Hawai'i is unbalanced when it comes to its Medicaid long-term-care spending and needs to look at allocating more of its dollars to homecare and other services found in the community.

That's the finding of a new AARP Public Policy Institute study, which looked at Medicaid spending for older people and adults with physical disabilities. It found the state allocates 83 percent of its long-term-care spending for this group to nursing homes, or more than the national average of 75 percent.

"Hawai'i is not doing as well as even the average," said Susan Reinhard, one of the authors of the report and senior vice president of the institute. "You can spread your money out a bit more."

The report says that most of long-term-care Medicaid funding in the U.S. goes to nursing homes and other facilities while most people with disabilities who are age 50 or older want to receive long-term-care services in their homes. Some states have shifted the majority of their Medicaid money to home and community care. Oregon, for example, spends 55 percent of its funding on those services.

Reinhard said states can also maximize the return on their Medicaid dollars by spending them on home and community care services.

Her report notes that, on average, Medicaid dollars can support nearly three older people and adults with physical disabilities in home and community-based services for every person in a care home.

"To the extent that states redirect resources to provide home and community-based services instead of nursing home services, their programs and services can be increasingly cost-effective and responsive to the preferences of people with disabilities," the report says.

Reinhard is in Hawai'i this week to meet with government, business and healthcare officials. Her visit comes at a time when the state is establishing a Long Term Care Commission after the state Legislature passed a bill noting an increasing need for comprehensive planning and making sure long-term-care services are accessible, efficient and as effective as possible.

The commission is to identify problems with long-term-care capacity, programs and services while developing a five-year plan that will ensure the availability of a range of services as Hawai'i's Baby Boomers age.

The governor will appoint five members, with another five each appointed by the president of the state Senate and speaker of the state House of Representatives. Another five nonvoting members will come from state agencies.

The commission is to deliver a preliminary report to the Legislature by the end of February 2010. A final report is due in September of that year.

Reinhard said Hawai'i doesn't have enough long-term-care beds and that the average cost of staying a year in a nursing home here is $107,000. Meanwhile, a number of homes where people provide long-term care have started to pop up in various communities here, she said.

She said more needs to be done to encourage more community-based alternatives.

"You're at a crossroads in my opinion, Reinhard said.