- Colorado receives around $20 million in annual Older Americans Act (OAA) funding to support aging populations.
- Area Agencies on Aging (AAAs) with higher per capita OAA funding tend to see larger declines in nursing home occupancy.
- These findings suggest that OAA investments may have downstream benefits for Medicaid and long-term care costs.
- More research is needed to understand the causal pathways and effectiveness across different services and regions.
Overview of OAA Funding in Colorado
The Older Americans Act (OAA), first passed in 1965, is the primary federal law supporting services that help older adults live independently. OAA funding flows from Congress to states based primarily on the share of the population aged 60 and over, with a minimum guaranteed amount to ensure small states still receive meaningful support.
In Colorado, state-level OAA funds are distributed to 16 Area Agencies on Aging (AAAs), which operate semi-independently and tailor programs to local needs. Each AAA receives a share of funds based on a progressive formula that considers not only the number of older residents, but also the rurality, minority status, income level, and share over age 75. This formula ensures more resources reach areas where aging populations may be more vulnerable.
Table 1 shows Colorado’s OAA funding allocations by category in 2015. These funds support a broad range of services — from congregate and home-delivered meals to caregiver support, transportation, health promotion, and ombudsman services for residents in long-term care facilities.
OAA Funding and Nursing Home Trends Across Colorado
To understand whether OAA funding is associated with older adults remaining in their homes longer, we examined trends across Colorado’s AAAs using 2015 funding data and changes in nursing home residents from 2015 to 2021.
Table 2 displays key variables by AAA: total and per capita OAA funding, the 65+ population, and nursing home resident counts in 2015 and 2021. For example, the Lower Arkansas Valley received $310,193 in OAA funds in 2015, or $40.64 per capita for its 65+ population. By 2021, the number of nursing home residents fell by 25%, one of the largest drops in the state. Across most AAAs, the number of nursing home residents declined — even as the older population grew — suggesting a decrease in the share of older adults entering institutional care.
Correlation Between OAA Funding and Nursing Home Occupancy
The pattern across AAAs suggests that higher per capita OAA funding is associated with larger declines in nursing home use. As shown in Figure 1, we estimate that a $15 increase in per capita OAA spending is associated with nearly a 10% decline in nursing home residents between 2015 and 2021. This negative correlation remains even when adjusting for population growth by examining the share of the 65+ population in nursing homes. Moreover, every Colorado AAA saw growth in their 65+ population over the period, due to broader demographic aging trends. Yet many saw falling or stagnant nursing home numbers — further reinforcing that aging alone does not explain the variation in institutional care. This supports the idea that increased investment in community-based services may allow more older adults to age in place.
Broader Implications: Medicaid and Cost Avoidance
Nursing homes are often a last resort for older adults. While some can afford them privately, many individuals deplete their savings and eventually rely on Medicaid, which devotes a substantial share of its total budget for long-term institutional care. If OAA funding delays or prevents nursing home entry, it may generate cost savings for Medicaid, which is jointly funded by federal and state governments. While we do not estimate these spillover effects directly, the observed trends suggest that even modest increases in OAA funding can have broader fiscal implications.
Conclusion
The Older Americans Act plays a vital role in helping seniors remain in their homes and communities. Our analysis of Colorado’s AAAs finds that higher per capita OAA funding is associated with fewer nursing home residents, suggesting that OAA services may help older adults avoid or delay institutionalization. Given the rising costs of Medicaid and the growing population of older adults, investing in community-based support may be a cost-effective strategy. While these findings are based on correlation, they point toward important avenues for future research and policy evaluation.
Data Sources
OAA Funding Data: Colorado Department of Human Services. (2015). Colorado state plan on aging: October 1, 2015 – September 30, 2019.
Nursing Home Data: LTCFocus Public Use Data sponsored by the National Institute on Aging (P01 AG027296) through a cooperative agreement with the Brown University School of Public Health. Available at www.ltcfocus.org. https://doi.org/10.26300/h9a2-2c26
Population Data: U.S. Census Bureau. (n.d.). American Community Survey 5-year estimates. Retrieved from https://data.census.gov/