A casual observer of the health care debate might think the historic new federal law does little to help older Americans. In fact, emotional talk of “death panels” likely led more than a few people to expect bad news for end-of-life care.

It’s true that the new law promises to pay only a tiny share of states’ biggest and fastest growing health care bill -– long-term care for the elderly and other adults with disabilities. Still, its attention to the issue may end up paying much bigger dividends in the future.

The law, known as the Patient Protection and Affordable Care Act, includes the first-ever national long-term care insurance plan –- called Community Living Assistance Services and Supports, or CLASS -– a federally administered program financed through payroll deductions. If a significant number of people sign up for the voluntary program – a heavily debated issue – individual long-term care benefits could defray a portion of states’ costs.

But the real gift the new law presents states is a detailed roadmap to the most successful ways to cut costs and improve services for the elderly. By offering incentive payments of 2 to 6 percent of costs, the federal government is encouraging states to adopt and expand successful programs pioneered by a handful of states that give elders more options for their care at much lower expense.

Health reform’s incentive funding for long-term care would flow through Medicaid –- the federal-state health insurance plan for the needy –- in the form of a slightly increased federal share for certain programs. And although the amounts are small, the power of the bully pulpit could accelerate state long-term care reforms, yielding billions in savings and substantial improvements in the care of our elders.

It is well known that nearly all seniors and adults with disabilities want to remain in their homes as long as possible, and it’s vastly cheaper for states to provide the help –- meals, bathing and dressing, and other home services –- that allows them to do so rather than resort to institutionalization. Yet, the majority of those who need long-term care are isolated in facilities estimated to cost at least three times as much as comparable home-based care.

For decades, states have experimented with programs to help elders age at home, saving millions that otherwise would be spent on costly nursing home stays. But the millions saved in a few states has barely made a dent in the behemoth national long-term care bill –- $147 billion in 2009 and projected to reach $207 billion by 2020 and $346 billion by 2040.

Here’s the problem: Medicaid –- which pays nearly 50 percent of all nursing home bills in the country and 40 percent of all long-term care — is biased in favor of institutional care. When seniors qualify financially and are deemed to need care, Medicaid funding for a nursing home bed is guaranteed. But for those who want to remain at home, funding is only a possibility and a national shortage of home health providers often means long delays.

Meanwhile, waiting for help can be out of the question when a loved one has fallen and broken a hip or suffered a serious stroke. So nursing home care, an entitlement under Medicaid, becomes the fallback, while so-called home and community-based care remains an optional program in most states.

Still, states have made progress -– some more than others.

In 2006, Oregon, New Mexico, Washington and Alaska spent more than 50 percent of their Medicaid long-term care dollars for the elderly and adults with disabilities on home and community care. Other states, including Iowa, Massachusetts, Minnesota, New Jersey, Ohio and Vermont are moving in the same direction.

In contrast, Tennessee, Indiana, Utah and North Dakota spent 5 percent or less on non-institutional care. As a national average, state spending on home and community-based care accounted for 41 percent or nearly $45 billion of total Medicaid long-term care spending in 2006, up from 13 percent in 1990.

Incentives in the new health care reform law aim to even out states’ progress in balancing long-term care options between nursing facilities and home and community care by setting goals of at least 50 percent of state spending on home care by 2015 for states that already spend 25 percent or more, and 25 percent by 2015 for states that spend less than 25 percent on non-institutional options.

Does the new federal law go far enough? Many policy experts say ”No.” But most agree that the final product of years of health reform debate went further than they expected toward recognizing the need to change our nation’s long-term care system.

After all, the historic law’s primary aim is to provide coverage for the nation’s masses of uninsured -– and seniors aren’t among them. Those aged 65 and older are covered by Medicare, the federal insurance plan for the elderly. And those who require more than a brief stay in a nursing home can tap into Medicaid –- once their own resources are exhausted.

But in addition to covering the uninsured, Congress and the Obama administration wanted to reduce the nation’s spiraling health care costs and ease the growing Medicaid burden on states.

Long-term care represents more than 30 percent of states’ Medicaid bills, which occupy more than 20 percent of overall state budgets. Medicaid costs are growing faster than any other state expense and long-term care costs are growing even faster.

That’s partly because Americans are living longer. By 2020, the number of people aged 85 years and older — those most likely to need long-term care — will increase by more than 40 percent, according to U.S. Census Bureau estimates. By 2040, the number of these very old people will increase more than 250 percent, from 4.3 million in 2000 to 15.4 million.

Even without those demographic pressures, states’ long-term care costs are daunting. The elderly and disabled represent about 25 percent of the total Medicaid population, but they account for more than 65 percent of the spending, according to the most recent federal data available.

States have every incentive to find ways to reduce the costs of long-term care and the new health reform law just gave them one more. Over the decades, federal money — even in small amounts -– has been an effective catalyst for state innovation. These difficult fiscal times may provide one more example.

This story was reported by Stateline.org staff writer Christine Vestal. Lauren Lambert, Pew Center on the States researcher, contributed to this article.

A controversial move to transfer operation control of three secular Denver area hospitals to a Catholic health care system expected to take place on Dec. 31 appears to be on hold pending federal approval.

The unexpected delay by the Federal Trade Commission to bless the transaction may provide local critics with a last gasp effort to continue fighting the deal. Community members and medical professionals contend the transfer would unfairly subject comprehensive reproductive health and end-of-life care to church doctrine over patients’ needs. The Catholic church considers abortion, contraception, elective sterilization and termination of invasive life support as “intrinsically evil” and refuses to provide these medical services or respect patients’ advance directives.

The disputed takeover in Denver exemplifies the very serious implications for the 127 non-denominational hospitals that succumbed to merger fever with cash-flush Catholic health care systems in the 1990s. According to a study by Catholics for a Free Choice, half of merged secular-Catholic hospitals suspended most or all of their reproductive health care services. Eighty-two percent denied emergency contraception to rape victims — and more than a third refused to provide a referral.

But for some tax-exempt, nonprofit hospitals co-owned by secular and church interests, there was little more than a wink and a nod to church mandates on care. Comprehensive reproductive health care services quietly remained available.

That care came later under close scrutiny in 2001 when the U.S. Conference of Catholic Bishops revised its Ethical and Religious Directives for medical care to address “misinterpretation and misapplication of the principle of cooperation with other-than-Catholic organizations.” In other words, the church would no longer turn a blind eye to reproductive health and end-of-life care at its secular partner facilities that did not meet strict Catholic orthodoxy.

MergerWatch.org notes several examples of broken promises by Catholic health care systems to preserve reproductive health services at non-religious hospitals it acquired through mergers. Typical reasons included newly installed diocesan bishops with more dogmatic views on medical directives or the Vatican overturning decisions made by previously autonomous bishops.

More importantly, the local hospital policymaking was a little noticed precursor to the bare knuckles strategy on recent display with the church’s relentless lobbying for the 2009 Stupak and Nelson amendments to further restrict access to abortion care via publicly-subsidized health insurance plans. At the same time, the Catholic Archdiocese of Washington, D.C., threatened to end social service programs for tens of thousands of poor residents if the city council approved a same-sex marriage ordinance.

Now, the Denver hospital takeover is offering a glimpse of the intense pressure being brought to bear by the church on its health care partners. The Vatican’s renewed insistence on complete doctrinal influence on patient care is bolstered by very real threats to hold desperately needed institutional capital funds hostage until its theological demands are met.

And that once delicate balance between serving patient needs and adhering to strict Catholic medical directives is unraveling in plain sight.