Ensuring that the elderly population and persons with major disabilities receive effective long-term services is a major policy focus at the federal and state levels. Half the total cost of nursing home care in the United States is paid for by Medicaid. In 2002 Medicaid beneficiaries who used long-term care accounted for half of all Medicaid spending, even though they constituted only 7% of the Medicaid population.

Policy makers are focused on changing the locus of care from nursing homes to the home and community. This contemporary process is similar in many ways to the deinstitutionalization movement to close large psychiatric hospitals and introduce community-based services in the latter half of the 20th century. A new report from the Kaiser Commission on Medicaid and the Uninsured finds lessons in the deinstitutionalization movement for today's policy makers who are seeking to reform long-term care.

Although the federal deinstitutionalization movement was launched in 1965—through the community mental health centers (CMHC) program—it was not until 1993 that the number of state-controlled mental health dollars allocated to community care exceeded the number allocated to state hospitals, the report notes. In addition, federal funds for the CMHC program did not come close to the amounts promised. Progress was slow not only in shifting funds but also in adopting promising models of community care. Such models were rarely fully evaluated and even more rarely incorporated into practice—with the result that old approaches continued to eat up resources long after more effective models were available. In addition, even after it became clear to policy makers that people with severe mental illness need an array of supports in addition to treatment in order to live in the community, multiple funding streams remained uncoordinated and it was difficult to put together a comprehensive service package.

The report's author, Chris Koyanagi of the Bazelon Center for Mental Health Law, notes, "Shakespeare tells us there is a tide in the affairs of men which, taken at the flood, leads on to fortune. Unfortunately, deinstitutionalization missed the flood. By the time the necessary knowledge existed, political will had faded. The optimism of the 1960s regarding government's ability to solve major social woes was gone. The memory of the snake-pit institutions had faded. The policy picture had become more complex than expected." The result was "a grievous muddle of cause and effect and abandonment of responsibility on all sides."

In hindsight deinstitutionalization as a policy goal can clearly be seen as correct both morally and economically, Ms. Koyanagi notes. But what could have been done differently, and how can lessons learned inform efforts to reform long-term care? First come issues of careful planning and adoption of best practices. Closure of institutions as a matter of principle—closure for its own sake—can quickly gain momentum. Retaining institutional beds while expanding community care may be necessary to ensure that services will be waiting for individuals when their long-term care institutions are downsized or closed. In addition, new approaches to meeting the needs of these populations must be evaluated promptly and systematically, and old approaches must not be allowed to continue beyond their usefulness.

Comprehensive and adequate funding over a sustained period of time is also essential for reform of long-term care. Even though the deinstitutionalization movement has made contemporary policy makers more cognizant of the array of supports needed for people to live in the community—and of their right to choose and self-direct—failure to ensure enough funding may lead to erosion in quality-of-life services, particularly psychosocial services and recreation. Resources need to be managed in a concerted manner across federal, state, and local governments. When large psychiatric hospitals were closed, not enough of the savings followed deinstitutionalized people into the community. Capturing the long-term services resources now spent on institutional care by all levels of government might provide sufficient resources for the alternative services envisioned. The report also warns policy makers to be careful of unanticipated consequences—"perverse fiscal incentives"—when implementing any new financing strategy. For example, early mental health planners did not anticipate transinstitutionalization into nursing homes or the expansion of general hospital psychiatric beds.

Another error that policy makers might avoid by studying the deinstitutionalization movement is replacing one form of long-term care institution (nursing homes) with another (group homes). Similarly, the assumption of early mental health planners that families could take up the slack and provide needed supports to their ill relatives with little help was "a major mistake," the report notes.

The 22-page report, Learning From History: Deinstitutionalization of People with Mental Illness As Precursor to Long-Term Care Reform, which also discusses lessons learned in regard to workforce issues and advocacy, is available on the Kaiser Commission Web site at www.kff.org/about/kcmu.cfm.