WASHINGTON - Only 19 percent of Iowa's Medicaid funds pay for community-based service for the elderly and disabled because the majority of state dollars go to institutional care, Sen. Tom Harkin, D-Iowa, said Wednesday.

"This is an issue of the highest importance," Harkin testified at a Senate Finance Committee hearing. "Medicaid laws are still in the dark ages."

Harkin, along with several Senate co-sponsors, recently introduced the Medicaid Community-Based Attendant Services and Supports Act (MICASSA) and the Money Follows the Person Act. Both programs propose giving elderly and disabled Americans a choice between living in an institution or receiving Medicaid-funded home care.

A large crowd of demonstrators chanting "we want access" and "free our people" attended the committee hearing headed by Sen. Charles Grassley, R-Iowa. Grassley said that while the government is moving to improve Medicaid, its work is far from finished.

"The elderly and people with disabilities and their families deserve a choice," he said. "They should have the ability to choose whether they prefer to live in the community or in a facility."

Former Speaker of the House Newt Gingrich, R-Ga., first introduced MICASSA in the House of Representatives in 1997. Last May, Harkin reintroduced the bill, which supports the elderly and disabled by increasing their access to community-based care. Similarly, the Money Follows the People Act provides one year of 100 percent federal funding to individuals who move home from an institution or nursing home.

Harkin said the two bills, with broad bipartisan support, are long overdue and must be acted upon before the Senate adjourns in October. However, some officials cautioned that transferring Medicaid funds might be costly and would take time.

"While states are making efforts to support community-based services, progress in reducing dependence on institutional care has been difficult to achieve due to fiscal challenges," said Dennis Smith, director of the Center for Medicaid and State Operations. Smith said that more than 70 percent of Medicaid funds for seniors and the disabled have historically been spent on institutional services.

"The idea of individuals deciding their care is highly valued," he said, "but it's going to take time to rebalance the system."

But several Iowans said they need and deserve more Medicaid options immediately. Ray Gerke of Perry told the committee he was sent to a care-giving facility two hours from his home when he was 8 years old. Gerke, who has cerebral palsy and spoke from a wheelchair, called on the committee to eliminate the Medicaid institutional bias and aid states in helping the disabled and allowing needy people to choose their care.

Similarly, Iowa Caregivers Association Director Di Finley highlighted the need for change.

"We have a very fragmented system," the Mitchellville native said.

"With the expansion of home and community-based services and the right supports and personal assistance for the elderly, persons with disabilities and special needs can remain in their home indefinitely."