
This book draws together information on costs, outcomes, and approaches to financing services for people with ID/DD and the effects on efficiency and/or effectiveness of variations in such factors. The primary focus is on community services, but because institutions continue to operate, attention is also given to the costs and outcomes of deinstitutionalization. The term costs encompasses both expenditures for services and the mechanisms for allocating resources that affect the nature and operation of service systems, specific service types, and ultimately the lives of service recipients. Costs sometimes is used to include not only public expenditures but also the substantial personal costs in time and money of family members, volunteers, and others applied to the support of people with ID/DD. Acknowledging such costs leads to distinctions among costs, personal expenditures, and public expenditures. Because accounting is rarely available on the comprehensive definition of cost in this book, the terms cost and expenditure are treated as synonymous unless distinguished as different.
There are many important issues that arise when considering community services and the expenditures for them. Foremost among these is effectiveness in achieving high-quality outcomes and good quality of life. Without satisfactory outcomes, expenditures on services are a poor investment for society, resulting in deprivation, increased disability, and even danger for service recipients and their families. Therefore, this book focuses on both costs andoutcomes.
Services' cost and cost effectiveness are important concerns for service recipients and families as well as for policy makers and service administrators. The budget crises faced by the majority of states since 2002 have demonstrated this clearly. The resulting expectation that state agencies will find ways to reduce, or to some degree control, budgets has shown how important it is to have information on costs and outcomes and their associations with different approaches to service delivery and financing. It has also shown how rarely available such information is when needed.
As a result of such funding challenges, it is now better understood that there are important consequences of not reforming ineffective, inappropriate, or excessively costly services. These undesirable consequences include limited (or nonexistent) access to appropriate services by those who are unserved, underserved, or poorly served. The public's expectation that society's limited resources are used wisely involves both effective use of public funding and assuring that those resources have maximum positive benefit for support recipients. Advocates of system reform emphasize the importance of wise use of public funding (Nerney, 1998).
At its simplest, spending on services "is affected by two factors: the number of individuals who receive such services, and the per capita costs associated with furnishing services to such individuals" (Smith, O'Keeffe, Carpenter, Doty, & Kennedy, 2000, p. 152). The implication of this simple observation is that, if service costs are not managed effectively, either total system expenditures increase sharply or costs are controlled by limiting access to services through the use of restrictive eligibility criteria, waiting lists, and the like. Therefore, careful management of costs and cost effectiveness is a crucial element of equitable, sustainable service provision for people with ID/DD.
A focus on cost should not imply that lower cost is self-evidently better, or that cost outweighs other considerations. Higher-cost services that deliver better outcomes ought to be supported strongly on cost-effectiveness grounds. For example, Emerson, Robertson, Hatton, Knapp, and Walsh (Chapter 7) found that institutional services in the United Kingdom cost significantly less than community services but concluded that the additional expenditure on community services was warranted in light of the consistent benefits of these services.
In this chapter, we provide a context for the chapters in this book. We describe the U.S. service and funding situation and examine a number of key issues drawing on selected previous research — issues such as family support, needs-based funding, individual budgets, cost comparisons between institutional and community services (including wage rates for direct-support staff), economies of scale, and the relation between expenditures and outcomes. The chapter ends with a list of 11 important issues that have helped to guide the development of this book.
UNITED STATES'S SERVICE AND FUNDING CONTEXT
Since the 1980s, major changes have taken place in the legal environment, funding, operation, and control of community services for people with ID/DD in the United States. First, a widespread shift from institutional to community provision of services took place in every state, although to substantially different degrees in each state (Prouty, Lakin, & Bruininks, 2003). A 59% decrease in public and private institution residents between 1982 and 2002 was accompanied by a 696% increase in community residences housing six or fewer people. This change has been accompanied by an operational transformation from state governments being the primary providerof services, to state governments being largely a purchaserof services.
In 1982, 49% of people with ID/DD who received residential services were supported by nonstate agencies, but by 2002, this figure had increased to 86% (Prouty, Smith, et al., 2003; see also Chapter 13). This change has had an impact on system costs because nonstate agencies typically provide services at a lower cost (Campbell & Heal, 1995; Stancliffe & Lakin, 1998). This outcome has been influenced strongly by the lower wages and other compensation of nonstate employees relative to state employees (Polister, Lakin, & Prouty, 2003).
Second, a dramatic shift occurred from state financing of community services to federal–state cost sharing of community-services expenditures. Between FY 1991 and FY 2000, inflation-controlled federal expenditures for community services increased by 227%, or about $7.36 billion expressed in FY 2000 dollars. This amount compares with a notable but much smaller increase in state expenditures of 46%, or $3.65 billion expressed in FY 2000 dollars.
Third, the total number of people with ID/DD receiving services grew substantially and proportionally. Nationally, from 287,294 in 1991, to 392,740 in 2002, the number of people served by residential services grew by 105,446 (36.7% increase relative to 1991). This expansion was due not only to a national population increase but also to a rising utilization rate that grew by 19.3%, from 114 per 100,000 of total population in 1991, to 136.2 per 100,000 in 2002 (Prouty, Smith, et al., 2003). Even so, in 2002 there were almost 60,000 people waiting for residential services. Increased life expectancy among people with ID/DD (Janicki, Dalton, Henderson, & Davidson, 1999) means that the demand for services is increasing more rapidly than would be expected based on the growth of the general population alone. Individuals who live longer remain in the community-services system longer. Consequently, new entrants to the service system increasingly require the creation of new places in addition to places relinquished by deceased service recipients.
Fourth, state governments have moved away from program funding, rate setting, and funding by numbers of people served, toward individual ized funding, individual budgets, and needs-based resource allocation. These initiatives are intended not only to establish appropriate levels of funding geared to individual need, but also to support greater consumer control of service decisions (see Chapters 9, 10, 11, and 12).
Fifth, in June 1999, the U.S. Supreme Court determined in Olmstead v. L.C. (1991) that unnecessary segregation of people with disabilities represents discrimination that is prohibited by the Americans with Disabilities Act of 1990 (PL 101-336) and that states are required to provide services, programs, and activities developed for people with disabilities in the "most integrated setting appropriate." The decision required states to place institutionalized individuals in community settings when 1)treatment professionals determine that community placement is appropriate, 2) the individual does not oppose community placement, and 3) community placement can be reasonably accommodated when taking into account the resources and needs of other people with disabilities.
Sixth, there has been substantial growth in HCBS Waiver funding (see Chapter 2) and greater flexibility in the application of this funding (see Chapter 5). Relative to HCBS Waiver–funded residential services, poorer outcomes have been reported for community ICFs/MR (Conroy, 1996, 1998; Stancliffe, Abery, & Smith, 2000; Stancliffe, Hayden, Larson, & Lakin, 2002).
Seventh, as noted by Braddock et al. (Chapter 2), total spending on public and private 16+ person institutions has fallen each year since 1992, but the rate of decline has been far less than the rate of depopulation of these facilities. As a result, average per-person daily institutional expenditures (per diems) have continued to rise. In 2002, per diems in public institutions averaged $344.51 (i.e., $125,746 annually) as compared to raw per diems of $270 in 1997, $211 in 1992, and $90 in 1982. This substantial growth in per diems was driven, in part, by diseconomies of reduced scale associated with institutional downsizing (see Chapter 13).
Eighth, wide variation continues among states in fiscal effort (see Chapter 2) and in service provision, including progress toward deinstitutionalization (see Chapter 13). Finally, supported living and family support have grown significantly. In 2002, state and federal expenditures for family support were about $1.4 billion, roughly 26% more than in 2000 (Rizzolo et al., 2004). Medicaid HCBS Waiver recipients living with family members were an estimated 149,500 in 2002, more than twice the number of just 4 years earlier (Prouty, Smith, et al., 2003).
Excerpted from Chapter 1 of Cost and Outcomes of Community Services for People with Intellectual Disabilities, edited by Roger J. Stancliffe, Ph.D., & K. Charlie Lakin, Ph.D.
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