Cynthia K. Wrona

HSM410 Policy Paper:

The Impending U.S. Long-Term Care Crisis

Professor Alan Fowler

August 26, 2006

The Impending Long-Term Care Crisis

I. Introduction

There is a crisis looming on the U.S. health care horizon. It is the impending long-

term care crisis. By the year 2030, there will be 70 million U.S. citizens age 65 and

older. 5.2 million of them will be over age 85 with a severe disability requiring long-

term care. (Bodenheimer & Grumbach, 2005) Only those who are either penniless, very

wealthy, or covered by long-term care insurance will be able to afford the care they need.

According to the Health Insurance Association of America, “more than 82 million

Americans over the age of 45 do not have any financial protection against the potentially

impoverishing impacts of long-term care.” (mrltc.com) To that end we must raise

awareness of, and enrollment in, long-term care insurance plans.

The other consideration in this crisis though is that, with the aging of our population,

the healthcare workforce will not be prepared to support the crush of this impending

patient load. Patients, hospitals, insurers, caregivers, AARP, the U.S. Senate Special

Committee on Aging; these are all key players in this healthcare dilemma, working

feverishly to develop plausible solutions to the problem before it is too late.

II. Policy Goals

The goal of these players is clear: raise awareness of the issue now in order to ensure

better protection of our citizens and our healthcare system in the future. The first step in

that regard is to expressly define the types of long-term care and the limitations of their

coverage. Long-term care is a misunderstood and often misinterpreted term. Specifically,

(APA format used)

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The Impending Long-Term Care Crisis

“Long-term care includes those health, social, housing, transportation, and other

supportive services needed by persons with physical, mental, or cognitive limitations,

sufficient to compromise independent living”. (Bodenheimer & Grumbach, 2005) That

refers to activities such as bathing, dressing, meal preparation, and eating, which are

termed “activities of daily living” (ADL). The U.S. Senate Special Committee on Aging

adds that, “It differs from other types of health care in that the goal of long-term care is

not to cure an illness, but to allow an individual to attain and maintain an optimal level of

functioning….” (caregiver.org) It is a common misconception that most people are

covered for this type of care through Medicare or Medicaid. If a patient has “spent

down” all their assets in order to qualify for Medicaid coverage, then only nursing home

care would be covered and only at a rate of approximately 43%. (Bodenheimer &

Grumbach, 2005)

The typical cost for a nursing home by the year 2020 will be $336 per day (that’s

$122,640 per year). (nursingworld.org) Nursing home conditions are that of “close

quarters where dementia abounds, [being] totally dependent upon underpaid,

inadequately trained staff where the lack of independence and companionship leads to a

sense of futility and a very poor quality of life”. (Bodenheimer & Grumbach, 2005)

Medicare, on the other hand, is quite the opposite of basic nursing home care. It covers

only skilled care like wound dressings and speech therapy, for example. Therefore, it

does not cover long-term ADL care. Medicare covers only approximately 17% of all

long-term care costs in the U.S. “Medicare was never designed to pay for long-term care

and custodial services. The limited scope of Medicare coverage is a problem now and

will be a greater problem in the future.” (nursingworld.org)

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The Impending Long-Term Care Crisis

New legislation by the U.S. Senate Special Committee on Aging reinforces notion

of the limited scope of Medicare: “As our nation’s population ages, our ability to pay for

programs such as Medicare and Medicaid will be stretched to the limit…We must begin

to educate the public about the importance of planning for long-term care to ensure future

generations of retiring Americans are able to meet their health care needs.”

(aging.senate.gov). Abysmal Medicaid and Medicare statistics alone should be enough to

peak the concern of U.S. citizens.

A third type of coverage for long-term care is that of private long-term care

insurance. According to The American Society on Aging, “…each person who purchases

a long-term care insurance policy saves the federal government about $6,600 in future

spending - $5,000 for Medicaid, and $1,600 for Medicare.” (mrltc.com) This type of

coverage should be purchased at a younger age (40’s or 50’s) since the premiums are

experience-rated. That means older Americans will pay the highest premiums and, since

they normally live on a fixed income, they usually cannot afford them. The problem is

that younger people see old-age as such a long way off that they don’t think they need

this type of coverage.

Long-term care coverage plans can include things like benefits for adult day care,

respite care, and custodial services such as personal care, homemaking, and chore

services. Care can be provided in a nursing home, in an assisted living facility, or most

importantly, at home. This is one area where awareness must be raised since currently,

this type of coverage finances only 10% of all long-term care costs in the U.S.

(Bodenheimer & Grumbach, 2005) Financial Planner, Jeffrey D. Voudrie states that,

“ignoring the potential need for LTC [insurance] is the wrong decision…many families

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The Impending Long-Term Care Crisis

are already finding themselves caught in the nightmare of having to provide care that isn't

covered by insurance or the government. This problem will not go away, as the

government is likely to cover even less care in the future. [Voudrie] advises families to

take action now." (ezinearticles.com) Reverse mortgages and accelerated death benefit

riders on life insurance policies are other ways to finance long-term care. Which ever

method is used to finance it, Barbara Edlund of Nursingworld.org sums it up best by

saying, “There isn’t enough money for any type of public program, or expansion of

existing programs, to pay for long-term care for everyone; and that long-term care is a

personal responsibility that requires planning ahead.” (nursingworld.org)

Yet another factor in this impending crisis is the effect it will have on the

workforce of our healthcare system. With the aging of our population, the number of

citizens who will require long-term care is preparing to skyrocket. The number of the

people in the workforce, on the other hand, will be shrinking. Harvard University JFK

School of Government poses the question, “Who will care for us?” (harvard.edu) “Long-

term care providers report unprecedented vacancies and turnover rates for

paraprofessional workers. Increasingly, the media, federal, and state policymakers and

the industry itself are beginning to acknowledge the labor shortage crisis and its

potentially negative consequences for quality of care and quality of life.” (harvard.edu)

According to the Online Journal of Issues in Nursing, “The number and

proportion of older Americans are rising rapidly and are expected to increase into the

middle of the 21st century. These changing demographics will have a tremendous impact

on the delivery of health care.” (nursingworld.org) Furthermore, The Urban Institute, a

social policy research organization states, “The severe shortage of nursing assistants,

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The Impending Long-Term Care Crisis

home health and home care aides, and other paraprofessional workers is the primary trend

influencing the current wave of concern about the long-term care workforce. National

data on turnover rates…suggests that turnover rates average about 45 percent for nursing

homes and about 10 percent for home health programs, while other data place average

annual nursing home turnover at over 100 percent a year. High rates of staff vacancies

and turnover have negative effects on providers, consumers, and workers: The cost to

providers of replacing workers is high; quality of care may suffer; and workers in under-

staffed environments may suffer higher rates of injury.” (urban.org) Even if we found a

solution to the financial aspect of the long-term care dilemma, it would be meaningless

without a resolution to the workforce aspect of the crisis.

III. Solution Proposals

So what is the solution? There are actually several solutions required to alleviate

these problems. We should begin in the customary place; with the individual. It is each

individual’s responsibility to protect themselves – and their loved ones – for the future.

We cannot depend upon the government for help in this arena. We must educate

ourselves. We should explore the long-term care coverage options available and make

the investment now. Time is money in this regard for the longer we wait, the higher the

rates will be.

Secondly, let’s expand upon Medicare coverage to include not only skilled at-

home care, but custodial ADL care, as well. That way all the grown children that would

be willing to quit their jobs to stay home and take care of aging parents would be able to

do so. There are options such as “consumer directed home care” whereby these care-

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The Impending Long-Term Care Crisis

givers could be paid a salary, allowing them to quit their jobs. (urban.org) This would

benefit the patients, who have much greater outcomes when cared for at home, it would

be less of a strain on the healthcare workforce, and it would also be less expensive than

other options.

IV. Policy Analysis

AARP has begun a strong push to advocate community based long-term care

services to help alleviate the problem. The first two items on their 2006 State Budget

Legislative Agenda are “Funding of key long term care programs, especially those related

to community based care services, and, Funding for the Long Term Care ombudsman

program”. (aarp.org) As a result of their Family Caregiver Focus Groups, AARP in my

home state of Georgia has expanded its respite, community care (CCSP), transportation,

and emergency back-up services for family caregivers. (georgia.gov) Perhaps local area

hospitals might take their cue from AARP and mirror this program in all states.

A more broad-range version of the community based program is the San

Francisco-based On Lok program. On Lok (which is Chinese for “peaceful, happy

abode”) was the first organization ever in the U.S. to assume full financial risk for care of

the elderly using capitation payments from Medicare and Medicaid. The On Lok system

integrates total care of patients with services like: “adult day services, in-home care,

home delivered meals, housing assistance, comprehensive medical care, respite care for

caregivers, hospital care, and skilled nursing care”. (Bodenheimer & Grumbach, 2005)

On Lok accomplishes all this for approximately one-third the usual cost of health care

expenditures and only 15% of their patients ever spend time in a nursing home.

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The Impending Long-Term Care Crisis

(Bodenheimer & Grumbach, 2005) This program should be widely replicated across the

country.

Finally, we should develop incentives to attract people to the health care

workforce and keep them there. As stated above, the turnover rate, especially in the

nursing home environment, is staggering. This is due, in part, to the stigma of the job.

“One important influence on individuals’ decisions to enter and remain in the long-term

care field is how society values the job. Frontline worker jobs in long-term care are

viewed by the public as low-wage, unpleasant occupations that involve primarily maid

services and care of incontinent, cognitively unaware old people. This image is

exacerbated by media reports that feature poor quality care by providers.” (urban.org)

Possible ways to overcome this problem might be to make the job more appealing or ease

the hiring restrictions. “One major policy issue for workforce development is the extent

to which states allow nursing assistants to perform certain tasks currently performed by

nurses (e.g., administering medications or providing wound care). Giving frontline

workers added responsibility and autonomy may motivate them to remain in the job or

encourage others to seek these positions. Given the current labor shortage and gloomy

projections about the future pool of workers, many providers have expressed interest in

immigration as a tool for expanding the potential labor pool.” (urban.org)

V. Conclusion

Other programs such as tax incentives, flexible spending account changes, and

life-care annuities can also make a change. All of these programs implemented together

would greatly improve the U.S. healthcare system. However, if we had to choose only

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The Impending Long-Term Care Crisis

one of these options, short of implementing a universal system of healthcare coverage, I

would propose wide expansion of the On Lok system. If they can care for so many

citizens, with such thorough horizontal integration, for such a low cost with such good

results…well are those not the very goals we seek for a successful health care system?

The On Lok system also succeeds where the other suggestions do not. In comparison to

the long-term care insurance suggestion, most people can afford the On Lok system,

where many cannot afford long-term care insurance. In comparison to the “custodial

care” option, not everyone has family members nearby or with the ability to care for them

at home. In comparison to the AARP initiatives, their goals are positive ones but the

success of those goals is yet to be determined. Finally, the workforce suggestions are

also important. However, if the On Lok system is as successful as it appears, it will

automatically attract a higher quality, and quantity of new people to the healthcare

workforce, thereby alleviated the shortage of workers.

So there you have it. Crisis diverted. Let us subscribe wholly to the On Lok

system of “peaceful happy abodes” and say farewell to the notion of the “tragedy of

chronic illness compounded by the failure of our nation’s healthcare system to meet our

needs”. (Bodenheimer & Grumbach, 2005).

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References

Bodenheimer, T.S., & Grumbach, K. (2005). Understanding health policy (4th ed.). New

York: McGraw-Hill.

Edlund, B., Lufkin, S., Franklin, B., (2003). Long-term care planning for baby boomers:

addressing an uncertain future. Online Journal of Issues in Nursing. Vol. #8 No.

#2, Manuscript 2. Retrieved August 20, 2006 from

www.nursingworld.org/ojin/topic21/tpc21_2.htm

Smith, G.H. (2006). Americans must better prepare for long-term care needs. Press

Releases and Articles. Retrieved August 19, 2006 from the World Wide Web:

http://aging.senate.gov/public/index.cfm?

FuseAction=PressReleases.Detail&PressRelease_id=532

Bayne, M. K. (2006). Long term care insurance (ltci) leader John Hancock introduces

ltci in Puerto Rico. Retrieved August 19, 2006 from the World Wide Web:

http://www.mrltc.com/press-releases-ltc-legislation.html

Family Caregiver Alliance. (2005). What is long-term care? Selected Long-Term Care

Statistics. Retrieved August 19, 2006 from the World Wide Web:

http://caregiver.org/caregiver/jsp/content_node.jsp?nodeid=440

Stuart, G. (2006). Long-term care insurance: security for Americans. Retrieved August

19, 2006 from the World Wide Web:

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The Impending Long-Term Care Crisis

http://www.ezinearticles.com/?Long-Term-Care-Insurance:-Security-for-

Americans&id=265497

Stone, R.I., & Wiener, J.M. (2001). Who will care for us? Addressing the long-term care

workforce crisis. Retrieved August 19, 2006 from the World Wide Web:

http://www.innovations.harvard.edu/showdoc.html?id=3325

AARP. (2006). AARP New York’s 2006 state legislative agenda. Retrieved August 19,

2006 from the World Wide Web:

http://www.aarp.org/states/ny/

ny-advocacy/aarp_new_yorks_2006_state_legislative_agenda.html

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