FAST FACTS
- In 2013, national spending on long-term services and supports (LTSS) totaled about $310 billion. Medicaid paid nearly half of that amount, at about $123 billion (source).
- Medicaid is the largest contributor to LTSS spending. In 2014, combined federal and state Medicaid spending on LTSS totaled $152 billion. That marked a 4 percent increase from $146 billion a year earlier (source).
- In 2014, the average annual cost was $45,800 for a home health aide, $16,900 for care in a community-based adult day-care center, and $87,600 to live in a nursing facility (source).
- Seventy percent of those turning 65 are expected to require some form of LTSS during their lives (source).
- LTSS spending through managed care organizations increased 55 percent in 2014, from $14.5 billion to $22.5 billion (source).
- The median annual cost for care in a nursing facility in 2015 was $91,250 (source).
- As of January 2015, direct care workers must be paid at least the federal minimum wage and must receive overtime pay (source)
With Americans enjoying longer life expectancy than prior generations, and with the baby boom cohort entering its retirement years, the share of Americans over age 65 is projected to rise from 15 percent, or about 46 million individuals, in 2014 to 21 percent, or about 74 million, in 2030 (source). An estimated 70 percent of those turning 65 are expected to require some form of long-term care during their lives (source). This is already creating an increased demand for long-term services and supports (LTSS) and will challenge policymakers to deliver that care more affordably and with higher quality.
LONG-TERM CARE COMMISSION & THE CLASS ACT
During fiscal negotiations at the end of 2012, Congress repealed a provision in the ACA that created a voluntary, public long-term care insurance program, the Community Living Assistance Services and Supports program (CLASS Act). At the same time, Congress wrote the Long-Term Care Commission into law (source). The commission submitted a report to Congress (source) and included recommendations to establish integrated care teams, using technology-enhanced data sharing across settings and providers; to train family caregivers; and to find a sustainable balance of public and private financing. Five of the 15 members of the commission issued an independent minority report that outlined alternative recommendations for LTSS reform (source).
Over the last two years, various organizations, including the Bipartisan Policy Center and the Urban Institute, have produced analysis to help inform LTSS reform (source) (source). The Long-Term Care Financing Collaborative, a group of policy experts and stakeholders, in February proposed major changes for LTSS financing and delivery (source). Congress, however, has not acted.
BACKGROUND
Long-term services and supports are comprised of formal and informal aid that focuses on those who are unable to take care of themselves due to age, disability or illness. LTSS is often defined as providing help with activities of daily living, including bathing, dressing, transferring from a bed to a chair and toileting. LTSS also includes help with other activities, such as cooking and transportation. LTSS services can range from weeks to years in aiding an individual with every day hygiene tasks and movements. Many people think of nursing homes as providing LTSS care, but it is mostly delivered in home and community-based settings (source). LTSS services are distinct from health care services, but they can include health-related services (source).
There are over 12 million Americans who rely on LTSS in home, community or institutional settings. Of these, approximately 600,000 are children, 5.4 million are non-elderly adults, and 6.7 million are elderly. The total is projected to more than double by 2050, to 27 million (source).
WHO PAYS & HOW MUCH?
In 2013, total spending for LTSS in the U.S. was $310 billion (source). Medicaid is the largest contributor to LTSS spending, accounting for about half of all expenditures. In 2014, combined federal and state Medicaid spending on LTSS totaled $152 billion. That marked a 4 percent increase from $146 billion a year earlier (source).
A significant portion of LTSS is also paid for privately, out of pocket. Private LTSS insurance covers only a small portion of the cost. Indeed, less than 8 percent of Americans have purchased it (source). The sale of these products is declining, with new individual policies falling from a 2002 peak of 754,000 to 129,000 in 2014. Rising premiums are a contributing factor (source).
Medicare covers some home care and skilled nursing facility services after a qualified hospital stay but plays a very small role in extended care.
Despite the billions of dollars being spent, the majority of long–term services and supports aren’t paid for at all. In 2013, there were 40 million family caregivers, providing an average of 18 hours of care per week to a loved one. Estimates of the economic value of this unpaid care vary, but some list the value as high as $470 billion (source).
WHERE CARE IS PROVIDED
While many people receive LTSS in nursing homes, or skilled nursing facilities, other possibilities include home care and adult day care programs, and residential facilities, such as assisted living or board and care homes. In recent years, the trend has been shifting from institutional care to home and community-based services (HCBS). This has been stimulated in part by the Olmstead decision, a 1999 Supreme Court decision that held that disabled persons have the right to receive care in the least restrictive yet appropriate setting, and more recently by provisions in the Patient Protection and Affordable Care Act (ACA), along with federal and state initiatives.
In the decade after the Olmstead decision, the number of people provided HBCS through Medicaid increased by more than 50 percent (source). By 2013 the majority of Medicaid’s spending on LTSS was focused on HBCS instead of institutional care, and the Centers for Medicare & Medicaid Services (CMS) predicts that share will rise to 63 percent by 2020 (source).
During this time of transition from institutional to HCBS, some states are at the same time shifting from the fee-for-service provider payments to experimenting with the managed care model for delivering care to Medicaid enrollees, including those who need LTSS (source). The number of states with managed LTSS programs increased from 8 in 2014 to 16 in 2012 (source), and managed care models have the potential to improve care coordination and access to HCBS (source).
FEDERAL AND STATE INITIATIVES
With Medicare providing the majority of LTSS funding, the federal government has sought to provide states with new tools and options to encourage higher-quality, more cost effective care and to facilitate a shift away from institutional care. Some of the initiatives currently in effect include the following:
Money Follows the Person provides federal grants to states to transition Medicaid beneficiaries from institutions into their homes or community-based care. Initially enacted in 2006, these grants were extended by the ACA through the end of 2016 (source). Without congressional reauthorization these grants will expire, but lessons learned from the demonstrations will shape future Medicaid strategies for LTSS care (source).
The 1915(i) Medicaid State Plan Option, initially enacted in 2006 and broadened by the ACA, gives states new options to provide HCBS to individuals who are not yet receiving institutional care. This provision has given states with more options to provide community-based supports for individuals with serious mental illness (source).
The Community First Choice Option is a new state plan option under Medicaid to provide home and community–based services. A provision of the ACA, it includes an increase in federal matching funds for providing community-based services and supports to beneficiaries who would otherwise be in institutions (source).
The ACA includes an Expanded Spousal Impoverishment Protection in Medicaid provision, in effect from 2014 through 2019, requires states to provide the same spousal impoverishment protections for both institutional and home and community-based care. This prevents impoverishment of both spouses in order for one to qualify for Medicaid; and it allows the one needing care to get that care at home and in the community (source).
In addition to its provisions regarding HCBS, the ACA also sought to improve the quality of care provided by nursing homes. Provisions regarding transparency of ownership of institutions — also known as the Nursing Home Transparency and Improvement Act of 2009 — were incorporated into the ACA. This allows consumers and regulators to weed through complex ownership, management and financing structures to hold providers accountable for compliance with federal requirements. The ACA also mandated updates to the Nursing Home Compare website that CMS maintains to provide consumers with detailed information and ratings for every Medicare and Medicaid-certified nursing home (source).
DIRECT CARE WORKFORCE
The shift from institutional LTSS care to care at home and in the community has driven a shift in the workforce providing the care. Personal care aides and home-care aides are among the fastest growing occupational categories, with employment in these fields expected to increase by over 800,000 from 2014 to 2024 (source) (source).
There are an estimated 3.27 million LTSS direct care workers, making up 20.8 percent of the total health care workforce (source). Over 90 percent of these workers are women, and they tend to be poorly paid, with many lacking any health benefits of their own (source). Training requirements vary by state, and there are high rates of turnover in these jobs, which can negatively impact the consistency of care.
In 2013 the Department of Labor extended the Fair Labor Standards Act to include home care workers. As of Jan. 1, 2015, direct care workers must be paid at least the federal minimum wage and must receive overtime pay (source)
