Payments to Informal versus Formal Home Care Providers: Policy Divergence Affecting the Elderly and Their Families in Michigan and Illinois

Abstract

State policies vary widely on paying friends and family rather than home care agencies to care for the elderly. We explore two state programs that exemplify different payment options: Michigan, which pays clients' informal caregivers, and Illinois, which generally pays agencies to provide services. We ask how different payment policies affect clients, specifically exploring program structure (division of labor and bases for need determination) and financing incentives created by Medicaid (centralization, means testing, and quality assurance). These factors shape provider and client preferences, well-being, and assessment of care quality. Comparatively, Illinois's approach favors professionalism, high cost/quality, documentation, and an orientation toward medical and physical needs. It has experienced high worker turnover and less regard for caregiver-client relationships. Michigan's approach favors informality, casual accountability, long-term stability of helping relationships, and respect for client preferences and autonomy. Both approaches offer important client benefits, but state precedents and incentives to administering agencies have shaped their overall directions. The recent rapid growth of the home care industry in Illinois could proscribe a fuller range of provider options. We recommend greater flexibility in considering states' payment.