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Long-Term Care

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What is long-term care?

Long-term care (LTC) refers to an array of medical and social services that are provided over a prolonged period of time to people with disabilities, people with chronically illnesses and frail elderly. People who need LTC services generally have one or more limitations in one or more activities of daily living, including eating, walking, bathing, transferring to and from a bed or a chair, dressing and using the toilet.

LTC services can be provided in a variety of settings - in institutions (e.g., skilled nursing facilities [SNFs] or intermediate care facilities for the mentally retarded [ICFs/MR]); in the community (e.g., assisted living facilities, adult foster homes, adult day services and senior centers); or in private homes. LTC encompasses a wide range of services, including skilled nursing care, case management, personal care, home health care, chore assistance, transportation, meals, respite care, home modifications and social services. Services may be needed on a regular or occasional basis and may be provided over a period ranging from a few months to a lifetime. l

Who needs long-term care services?

LTC is typically is associated with growing old. However, people of all ages need LTC services. Generally, people who need these services are those who are functionally impaired-that is, unable to perform one or more activities of daily living, as described above. Many people with developmental disabilities, people with severe physical disabilities, people with mental illness and the elderly use LTC services.

Moreover, the number of people who need LTC services is expected to increase rapidly during the next several decades as advances in medical technology, healthier lifestyles and a cleaner environment combine to extend lifespans. People age 85 and older constitute the fastest growing population in the United States; they are expected to increase from 4 million in 2000 to 19 million by 2050, foreshadowing an ever-growing need for LTC services. As people age-particularly when they reach their 80s and 90s-their ability to manage everyday activities diminishes.

Millions of vulnerable Americans continue to live on their own in homes and communities, often going without needed services. Several factors account for that reality. First, skilled nursing care is costly, which means that many people cannot afford these services. Second, many people live in areas that are poorly served by health and LTC providers. Finally, most people view nursing homes as undesirable, fearing impersonal care and loss of independence. l

How is long-term care financed?

LTC is financed through a combination of public and private resources, including Medicaid, Medicare, private LTC insurance and out-of-pocket funds (see figure 1). Contrary to popular belief, however, Medicare, Medicare supplemental insurance, major medical insurance provided by most employers and long-term care insurance do not cover the bulk of long-term care expenses. Medicare will cover the cost of some skilled care in approved nursing homes or in the home, but only for expenses resulting from acute care episodes rather than from chronic disabilities. Likewise, fewer than one in 10 seniors owns a long-term care insurance policy.

Medicaid, financed jointly by the federal and state governments, is the nation's primary public payer of LTC services. Approximately one-third (35 percent) of total Medicaid expenditures go for LTC services. It covers the cost of care for roughly two of three nursing home residents.

Interestingly, the elderly, blind and disabled constitute just over one-quarter of beneficiaries but consume almost 70 percent of total Medicaid spending. By contrast, adults under age 65 and children make up nearly three-quarters of Medicaid beneficiaries but account for less than one-third of Medicaid spending. This is due primarily to the fact that per beneficiary spending is about six times greater for the disabled and seven times greater for the elderly than it is for children (see figure 2).

Obviously, these populations require greater amounts and more intensive levels of care than the general population. Annual costs for nursing home care average about $46,000. Unlike private health insurance, Medicaid is a means-tested program that provides assistance only when financial resources are substantially exhausted. Many individuals enter nursing homes and pay for their own care. However, over a period of months or years, income and assets eventually are depleted or "spent down" and people then qualify for Medicaid. (Estimates indicate that this situation occurs for as many as one in four nursing home residents.)

About three-fourths of Medicaid spending on LTC is for institutional services with a large percentage going toward nursing home care. During the past decade, however, the percentage of Medicaid spending on institutional care has decreased and more funds have been allocated to home and community-based services.

Medicaid has played an important role in the increase in home and community-based LTC services. It pays for skilled home health care in all states, and more than half the states have elected to cover the optional benefit of personal care in the home under Medicaid. In addition, every state has federal waivers to design programs that provide a wide range of home and community-based services that include adult day care, personal services, homemaker services and respite care. However, the populations that are eligible for these benefits (e.g., the elderly or developmentally disabled) and the types of services offered (e.g., adult day care or assisted living) vary significantly by state. l

How are long-term care services delivered?

Although many people tend to equate LTC with nursing home care, 78 percent of older Americans in need of LTC live in non-institutional settings, and family members and friends provide the majority of services. Adult day care, personal care and home health services-that provide respite for unpaid family caregivers-are other important components of community LTC services.

According to the latest count, about 1.5 million Americans reside in nursing homes. Reporting on trends of the last decade, the 1995 National Nursing Home Survey shows only a small increase in the number of nursing home residents compared with earlier years, and a decrease in the ratio of nursing home residents to the general population-an indication that older Americans are not entering nursing homes at the rate they once did.

At least part of the trend can be attributed to the astonishing growth in home health care agencies and home and community-based care settings. People who need LTC have access to a variety of community-based settings, from adult foster homes and board and care homes to continuing care retirement communities and assisted living facilities. These settings combine housing with social supports for people who are unable to remain independent in their own homes but who do not require the around-the-clock skilled nursing provided in nursing homes.

With all the LTC options available today, many older people in need of assistance still continue to face significant barriers to obtaining such services. Many are unaware of the options available to them through private and public programs and have difficulty finding the information they need and paying for the services. In addition, services often are fragmented among a variety of public and private agencies. This makes it more difficult for consumers to gain access to the services. l

What is the Olmstead Supreme Court decision, and how will it affect people who need long-term care?

In June 1999, the Supreme Court ruled in L.C. & E.W. vs. Olmstead that states may not discriminate against persons with disabilities-including persons with developmental disabilities, persons with physical disabilities, persons with mental illness and the elderly-by providing services in institutions when the individual could be served in the community. States are required to provide community-based services for persons with disabilities if 1) treatment professionals determine that it is appropriate, 2) the affected individuals do not object to such placement, and 3) the state has the available resources to provide community-based services. The Court suggests that states demonstrate that they have a comprehensive, effective working plan-including timetables and progress reports-for placing qualified people in less restrictive settings. States that maintain waiting lists for community-based services must make a good faith effort to move people on the list to community programs at a reasonable pace.

In light of this ruling, many states have task forces or work groups that are attempting to assess the need and the supply of services and thus develop a plan. At the same time, several lawsuits are pending that may clarify the scope and breadth of the decision. At this point in time, therefore, it is not possible to determine the fuel effects of the Olmstead decision. One possible outcome is that the Olmstead decision may accelerate state efforts to provide community-based services for disabled people. l

What options are available to legislators who are seeking to reform their state's long-term care system in their respective states?

State legislators across the country are using multiple, incremental strategies to improve the financing and delivery of LTC services. Options include the following.

Consolidate state agencies. In most states, a variety of agencies administer LTC services, resulting in delivery structures that are fragmented, duplicative and difficult for consumers to negotiate. To reduce redundant services and confusion, state legislators could designate a single state agency to take responsibility for all LTC services and financing. Such consolidations typically involve transferring programs like the Medicaid home and community-based waiver programs from an agency that handles Medicaid-supported services to the state department on aging.

In 1981, Oregon became the first state to move toward consolidation with the creation of the Senior Services Division (renamed the Senior and Disabled Services Division in 1989, when the agency assumed administration of programs for both the elderly and adults with disabilities). Kansas is among a group of states that have more recently consolidated LTC services. In 1997, it began a transfer from the Department of Social and Rehabilitation Services to the Department on Aging of nursing home programs, Medicaid waiver programs and a state-financed home and community-based care program for people who are not eligible for Medicaid.

Create single points of entry. To make it easier for consumers to obtain information and services, state legislators could encourage the creation of single points of entry at the local level. These agencies would provide screening, assessment and case management to determine the most appropriate services for those with disabilities. The single point of entry may be county offices, area agencies on aging or nonprofit social service agencies that contract with the state to provide information and coordinate services.

Colorado began phasing in a single point of entry system in 1993; the system was implemented statewide in 1995. Each district within the state-encompassing one or more counties-chooses the agency it wishes to designate as the single point of entry: a county, social services agency or other entity. Those agencies then broker Medicaid and state-funded programs for clients. New Jersey also has established a county-based system called NJ EASE (Easy Access Single Entry).

Increase home and community-based services. Helping low-income older and disabled people to remain at home and in the community when that option is appropriate is a common state strategy. To expand the availability of home and community-based services, state legislators could consider the following strategies.

· Offer optional Medicaid services or expand their scope. Although they are required to provide coverage of home health services under Medicaid, states can offer a range of optional Medicaid services, from prescription drugs to assistive technology. The most important of the optional services that affects LTC is personal care, which typically includes assistance with daily activities. As of 1995, 31 state Medicaid programs offered coverage of personal care although the conditions under which it is offered vary greatly.

· Expand existing Medicaid home and community-based waiver programs. Under the programs, the federal government waives certain Medicaid requirements, allowing states to design home and community-based programs for specific populations such as seniors or people with mental retardation or other developmental disabilities. Waivers allow them to cover different types of services-chore assistance, for instance-that are not covered under the traditional Medicaid program. States also have more flexibility under waivers to set higher financial eligibility limits, for example, by using the higher income levels allowed for applicants for Medicaid nursing home coverage. To receive approval from the Health Care Financing Administration, a state must prove that its waiver program is cost-effective. Except for Arizona, which provides such coverage through a broader Section 1115 waiver, all states have home and community-based waiver programs, although they generally encompass a small portion of the Medicaid recipients who are in need of LTC services.

· Authorize spending of general revenues for home and community-based programs. In addition to Medicaid-supported programs, several states-California, Florida, Illinois, Indiana, Massachusetts, Pennsylvania and Wisconsin-have state-funded home and community-based programs. Policymakers in these states have chosen to appropriate state funds because these programs reach near-poor individuals-those who are poor but not poor enough to qualify for Medicaid-and are tailored to meet their needs, instead of prescribed benefit packages.

Promote personal responsibility through private LTC insurance. As of August 2000, 23 states now provide either tax credits or tax deductions to stimulate the purchase of LTC insurance policies. However, premiums are high for people over age 65, particularly for policies that are not limited only to nursing home care and that include inflation protection and nonforfeiture of benefits. Without nonforfeiture of benefits, subscribers who buy but later give up an LTC insurance policy do not retain rights to any coverage, regardless of the amount of time they held the policy or the amount of money they spent for it.

Develop demonstration projects to experiment with managed long-term care. Throughout the 1990s, states moved to enroll Medicaid beneficiaries-mainly women and children-into managed care plans. Many state policymakers are planning to transfer their sicker Medicaid populations into managed care. The move has been spurred by concerns about the high cost of Medicaid for older and disabled recipients, although the degree to which costs can be contained by shifting these recipients into managed care remains an open question.

Source: American Council of Life Insurance, Health Policy Tracking Service, 2000.

Some states-including Colorado, Florida, Minnesota, Texas, Virginia, Washington, Wisconsin and a New England consortium of states-are developing demonstration projects to test the integration of acute and LTC services for those who are eligible for both Medicare and Medicaid (the so-called "dual eligible" population who number about 6 million). By eliminating the cost-shifting that currently occurs between the two programs and the inherent inefficiencies of two separate systems operating under different rules for the same people, policymakers hope to integrate care to save money and improve care delivery.

Enforce and improve quality of care standards. The single most important determinant in any long-term care setting is the direct care staff. However, there is a severe shortage of nursing aides and attendants-the 2 million frontline workers who provide up to 90 percent of hands-on care in nursing homes and other settings, including private homes. According to the U.S. Department of Labor's Bureau of Labor Statistics, nursing homes will need 600,000 new aides by early in the next decade. On top of that, turnover for nursing assistants has been estimated to be 100 percent nationally.

Responding to the crisis, state legislatures have set staffing standards and raised wages. To date, more than 35 states have established minimum staffing levels beyond the federal requirement. Federal rules set baseline staffing requirements for registered nurses and licensed professional nurses-but not certified nurse aides-in nursing homes. These states have set additional requirements for ratios of direct care workers or hours of care per resident. However, minimum staffing ratios are controversial. Raising wages has been less so. To that end, at least 16 states have adopted "wage pass through" laws, which raise Medicaid reimbursement for LTC providers, earmarking all or some of the increase to wages and benefits.

Encourage family caregiving. Family caregivers are the backbone of the LTC system. Without them, many Americans would enter institutions for care, and the government would pay for larger portions of their care. Many policymakers realize the cost savings that family caregivers provide and, as a result, many states have created public programs to assist them. States have increased their respite care programs, both as state-funded individual programs and as part of a series of benefits provided under Medicaid home and community-based waiver programs. Respite care-such as adult day care, short stay programs in nursing homes and attendant care in private homes-provides a temporary break from caregiving responsibilities. It is perhaps the one service caregivers request most often. Several states also have developed some form of caregiver assistance. California, New Jersey and Pennsylvania, for example, offer comprehensive caregiver assistance services.

Pennsylvania's Family Caregiver Support Program annually assists more than 6,000 caregivers of functionally dependent older adults as well as people of any age with an organically based mental illness. Administered by the state Department of Aging, the program provides up to $200 per month in respite and chore services, with a lifetime cap of $2,000 for home modification as well as an assessment of both caregiver and care recipient, counseling and caregiver training. The program is funded at $10 million in state general funds. l

Glossary

Activities of daily living (ADLs): Eating, walking, bathing, transferring to and from a bed or a chair, dressing and using the toilet. People who need LTC services generally have one or more limitations in activities of daily living.

Home and community-based services (HCBS): long-term support services-such as personal care, chore assistance, case management, home modifications, adult day programs and respite care-to help people live at home or in the community.

Intermediate Care Facilities for the Mentally Retarded (ICFs/MR): Residential facilities for people with mental retardation and developmental disabilities.

Long-term care (LTC): An array of medical and social services that are provided over a prolonged period of time to people with disabilities, people with chronically illnesses and frail elderly people.

Long-term care insurance: These private policies address some of the gaps and limitations found in both Medicare and Medicaid LTC coverage. They pay a set amount over a specified period for each day a policyholder uses a covered service and typically are purchased by individuals with modest to significant assets who wish to protect such capital from potentially devastating nursing home or home health costs. There is considerable variation, however, among policies in terms of coverage, the amount payable per day, the premiums charged, exclusions of certain injuries or illnesses from coverage and length of the benefits.

Skilled Nursing Facilities (SNFs): Nursing homes. l

STAFF CONTACT:

OTHER SOURCES:

The Administration on Aging (AoA) has an excellent web page that has a wide range of statistics on senior citizens, people with disabilities and long-term care at http://www.aoa.gov/aoa/stats/statpage.html The AoA site also has an extensive collection of links organized by topic, at http://www.aoa.gov/agingsites/default.htm

The Health Care Financing Administration (HCFA) has a wealth of information on community-based long-term care. Highlights include http://www.hcfa.gov/medicaid/ltchomep.htm, a collection of links to policies, state profiles and data sources on Medicaid long-term care services.

The Office of Disability, Aging and Long-Term Care Policy has an extensive collection of reports, research and data sets available through its web site at http://aspe.hhs.gov/daltcp/

Other good sources of information include The Robert Wood Johnson Foundation at http://www.rwjf.org; the Urban Institute at http://www.urban.org; the Kaiser Family Foundation at http://www.kff.org; the Family Caregivers' Alliance at http://www.caregiver.org; and Elder Web at http://www.elderweb.com.

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