The Effects of Cash and Counseling on Personal Care Services and Medicaid Costs in Arkansas

The Cash and Counseling Demonstration gives Medicaid beneficiaries who are eligible for personal care services a consumer-directed allowance in lieu of traditional agency services. Using survey and Medicaid claims data on 2,008 adult applicants randomly assigned to treatment or control groups, we find the program increased the receipt of paid care but reduced unpaid care. The treatment group had higher Medicaid personal care expenditures than controls did, because many controls received no paid help, and recipients obtained only two-thirds of entitled services. By the second year after enrollment, these higher personal care expenditures were offset by lower spending for nursing homes and other Medicaid services.