The use of direct public payments to persons providing in-home care to impaired elderly is currently the object of increased interest. This paper draws upon data from two studies of impaired elderly to address the feasibility and potential impact of such policies. Findings suggest that family members are heavily involved in support to the impaired elderly and that institutionalization is most often the result of non-financial rather than financial factors. The study concludes with a discussion of the issues which must be resolved in designing policies incorporating public payments for family caregiving.