Five Key Facts About the Delivery and Financing of Long-Term Services and Supports
Fact #1: People of All Ages Require Long-Term Services and Supports
As a result of physical limitations, cognitive impairments, mental illness, and/or a disabling chronic condition, an individual may need long-term assistance for several months or years. Assistance can include help with completing daily self-care tasks, such as bathing, dressing, or managing prescription medications, and also with completing errands, such as grocery shopping or traveling to doctor appointments. Those with severely disabling chronic conditions often require more extensive acute care and long-term services and supports (LTSS) as they age. The 2011 U.S. Census Bureau American Community Survey estimates that:
- 8 million people experience difficulty with self-care (i.e., completing “activities of daily living”)
- 13 million adults experience difficulty with living independently
- 14 million children and adults have difficulty remembering, concentrating, or making decisions
- 20 million children and adults experience difficulty with walking or climbing stairs1
Fact #2: Many People Who Need Long-Term Services and Supports Rely on Unpaid, Informal Care
Family caregivers have traditionally provided informal assistance with personal care and household chores, but in many cases informal caregiving now includes skilled medical/nursing care tasks such as meal preparation for a special diet, wound care, and care coordination. The majority of family members providing care to people with multiple chronic physical and cognitive conditions were:
- female (58%)
- age 50 or above (66%)
- caring for a parent (38%)
- providing care for three or more years (44%)
- employed outside of the home (47%) and making less than $50,000 annually (48%)
Most family caregivers are willing to provide care for their family members and friends, but the caregiving experience can be very demanding, leading to undesirable outcomes such as chronic stress or financial strain.2
Fact #3: When Paid, Formal Care is Needed, Many People Cannot Afford to Cover These Expenses Out-of-Pocket
Paying for needed LTSS is expensive and often burdensome. On average, nursing home care costs over $90,000, assisted living facility care costs over $42,000, home health aide services (at $20/hour, 20 hours/week) cost almost $21,000, and adult day care (at $70/day, 5 days/week) costs about $18,000 annually.3 Thirty-four percent of seniors live below 200 percent of poverty ($22,002 for an individual age 65 or older) (Figure 1).4 Many individuals and families exhaust their assets paying for much needed services and supports, thereby qualifying for financial need-based coverage under Medicaid. In the absence of affordable private insurance coverage options or viable public insurance alternatives, such as a national long-term care insurance system or expanded coverage for Medicare beneficiaries, there will be a continued reliance on the Medicaid program.
Fact #4: Medicaid is the Primary Payer for Long-Term Services and Supports
Medicaid, administered by states and jointly financed by the federal and state governments, is the primary payer for LTSS for people who have low incomes and who deplete their personal savings to pay for medical and long-term care. In 2011, a total of $357 billion was spent on LTSS. Medicaid accounted for 40 percent of total expenditures, and Medicare, which provides limited post-acute care, accounted for slightly more than one-fifth of spending (21%). Direct out-of-pocket spending accounted for 15 percent of total LTSS spending, with private insurance and other public and private funding sources covering 7 percent and 18 percent of total LTSS spending, respectively (Figure 2).
Currently, home and community-based LTSS represent almost one-half (45%) of total Medicaid long-term care expenditures, up from 20 percent in 1995.5 This shift in spending is a reflection of states’ efforts to meet their community integration obligations under the U.S. Supreme Court’s 1999 Olmstead decision and beneficiaries’ preference for community-based care. Medicaid home and community-based services (HCBS) spending as a share of Medicaid LTSS expenditures varies widely by state, ranging from Mississippi at 16 percent to Oregon at 75 percent in 2011.6 The Affordable Care Act (ACA) provides a number of new and expanded options for states, many with financial incentives, to increase the availability of HCBS; as of August 2013, all but three states plan to pursue or are pursuing at least one ACA option, but it is too early to determine the full impact of the various LTSS options on spending and beneficiary outcomes. 7
Fact #5: With the Aging of America, the Demand for Long-Term Services and Supports is Expected to Increase in the Coming Decades
The U.S. will experience a demographic shift by age in the coming decades as a result of the “Baby Boomers” reaching older adulthood, increased life expectancy, and advances in medicine and medical technology. The majority of Americans aged 65 and over will have long-term care needs (70% of “Baby Boomers” can expect to use some form of long-term care during their lives); the population that is most likely to need LTSS—individuals aged 85 and over—is expected to increase by almost 70 percent in the next 20 years (Figure 3).8 In the face of increased demand for LTSS, states and the nation will be challenged to find innovative ways to deliver high quality, person-centered LTSS, reduce unmet long-term care needs and HCBS workforce shortages, increase accessible and affordable community-based housing options, and strengthen community-based provider and resource networks.
U.S. Census Bureau. American Community Survey 2011 1-Year Estimates, available at: http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_11_1YR_S1810&prodType=table.
S. Reinhard, C. Levine, and S. Samis. Home Alone: Family Caregivers Providing Complex Chronic Care, AARP Public Policy Institute, October 2012, available at: http://www.aarp.org/content/dam/aarp/research/public_policy_institute/health/home-alone-family-caregivers-providing-complex-chronic-care-rev-AARP-ppi-health.pdf.
MetLife Mature Market Institute. The 2012 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs, November 2012, available at: https://www.metlife.com/mmi/research/2012-market-survey-long-term-care-costs.html#keyfindings.
U.S. Census Bureau. Current Population Survey, 2012 Annual Social and Economic Supplement, available at: http://www.census.gov/hhes/www/cpstables/032012/pov/POV01_200.htm.
Urban Institute estimates based on data from HCFA-2082 and HCFA/CMS-64.
Urban Institute estimates based on data from CMS-64.
M. O’Malley Watts, M. Musumeci, and E. Reaves. How is the Affordable Care Act Leading to Changes in Medicaid Long-Term Services and Supports (LTSS) Today? State Adoption of Six LTSS Options, The Henry J. Kaiser Family Foundation, April 2013, available at: http://www.kff.org/medicaid/issue-brief/how-is-the-affordable-care-act-leading-to-changes-in-medicaid-long-term-services-and-supports-ltss-today-state-adoption-of-six-ltss-options/; Table 1 updated August 2013, available at: http://www.kff.org/state-category/health-reform/medicaid-and-health-reform-health-reform/.
A. Houser, W. Fox-Grage, and K. Ujvari. Across the States 2012: Profiles of Long-Term Services and Supports. AARP Public Policy Institute, September 2012, available at: http://www.aarp.org/home-garden/livable-communities/info-09-2012/across-the-states-2012-profiles-of-long-term-services-supports-AARP-ppi-ltc.html.