IN AN IDEAL world, no elderly person would have to live and be cared for in a nursing home. No child with a chronic illness would have to be cared for in an institution, and no disabled adult would be short of the help needed to care for himself at home. With these objectives in mind Reps. Claude Pepper and Edward Roybal have introduced legislation to provide federal funding for long-term home health care. The program would be financed by eliminating the cap ($45,000 a year) on income subject to the Medicare tax of 1.45 percent, a change that would affect only 5 percent of American workers. Long-term home health care assistance would be available to persons who need help in at least two activities of normal daily life -- eating, dressing, etc. -- and the benefit would not be based on need.

The bill's sponsors claim that many of the people who would be eligible for this assistance would otherwise have to be cared for in costly hospitals or nursing homes. They predict that in the long run, a switch to home health care would save money for the government. That may be true in some individual and well-publicized cases, but according to a recent, federally financed study, the assumption is dubious.

The report, described in a news story in this paper yesterday, was prepared under the auspices of the Institute for Research on Poverty at the University of Wisconsin. Scholars there studied 16 experimental projects in which one group of elderly received home services and another did not. They found little significant difference between the two in terms of days spent in nursing homes. This may be owing to any of a number of things. At a certain level of incapacity, people from both groups may have to get institutionalized care, and below that level, home help that is not publicly funded may be provided by family, friends or community volunteers. At any rate, it is best not to count on huge savings and a retreat from nursing homes if the Pepper-Roybal bill is passed.

In fact, the proposal for home health services shouldn't be sold as a money saver. It will cost many billions of dollars to fund an entitlement program of this kind. But it is clearly a popular proposal. What taxpayer in old age would not prefer the independence of his own home, the freedom to control his schedule and surroundings, the dignity of personal instead of institutional care? Still, the cost of these services must be assessed honestly, and the alternative uses to which public funds might be directed should be weighed. In this time of budget crisis, the question for legislators is whether the country can afford a benefit that everyone agrees would be a good one.