This study examines the impact of state variation in commitment to the provision of home and community-based services on the living arrangement outcomes of older unmarried females with functionallimitations. We combine data from the 1990 U.S. Census of Population (PUMS) with state-level information on long-term care home and community- based service expenditures, nursing home bed availability, and Medicaid nursing home costs from a special report that compares state variation in long-term care systems. Using multilevel logistic regression modeling techniques, we find that the risk of institutionalization compared to community living arrangements is reduced as spending for home and community-based services at the state level increases. We discuss these findings in light of policy changes during the 1990s.