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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)
LTC: Nursing Home and Home Health
($139.3)10%
Physican and Clinical Services (339.5)
25%
Other Retail Outlet Sales of Medical
Products ($50.5)
4%
Other Professional Services ($162.0)
12%
Hospital Care ($486.5)37%
Prescription Drugs ($162.4)
12%
Medicare ($12.9)
13%
Out-of-Pocket ($25.9)
26%
Federal & State
Medicaid ($50.9)
51%
Other Public ($2.2)
2%
Private Health
Insurance($7.7)
8%
Out-of-Pocket ($6.5)19%
Private Health
Insurance ($6.7)19%
Other Public ($2.0)
6%
Medicare ($11.4)
32%
Federal & State
Medicaid ($8.4)24%
LTC: Nursing Home and Home Health Care Total, 2002, billions ($139.3)
Home Health Care Total ($36.1)Nursing Home Care Total ($103.2)
Sources of Long Term Care Spending
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
Total = 9.5 million
Community Residents Under 65
(3.4 million) 36%
Community Residents 65 or Over (4.5 million)
47%
Nursing Home Residents
65 and Over (1.5 million)
15%
Nursing Home Residents Under 65
(.16 million)2%
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 co-payments
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
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