Thousands of New Jersey seniors and disabled residents who qualify for Medicaid could choose to be cared for in their homes instead of a nursing facility, under state legislation proposed Monday.

The bill -- called the Independence, Dignity and Choice in Long-Term Care Act -- would speed Medicaid funding for senior and disabled home and community care, in two pilot projects next year in Atlantic and Warren counties. The program would expand statewide to all 21 counties in 2008.

"For too many generations, ironclad government systems channeled the elderly and the disabled into nursing homes and other institutions," said state Sen. Loretta Weinberg, D-Teaneck, co-sponsor of the bill with Assemblyman Jim Whelan, D-Atlantic City.

"Those who wanted to stay home and take care of themselves, or get family help, often died before financial help arrived," Weinberg said.

Fourteen states have similar Medicaid home care programs to pay for nursing care, assisted living services or other community care.

The measure "will empower seniors and the disabled to decide what long-term care plan works best for them," Whelan said in a statement.

The proposal would save millions of dollars over time because, "it's cheaper to care for people at home than in an institution," Weinberg said.

New Jersey's current population of 1.6 million residents who are 60 or and older is expected to double in the next 25 years as baby boomers become senior citizens, Weinberg said. New Jersey has started shifting the balance of Medicaid billions away from institutional care, she said.

"The bad news is that, so far, the re-balancing has been too slow to help people who want to use community based programs, like adult family care and assisted living," she said.

The program would be monitored by a 13-member Medicaid Long-Term Care Funding Advisory Council, including groups such as AARP, nursing home associations, and home care worker unions. It would be operated by the state Department of Health and Senior Services.

Shifting some Medicaid funding to home care should not shortchange nursing home reimbursement, said Paul Langevin, president of the Health Care Association of New Jersey.

"There's been a lot of discussion that it's going to save money. We're looking to see where the saving might occur," said Langevin, whose group represents 300 nursing homes, including 120 assisted living facilities.

New Jersey dispenses $9 billion in Medicaid, half of which is state funding, Langevin said. About $1.5 billion goes to nursing homes, he said.

"Our support has been for full funding of all services -- home, institutional and assisted living," Langevin said. Medicaid home care "could delay people entering institutions. Everyone wants to stay in their home as long as they possibly can," he said.

E-mail: groves@northjersey.com