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Closing the Gap Between Knowledge and Practice in the U'S LongTerm Care System

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Title: Closing the Gap Between Knowledge and Practice in the U'S LongTerm Care System


1
Closing the Gap Between Knowledge and Practice in
the U.S Long-Term Care System
  • Larry Polivka, Ph.D.
  • Elder Law Symposium
  • Marquette UniversityMilwaukee
  • March 28, 2008

2
Closing the Gap in LTC
  • The large gap between what we know and what we do
    in LTC damages the lives of people who require
    some level of assistance with the activities of
    daily living (ADLs).
  • This population is set to increase very
    substantially (from 10 million to over 15
    million) with the growth of the 65 population
    over the next three decades from 36 million to 78
    million.
  • If we dont close this gap within the next
    decade, it will become increasingly difficult to
    achieve with the growth of the 65 population.

3
Closing the Gap (contd)
  • About two-thirds of the 65 population will need
    some form of LTC with an average duration of
    about three years.
  • About 70 of those with LTC needs receive
    assistance exclusively from informal or unpaid
    help and 75 of those receiving paid help also
    rely on informal assistance.
  • This informal help was worth 350 billion in
    2006, which is between 100 and 150 billion more
    than the dollar value of all paid (public and
    private) assistance.

4
Closing the Gap (contd)
  • Nursing home care now costs 60,000-80,000
    annually assisted living 35,000 annually and
    in-home care (home health aides, etc.) between
    10,000-15,000 annually.
  • Public spending (Medicaid, Medicare mainly)
    amounted to about 150 billion in 2005 and
    private out-of-pocket expenditures were 58
    million.
  • Nursing home costs came to 130 billion with
    Medicaid covering 45, Medicare 17, private
    insurance 7, and out-of-pocket 25.
  • Medicaid also paid over 20 billion for
    non-entitlement HCB services in 2005, about 5
    billion for the 65 population and 15 billion
    plus for the developmentally disabled.

5
What We Know About LTC
  • Younger and older disabled persons vastly prefer
    home- and community-based services to nursing
    home, or any other form of institutional care.
  • This preference is especially strong among baby
    boomers (ages 47-64)AARP surveys.
  • This is one reason that 75 of all LTC assistance
    is provided by family and friends in private
    homes (informal care).

6
What We Know (contd)
  • Most home- and community-based LTC services are
    more cost-effective than nursing home (or other
    institutional) care.
  • Oregon, Washington, Arizona, Vermont, New Mexico,
    California, and few other states have been able
    to serve growing populations of impaired persons
    by providing resources for a wide range of
    in-home and community-residential programs over
    the past 15 to 20 years.

7
What We Know (contd)
  • Each of these states now spends over 50 of their
    public LTC dollars on HCBS programs and serve
    over 50 of their LTC consumers in these
    programs.
  • And their overall LTC expenditures are at or
    below the national per capita average.
  • They are able to meet a greater percentage of the
    need for LTC services while containing total LTC
    spending.

8
What We Know (contd)
  • A recent study by the Office of the HHS Assistant
    Secretary for Planning and Evaluation (Jan. 2008)
    found that
  • Duration of nursing home spells was negatively
    associated with availability of community-based
    services in a state.
  • Oregon, a state with an extensive community-based
    waiver program, had the smallest percentage of
    enrollees with spells lasting longer than a year.
  • States with significant community-based programs
    tended to have a higher percentage of people
    using community-based services before entering
    nursing homes.

9
What We Know (contd)
  • A related study from the same office found that
  • Institutional and community long-term care
    expenditures were much more balanced among young
    disabled Medicaid enrollees than their aged
    counterparts in 2002.
  • Over half of long-term care expenditures were for
    community-based services among disabled enrollees
    but less than 20 were for community-based care
    among those over 65.
  • Community-based service expenditures as a share
    of total long-term care expenditures ranged from
    50 for people under age 65, 31 for people
    between ages 65 and 74, 21 for people between
    ages 75 and 84, and 13 for those age 85 and
    older.
  • Rates of community-based service utilization were
    higher but followed a similar pattern by age.

10
What We Know (contd)
  • A study of Medicaid-funded HCBS programs in
    Florida covering a 5-year period from 2000 to
    2005 found that all of them were cost-effective
    alternatives to nursing home care.
  • These programs ranged from one-quarter to
    one-half as expensive as the Medicaid nursing
    home program with impairment and caregiver
    resource profiles matching a quarter to one-half
    of the nursing home new entrant population over
    the three-year study period.

11
What We Know (contd)
  • Nursing home admission rates from the HCBS
    programs ranged from 9 to 27 over a (36-month)
    follow-up period.
  • Many more participants died while in the HCBS
    programs (40) than exited for a nursing home.
  • These findings generally provide strong support
    for the relative cost-effectiveness of HCBS
    alternatives to nursing home care.

12
What We Know (contd)
  • Community-residential LTC programs, especially
    assisted living (AL), have become a major (and
    still growing) part of the LTC system in most
    statesbut, mainly (85) private-pay residents.
  • Oregon, Washington and a few other states have
    made AL and adult foster homes major components
    of their public LTC systems.

13
What We Know (contd)
  • Community-residential care has potential to be a
    very cost-effective part of every states LTC
    system and about half as expensive as nursing
    home care (2,000-3,000 a month) and LTC
    consumers clearly prefer them to nursing home
    care, and, in some cases, even in-home care.
  • The AL philosophy of choice, privacy, dignity,
    aging in place, and home-like environment should
    be supported through regulation and sufficient
    reimbursement.

14
What We Know (contd)
  • As HCBS programs expand, nursing home populations
    are likely to become more impaired with more
    acute conditions which will require more and
    better skilled care staff
  • Higher staffing levels are associated with better
    quality care and caregiving outcomes.

15
What We Do in LTC
  • What we do in LTC for the elderly is largely
    inconsistent with what we know about what people
    want in terms of LTC services and about what
    works from a cost-effectiveness perspective.
  • Publicly funded LTC systems are still dependent
    on nursing home care, which is a Medicaid
    entitlement program70 to 80 of all public LTC
    expenditures go to nursing homes on a national
    basis.
  • Nine states, however, are now spending 50 or
    more (70 in Oregon) of their LTC resources on
    HCBS programs and serving over 50 of their LTC
    recipients in the community.

16
What We Do (contd)
  • A substantial majority of the developmentally
    disabled population is now served in HCBS
    programs in over 40 states. A recent analysis by
    the Kaiser Commission (Dec. 2007) found that
  • Despite mounting demand for expanded Medicaid
    HCBS, all states reported using cost controls on
    HCBS waivers in 2006, such as restrictive
    financial and function eligibility standards,
    enrollment limits, and waiting lists.
  • Nearly one-quarter of reporting waiver programs
    used more restrictive financial eligibility
    standards for HCBS waiver programs than for
    nursing facilities.

17
What We Do (contd)
  • Kaiser Commission study (contd)
  • Only 7 waivers used more restrictive functional
    eligibility criteria for waivers than for
    institutional care.
  • The survey also found an increase in the number
    of persons on waiting lists for waiver services.
  • In 2006, 280,176 individuals were on waiting
    lists for 93 waivers in 31 states, up from
    260,916 individuals in 2005 and 206,427
    individuals in 2004.
  • The average length of time an individual spent on
    a waiting list ranged from 13 months for
    aged/disabled and childrens waivers to 42 months
    for aged waivers.

18
What We Do (contd)
  • Even with the declining impairment rates among
    the elderly and an overall improvement in health
    care status, the need for long-term care is
    projected to increase by 50 to 100 over the next
    25 years, which will put a great deal of pressure
    on Medicaid budgets in many states.
  • Thirty to 40 of the Medicaid budget is already
    spent on long-term care services.
  • Creating more balanced long-term care systems by
    expanding HCBS programs and containing the use of
    nursing home care is critical to meeting the
    growth in the need for long-term care services
    over the next two decades.

19
What We Do (contd)
  • Creating more balanced long-term care systems
    will require that policy makers at every level,
    advocates confront several factors that have made
    change slow and limited the influence of the
    Oregon model despite the growing evidence in
    support of HCBS cost-effectiveness and public
    support for community-based care. These factors
    include the following
  • Although public surveys show support for
    community-based alternatives to nursing home
    care, the issue has not achieved much political
    salience. This reflects the fact that advocacy
    efforts for long-term care reform have been weak
    to non-existent in most states and at the
    national level in comparison to the advocacy
    activities of the DD community over the last 30
    yearsand the reluctance to think about LTC.

20
What We Do (contd)
  • 1. (Contd)
  • Oregon is a major exception to this central
    tendency.
  • Several voluntary organizations, especially the
    Retired Teachers Association, played major roles
    in achieving passage of the landmark 1981
    long-term care legislation and supporting steady
    increase in HCBS funding in the following years.

21
What We Do (contd)
  • 2. Policy makers fear of the woodwork effect
    continues to slow the expansion of HCBS programs
    in many states. This fear is based on the
    perception that the HCBS programs are so much
    more appealing than nursing home care that their
    expansion will attract many new consumers and
    eventually make the long-term care budget
    unsustainable.
  • The experience, however, of states with
    relatively balanced long-term care systems should
    assure policy makers that the costs of
    HCBS-oriented long-term care systems can be
    effectively contained through uniform and
    rigorous needs assessment, service planning, care
    management, and the expansion of community-based
    services that cost less than nursing home care.
  • Oregon, after 25 years of HCBS growth, spends
    225 annually per resident on long-term care
    services, which is 75 less than the national
    average and the 11th lowest among the states.

22
What We Do (contd)
  • 3. The aging services agency in most states is
    relatively weak in comparison to the power
    exercised by the state Medicaid office and tends
    to have relatively limited influence on Medicaid
    policy, either administratively or legislatively.
  • Oregon, Washington, and Vermont remain the only
    states where control over the Medicaid long-term
    care budget has been lodged in the state aging
    services agency, which gives it consolidated
    authority to administer all public long-term care
    funds and to make budget decisions and
    recommendations regarding the allocation of
    long-term care resources.

23
What We Do (contd)
  • 3a. This kind of organizational arrangement,
    which is designed to give control of all
    long-term care to the aging network, is one of
    the major reasons Oregon and Washington have been
    able to make such dramatic changes in the
    long-term care system.
  • State Medicaid offices and the Center for
    Medicare and Medicaid Services (CMS) have
    gradually become more supportive of increase HCBS
    funding over the last 15 years, but they have not
    tended to support the kind of qualitative shift
    in funding priorities carried out by Oregon and
    Washington.

24
What We Do (contd)
  • 3b. In the absence of administrative
    consolidation and aging network control of all
    long-term care resources, a few states have
    adopted managed long-term care systems that fold
    all Medicaid long-term care funds under a single
    capitated rate and empower the consumer to make
    decisions about how these resources will be used.
  • - This approach has been used in the Wisconsin
    Family Care program to expand HCBS programs in
    five demonstration sites since 2000 (APS et al).

25
What We Do (contd)
  • 4. The nursing home industry in some states has
    also been a factor in slowing the growth of HCBS
    programs.
  • Nursing homes receive abut 65 billion in
    Medicaid funding annually (2.4 billion in
    Florida), which gives them considerable leverage
    with many governors, state legislatures and
    Congress.
  • Their influence has declined over the last
    several years and some nursing home state
    associations have adopted more sophisticated
    lobbying and public relations strategies that
    include support for increased HCBS funding, but
    only after the annual budget needs of the nursing
    home industry have been met.

26
What We Do (contd)
  • 4a.Aging advocates should keep a close eye on
    recent changes in nursing home ownership patterns
    as large private equity firms (Carlyle,
    Blackstone) have begun to purchase nursing home
    corporations.
  • If anything, these firms are likely to have more
    political influence than the traditional nursing
    home owners and the potential to exercise even
    more leverage over long-term care public policy.

27
What We Do (contd)
  • 4b.Firms may be interested mainly in the real
    estate, which would raise concerns about the
    future availability of nursing home care.
  • Even with the expansion of HCBS programs and the
    evolution of dramatically more balanced long-term
    care systems, nursing homes will remain an
    essential part of the long-term care continuum
    for those with advanced dementia and physical
    impairments and their survival in substantially
    improved form (higher quality of life for
    residents and caregiving staff) is critical to
    achieving and maintaining an appropriately
    balanced long-term care system.

28
What We Do (contd)
  • 5. A fifth factor that may prove to be a barrier
    to the growth of publicly funded HCBS programs in
    the future is the clamor in some quarters for
    private long-term care insurance as an
    alternative to expansion of public coverage for
    long-term care services.
  • The effort to expand the use of private insurance
    is associated with the initiatives designed to
    restrict eligibility and funding for Medicaid
    supported long-term care programs.
  • These initiatives include the recently successful
    effort to extend the look back period for asset
    transfers from three to five years.

29
What We Do (contd)
  • 5a.The rationale for this initiative was the
    claim that many Medicaid long-term care consumers
    are relatively affluent and deliberately
    impoverished themselves to become eligible for
    Medicaid by transferring large amounts of assets
    to relatives and friends.
  • In fact, the most recent study indicates that the
    percentage of Medicaid long-term care consumers
    who have transferred significant assets in the
    last five years is well under five percent.
  • This reflects the reality that most older people
    do not have many assets other than their own
    home.

30
What We Do (contd)
  • 5b.The Kaiser Commission report by Waidmann and
    Liu (2006) recently reported that
  • Our analysis also estimated the maximum number of
    dollars that could possibly be recovered by
    Medicaid if all cases of transferred assets were
    deemed inappropriate and were collected as
    program savings and found that even the most
    aggressive pursuit of transferred assets would
    recover only about 1 percent of total Medicaid
    spending for long-term care.

31
What We Do (contd)
  • 5c.This effort by conservative opponents of
    publicly funded long-term care, and health care
    more broadly, to exaggerate the wealth of the
    elderly is part of a larger campaign to increase
    the number of private long-term care insurance
    policy holders.
  • Only about nine percent of the 60 population has
    long-term care insurance, which currently covers
    about five percent of all long-term care costs.

32
What We Do (contd)
  • 5d. Conservative supporters of President Bushs
    ownership society see long-term care insurance
    as an important vehicle for
  • containing Medicaid costs over the next several
    decades
  • reducing the scope of the U.S. welfare state
  • forestalling any initiative to convert the means
    tested Medicaid long-term care program into an
    entitlement, possibly under the Medicare program
  • forcing younger people to plan and provide for
    their retirement needs and creating another major
    source of profits for the insurance industry.

33
What We Do (contd)
  • 5e. Purchasing private long-term care insurance,
    however, is simply not a prudent strategy for
    most people under age 60 and is largely
    unaffordable for those over age 65.

34
What We Do (contd)
  • 5f. Private insurance is likely to have an
    increasingly important source of long-term care
    funding over the next 20 years for the more
    affluent elderly in need of long-term care,
    covering possibly as much as 20 percent of all
    long-term care costs by 2025.
  • This trend may damper support for moving to a
    long-term care entitlement program, but it is not
    likely to reduce the need for publicly supported
    long-term care under the Medicaid program.
  • The vast majority of Medicaid long-term care
    beneficiaries do not have the income needed to
    purchase long-term care insurance nor many assets
    to protect with insurance.
  • This reality is not likely to change much over
    the next 20-30 years (more on LTC insurance
    later).

35
What We Do (contd)
  • None of these factors, either alone or
    collectively, constitute permanent barriers
    blocking the efforts of states to develop more
    HCBS-oriented systems as the older population
    increases and the need for long-term care grows
    over the next 30 years.
  • The fact that a few states have been able to
    create extensive HCBS systems, and that most
    states have used Medicaid waiver funds to
    increase their HCBS programs substantially since
    1990, clearly indicates that these barriers are
    not insurmountable.

36
What We Do (contd)
  • According to the Congressional Budget Office, the
    Medicaid long-term care program will grow from
    about 100 billion in federal and state dollars
    in 2006 to about 250 billion by 2017.
  • This is generally considered an affordable
    increase over an 11-year period.
  • The fundamental policy issues are how the 150
    billion increase will be allocated between
    institutional and community-based care and the
    extent to which the barriers described above will
    be successfully addressed and the percentage
    spent on HCBS programs will reach levels
    necessary to balance the long-term car system in
    many more states.

37
Closing the Gap and Preparing to Meet the Growing
Need for LTC
  • Maximizing the potential of current funding
    opportunities to create more balanced LTC
    systems, as demonstrated by Oregon, Washington,
    Vermont and a few other states.
  • These model states have used provisions within
    the Medicaid programs (HCBS waivers) to build a
    growing array of cost-effective HCBS programs and
    limit nursing home use, which is treated as an
    entitlement for those meeting financial and
    level-of-need eligibility criteria.

38
Closing the Gap (contd)
  • Most of these model states have created
    integrated organizational structures at the state
    and service delivery levels to administer all
    public LTC resourcesnursing home and HCBS funds.
  • This gives them the capacity to use savings
    generated from reduced nursing home use to expand
    HCBS programs.

39
Closing the Gap (contd)
  • A few states have developed managed LTC programs
    in lieu of integrated administrative
    organizations. These programs are based on a
    capitated rate designed to cover all LTC services
    (NH and HCBS programs).
  • This approach may not be as efficient as
    integrated administrative structures, but they do
    have the potential to facilitate the development
    of more balanced LTC systems by expanding HCBS
    programs.

40
Closing the Gap (contd)
  • The two major models of managed LTC are either
    proprietary HMO-based or operated through the
    non-profit/public sector-based aging networks
    which have existed for over 30 years in most
    states.
  • The proprietary HMO managed LTC model is now
    operational in Texas (STAR Plus program), and
    Florida (Nursing Home Diversion) on an extensive
    scale and to a more limited extent in a few other
    states.

41
Closing the Cap (contd)
  • The Wisconsin Family Care Program is the largest
    aging network-based managed LTC program and is
    expected to be available statewide by 2011.
  • A comprehensive evaluation of the WFC program
    found that the program was generally more
    cost-effective than the states fee-for-service
    community-based program (Community Options) and
    consumer satisfaction levels were very high.

42
Closing the Gap (contd)
  • An evaluation of HCBS waiver programs in Florida
    found that the HMO-dominated managed LTC program
    (Diversion( is a relatively cost-effective
    alternative to nursing homes but less
    cost-effective than the other aging network-based
    HCBS waiver-funded programs.
  • A 1997 evaluation of the Arizona Managed LTC
    System (ALTCS) found that the program has created
    a far more balanced LTC system (50 HCBS) and had
    effectively contained public LTC costs.

43
Closing the Gap (contd)
  • A few states (MN, MA, WI) have developed Medicare
    and Medicaid managed care programs designed to
    integrate acute, chronic and LTC services.
  • These initiatives are based on lessons learned
    from the PACE Medicare/Medicaid program which was
    created over 20 years ago and now operates in
    over 20 states.
  • The relative cost-effectiveness of these
    relatively early-stage programs has not yet been
    clearly established but their potential is very
    promising.
  • Most states, however, may be better served by
    integrating their LTC system before implementing
    Medicare and Medicaid managed care programs.

44
Closing the Gap (contd)
  • Organizational innovations and financing
    strategies based on the more expansive use of
    Medicaid-waiver options should be designed to
    create a wider range of HCBS programs.
  • A more expansive array of HCBS options should
    include consumer-directed care programs like the
    Cash and Counseling program and
    community-residential programs like assisted
    living, especially smaller facilities (16 or
    fewer beds) and adult foster homes (Family Care
    Homes).

45
Closing the Gap (contd)
  • The Cash and Counseling program gives the
    consumer control of funds which she can use to
    organize the kind of LTC assistance she needs in
    the way she chooses, usually by paying her
    caregiver who is usually a relative or friend.
  • An extensive evaluation of the RWJ Foundation
    cash and counseling demonstration projects in
    Arkansas, New Jersey, and Florida found that the
    projects were generally cost-effective in
    comparison to agency-directed in-home programs,
    especially in terms of caregiver and consumer
    satisfaction levels.

46
Closing the Gap (contd)
  • Over 40 states now have some version of
    consumer-directed care, including 12 states with
    new cash and counseling programs. But the
    percentage of publicly supported LTC recipients
    in consumer-directed care programs is still very
    small (probably less than 5).
  • Consumer-directed LTC programs have the potential
    not only to improve the quality of care and life
    of LTC consumers, but also to help address the
    emerging shortage of LTC workers which could
    become severe with the aging of the baby boomers.

47
Closing the Gap (contd)
  • Assisted living has grown enormously since 1990
    (1 million AL residents in 2007), but the
    availability of publicly supported AL is still
    very limited in most states.
  • Oregon and Washington have long demonstrated the
    capacity of AL to help contain nursing home use
    and provide a high quality of LTC assistance to
    impaired persons who can no longer remain in
    their own homes.
  • The demographic characteristics (fewer children
    and spouses) and life style preferences
    (independence and autonomy) are likely to make AL
    a highly preferred option for the baby boomers,
    regardless of their individual financial
    resources.

48
Closing the Gap (contd)
  • Adult Foster Care is a largely neglected LTC
    resource in most states, even though Oregon and
    Washington long ago demonstrated its utility as
    an essential part of both the public and
    privately funded LTC system.
  • Oregon now has over 6,000 adult foster beds
    (8,000 NH beds), 70 of which are filled by
    private-pay residents.
  • An evaluation in Washington found that foster
    homes and small AL residents were highly
    satisfied with their care arrangements which were
    among the least expensive of all LTC programs.

49
Closing the Gap (contd)
  • The instructive examples of Oregon, Washington
    and a few other states with relatively balanced
    LTC systems and the research supporting the
    relative cost-effectiveness of HCBS programs and
    the public preferences for them may not be
    sufficient to speed up the creation of balanced
    LTC systems to the extent needed in the face of
    population aging.
  • The pace needs to be much faster over the next
    ten years than it has been for the last 20 years

50
Closing the Gap (contd)
  • Aging and LTC reform advocates supporting the
    rapid expansion of HCBS programs should form
    advocacy coalitions with labor unions, especially
    those representing caregiving workers like SEIU,
    and retiree organizations the Retired Teachers
    Association, and other organizations of retired
    professionals.
  • State AARP organizations can play a major role in
    such advocacy coalitions without necessarily
    dominating the leadership of the coalitions.

51
Closing the Gap (contd)
  • One major strategy LTC reform coalitions should
    seriously consider pursuing is a legal remedy
    based on the Supreme Court Olmstead Decision and
    its interpretation of Title II of the Americans
    with Disabilities Act and Section 504 of the
    Rehabilitation Act.
  • These laws and the Olmstead Decision would appear
    to require coverage of, as appropriate, LTC
    services in the most integrated
    (non-institutional setting and avoid providing
    unnecessary and unwanted LTC only in
    institutional settings.

52
Closing the Gap (contd)
  • In Florida, where a suit has been filed, the MDS
    data indicate that 26 of nursing home residents
    (half of them Medicaid supported) want to live in
    the community.
  • A recent analysis (Mor, et al., 2007) of MDS data
    from each state found that based on very
    conservative criteria (no impairment in four late
    developing ADLS), between 4 and 15 of nursing
    home residents do not have a level of impairment
    sufficient to justify nursing home placement.

53
Closing the Gap (contd)
  • Full scale maximization of currently available
    Medicaid HCBS-waiver funding opportunities (the
    Oregon and Washington model), however, will not
    be sufficient to meet the level of need for LTC
    services that will be generated by the aging of
    the baby boomers.
  • This strategy can certainly create a far more
    balanced and cost-effective LTC system than most
    states now provide for the Medicaid-eligible
    population needing LTC assistance.
  • This approach, however, will not do much to help
    the large and rapidly growing population of
    non-Medicaid eligible low- to-moderate-income
    elderly with relatively few assets and LTC needs.

54
Closing the Gap (contd)
  • The population of low-to-moderate income elderly
    with LTC needs and without the financial capacity
    to pay for care on their own will grow by several
    million over the next three decades.
  • These people must impoverish themselves (spend
    down) before becoming eligible for
    Medicaid-supported LTC services and Medicare
    provides only a limited home health care benefit
    and up to 120 days of nursing home coverage.
  • Otherwise, this population is wholly dependent on
    informal care, out-of-pocket resources, or
    private LTC insurance, if they are among the 9
    of those 65 who have purchased it.

55
Closing the Gap (contd)
  • LTC insurance can be made more attractive
    (affordable) through more beneficial tax
    treatment (credits) and other kinds of public
    policy support, but its potential to address the
    LTC cost challenge effectively is very limited.
  • Although about three-quarters of the population
    age 35-59 could theoretically afford LTC
    insurance, only half now have adequate savings
    (including home equity).
  • One-third had adequate savings and life insurance
    and only 20 have, in addition, sufficient health
    disability insuranceall of these arguably have
    greater priority than LTC insurance.

56
Closing the Gap (contd)
  • According the National Association of Insurance
    Commissioners (1998), only about 20 of those age
    60 (the population most likely to consider
    purchasing LTC insurance) can afford LTC
    insurance and only 15 of those age 74.
  • Half of the 65 population is already spending,
    on average, over 22 of their income in health
    care costs.
  • This percent is projected to increase to 30
    between 2025 and 2030.

57
Closing the Gap (contd)
  • Given the projected increase in the National
    Retirement Risk Index (NRRI) over the next 30
    years, LTC insurance is likely to prove
    increasingly less affordable over the period.
  • Baby boomers need to do far more to build their
    savings than they need to purchase LTC
    insurancethis task has been greatly complicated
    by the stagnant/declining wages of the last 30
    years.
  • In short, there are many more immediate issues
    that need to be addressed before thinking about
    LTC costs and insurance for most people.
  • Furthermore, LTC insurance is an inherently
    uncertain product in terms of both costs and
    benefits.

58
Closing the Gap (contd)
  • But, LTC needs and costs are major challenges for
    many people and the federal and state
    governmentschallenges that will grow steadily
    for the next several years, putting great stress
    on the fiscal capacities of both individuals,
    families, and government.
  • In the future, the Medicaid program can be
    expected to provide continuing assistance to
    about 10-20 of the population with LTC needs who
    meet the programs stringent eligibility criteria.

59
Closing the Gap (contd)
  • This percentage, of course, will be higher in the
    nursing home population (60) and in states that
    have done the most to extend Medicaid coverage in
    their waiver-funded HCBS programs.
  • LTC insurance may cover a substantial portion of
    the LTC needs of another 10-20 of the population
    requiring assistance who can afford the premiums.

60
Closing the Gap (contd)
  • This will leave at least 50-60 of the population
    with LTC needs that will have to be met through
    out-of-pocket spending and dependence on the
    shrinking availability of informal care.
  • This is a recipe for the growth of unmet LTC
    needs.

61
Closing the Gap (contd)
  • Several European countries are confronting these
    realities years ahead of the U.S. because their
    populations are aging more rapidly.
  • And several of them have begun implementing
    social insurance systems to fund the provision of
    universal LTC services with a focus on HCBS
    programs (Germany, Austria, Denmark,
    Scandinavia).

62
Closing the Gap (contd)
  • Aging and health care reform advocates and policy
    makers in the U.S should begin now to press for
    serious consideration of a social insurance-based
    LTC system informed by the experiences of the
    European countries.
  • Current assessments indicate that implementation
    of social insurance-based LTC programs in Europe
    will increase LTC expenditures from 0.5/1.0 of
    GDP to between 1 and 3 of GDP.

63
Closing the Gap (contd)
  • Advocates, policy makers, and the media should
    begin now to hold a national conservation
    focusing on whether the future long-term care
    financing partnership should rest on a private or
    public foundation.
  • Analysis tells us that policy changes can improve
    and extend private insurance.
  • But its benefits will inevitably be limited to
    the top tier of the income distribution it has
    little potential to spread risk for the rest.

64
Closing the Gap (contd)
  • Even if it is accompanied by a universal public
    catastrophic benefit, a strategy grounded in
    private insurance will enhance protection
    primarily for older people with higher incomes,
    leaving most older people and all younger people
    with disabilities at considerable riskor
    dependent on the safety net if they need
    substantial care.
  • Making private long-term care insurance policies
    better for those who can afford them makes sense,
    but making it the centerpiece of the nations
    long-term care policy does not.

65
Closing the Gap (contd)
  • Making LTC needs and costs an essential part of
    the debate over the future of U.S. health care
    will help raise the consciousness of the American
    people and their policy makers regarding the
    relationships among
  • foreign policy goals and military spending
  • fiscal policy (tax cuts and deficits
  • the future viability of the major entitlement
    programs (Social Security, Medicare, and Medicaid
  • emerging domestic challenges like LTC needs,
    costs, and the capacity of impaired persons to
    cover these costs on their own.

66
Closing the Gap (contd)
  • Will the electorate continue to support a
    political agenda designed to undermine current
    public programs, like Medicare, and preclude new
    programs, like universal LTC and social
    insurance, through starve the beast strategies
    based on increasing military budgets and growing
    deficits?
  • These are fundamental quality-of-life issues that
    profoundly affect all but the most affluent.
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