Traditionally, Medicaid beneficiaries who are elderly or have disabilities have received agency-directed care to perform activities of daily living like bathing, dressing, toileting, transferring, or eating. In response to beneficiaries’ desire for more control over these services, the Cash and Counseling Demonstration and Evaluation was designed to test whether consumer-directed care might improve beneficiary and caregiver well-being without increasing public costs. In the evaluation, Medicaid beneficiaries in Arkansas, Florida, and New Jersey were randomly assigned to receive an allowance and direct their own Medicaid supportive services as Cash and Counseling consumers or to rely on Medicaid services as usual. 

According to surveys of participants, caregivers, and workers, the program reduced participants’ unmet needs, and improved their satisfaction with care and quality of life. Family caregivers of program participants experienced much higher quality of life and lower levels of physical, emotional, and financial stress than control group caregivers. Workers hired under the program fared well relative to agency workers, reporting higher levels of satisfaction and similar rates of work-related injuries or stress. Finally, administrative claims data showed that program participants had higher costs for personal care (because they were more likely to receive services) but lower costs for other long-term care services.  Based on the dramatic positive impacts, the program inspired policymakers to make changes intended to improve the lives of thousands of Medicaid beneficiaries and their caregivers. The federal government passed legislation encouraging consumer-directed care, and twelve more states adopting Cash and Counseling into their Medicaid programs.