Transcript Definition of Long Term Care

What is Long Term Care?
Kathleen King
VP for Health Policy
February 20, 2004
Definition of Long Term Care
• Care provided on a regular basis for three months
or more that includes:
• Help with daily activities such as shopping,
cooking, taking medications;
• Help with personal care tasks such as bathing or
dressing; or
• Help with nursing care such as monitoring blood
pressure or side effects of medications.
Long Term Care Care can be Provided
• At home by family members or paid staff;
• In an assisted living facility; or
• In a nursing home
Long Term Care as a Percentage of
Personal Health Spending, 2002
Total Personal Health Care Expenditures, billions ($1,304.2)
Physican and Clinical
Services (339.5)
25%
Other Professional
Services
($162.0)
12%
LTC: Nursing Home
and Home Health
($139.3)
10%
Prescription Drugs
($162.4)
12%
Hospital Care ($486.5)
37%
Other Retail Outlet
Sales of Medical
Products
($50.5)
4%
Sources of Long Term Care Spending
LTC: Nursing Home and Home Health Care Total, 2002, billions ($139.3)
Nursing Home Care Total ($103.2)
Federal &
State
Medicaid
($50.9)
51%
Home Health Care Total ($36.1)
Other Public
($2.2)
2%
Out-ofPocket
($25.9)
26%
Medicare
($12.9)
13%
Private
Health
Insurance
($7.7)
8%
Federal &
State
Medicaid
($8.4)
24%
Medicare
($11.4)
32%
Other
Public
($2.0)
6%
Out-ofPocket
($6.5)
19%
Private
Health
Insurance
($6.7)
19%
Spending for Long Term Care
Understated
• 65 percent of the elderly who need assistance
with daily activity rely exclusively on friends and
family
• Another 30 percent rely partially on informal
care
• Economic value of unpaid care is about $200
billion a year
Americans with Long Term Care Needs
Nursing Home
Residents
65 and Over
(1.5 million)
15%
Nursing Home
Residents
Under 65
(.16 million)
2%
Total = 9.5 million
Community
Residents
Under 65
(3.4 million)
36%
Community
Residents
65 or Over
(4.5 million)
47%
Under 65 (3.5 million) 38%
65 and Over (6 million) 62%
Demographics of the Baby
Boom Generation
• In 2000, 13 percent of the population was over
age 65
• By 2030, 20 percent of the population will be
over age 65
Life Expectancy is Increasing
• Compared to 1900, life expectancy for men age
65 in 1990 has increased by 4 years
• For women age 65 in 1900, life expectancy has
increased 7 years for women age 65 in 1990
• Since 1950, the mortality rate has declined nearly
1 percent a year
Family Patterns Are Changing
• In 1960, only 19 percent of elderly people lived
alone
• By 1990, 31 percent of the elderly lived alone
Higher Divorce Rates
• By age 40, only 15 percent of those born
between 1925 and 1934 had divorced
• For those born between 1945 and 1954, 31
percent of men and 34 percent of women had
divorced
Lower Birth and Disability
Rates
• In the late 1950s, women had an average of 3.5
children, compared to 1.8 in the late 1970s
• Since the mid 1980s, dependence rates among
the elderly have declined between 1 and 2
percent a year
Lower Percentage of Elderly in
Nursing Homes
• 5.4 percent of elderly lived in nursing homes in
1985, but only 4.6 percent in 1995 – an annual
decline of .7 percent a year
Growth in Need for Long Term
Care Services
• Olmstead Decision – shift in long term care
settings from institutions to community settings
• Need for long term care services may increase
between 2 and 4 times the current number
Lack of Understanding
• 31 percent of persons over age 45 said they had
purchased ltc insurance in 2001
• 27 percent of persons ages 32-52 said they had
ltc insurance in 1998
• Fact: Only 5.8 million ltc insurance policies in
force in 2001
Lack of Understanding, Take 2
• 35 percent said Medicare is the primary source of
payment for nursing home care
• In another survey, 30 percent said that Medicare
pays the expenses of people with Alzheimer’s
Disease
Lack of Understanding, Take 3
• 66 percent said the average annual cost of a
nursing home is $25,000 in 2001
• Fact: Average annual national cost of nursing
home care is $57,000
Dissatisfaction with Current System
• Clear preference to remain in own home and
avoid nursing homes
• 45 percent of baby boomers have unfavorable
views of nursing homes
• 29 percent of seriously ill people said they would
rather die than enter a nursing home
CBO’s Federal Fixes
•
•
•
•
Reduce the Overall Federal Contribution
Reduce Mandatory Benefits or Restrict Coverage
Increase Costs Shared by Beneficiaries
Encourage the Use of Lower-Cost Services
Dire State Fiscal Conditions,
FY 2001-2003
• Since 2001, state revenues have fallen, Medicaid
spending has increased, and Medicaid has been
the target of budget cuts
• States reduced provider payments, restricted
eligibility and benefits and increased copayments
Federal Estimates of Medicaid
Spending Growth
•
•
•
•
7.5 percent in 2003 (projected)
11.7 percent in 2002
9.5 percent in 2001
Enrollment growth slowed from 5.9 percent in
2002 to 3.9 percent in 2003
FY 2004 - Fiscal Conditions
Brighten Somewhat
• Congress provided $20 billion in temporary relief,
through June 2004
• Falloff in State revenues began to ease
• States estimate that total Medicaid spending growth will
slow to 8.2 percent in 2004, compared to 11.9 percent
from 2000-2003
• Still, 49 States and D.C. plan further cost containment
this fiscal year
What About the Future of
Long-Term Care?
•
•
•
•
Not necessarily all doom and gloom
Redefine dependency as those over age 75
Declining disability rates
What happens to the economy?
Designing a Long-Term Care
System for the Future
• Increase public recognition of long-term care as a
problem
• Baby boom generation drives a different definition of
the problem
• Redesign the accidental financing system to take some
pressure off Medicaid, reallocate burden
• Consider separating housing from care needs
• Consider more housing options using tax incentives
Vision for the Future
• Consider other financing sources, including
social insurance and private insurance
• Consider separating housing from care needs
• More housing options through tax incentives
• Focus on maintaining independence