States' policies vary widely on paying friends and family rather than home care agencies to care for the elderly. This analysis explored two state programs which exemplify different payment options: Michigan, which pays clients' informal caregivers, and Illinois, which generally pays agencies to provide services. It asked how different payment policies affect clients, specifically exploring program structure and financing which shape provider and client preferences, well-being, and assessment of care quality. Comparatively, Illinois' approach favors professionalism, high cost/quality, documentation, and an orientation toward medical and physical need. It has experienced high worker turnover and less regard for caregiver-client relationships. Michigan's approach favors informality, casual accountability, long term stability of helping relationships, and respect for client preferences and autonomy. Both approaches offer important client benefits, but state precedents and incentives to administering agencies have shaped their overall direction. The recent rapid growth of the home care industry in Illinois could proscribe a fuller range of provider options. Greater flexibility is recommended in considering states' payment. (Author)