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.