What is Long Term Care?

1. What is Long Term Care? Kathleen King VP for Health Policy February 20, 2004

2. 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.

3. 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

4. Long Term Care as a Percentage of Personal Health Spending, 2002

5. Sources of Long Term Care Spending

6. 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

7. Americans with Long Term Care Needs

8. 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

9. 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

10. Family Patterns Are Changing • In 1960, only 19 percent of elderly people lived alone • By 1990, 31 percent of the elderly lived alone

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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 co-payments

21. 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

22. 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

23. 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?

24. 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

25. 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