THE CRISIS AHEAD IN LONG-TERM CARE.

• Author: Fox-Grage, Wendy
• Position: Statistical Data Included

One of the biggest health challenges ever is how to afford good care for long-term residents in nursing homes, community settings or their own homes.

If we don't find some alternatives for financing long-term care, it's going to bust the bank, not just for New Hampshire, but for the country. This is bigger than Social Security and Medicare.

New Hampshire Health and Human Services Commissioner Terry Morton in testimony to the House Finance Committee, February 1998

Morton's warning echoes in other states as well. Legislators across the country are worrying that left alone, today's long-term care system will indeed "bust the bank." Today, 35 percent of Medicaid's $160 billion budget--roughly half of which comes out of state general revenues--goes to long-term care, most of it in institutions. That percentage is almost certain to increase as the roughly 77 million baby boomers age and medical science keeps people with chronic diseases and disabilities alive longer. More than half of the U.S. population is expected to eventually need some kind of long-term care. And with census Bureau figures that have the average per person nursing home cost at $51,000 a year, lawmakers understandably are worried about government's ability to handle the costs.

THE CHALLENGE

Just under half of the 13.5 million Americans who need long-term care are under the age of 65 and are expected to live longer than their counterparts did a generation ago. People 85 and older--half of whom need help with basic daily living tasks like dressing and bathing--now number about 4 million and represent the fastest growing segment of the population. By 2050, their numbers are expected to swell to perhaps 27 million.

Disabled, chronically ill and frail elderly people need skilled nursing, personal and home health care, help with chores, transportation and meals, respite help for their caregivers, and social services, as well as a physician. Such services can be provided in a variety of settings: institutions (such as nursing or residential care facilities for people with developmental disabilities); the community (in assisted living centers, adult foster homes, adult day care and senior centers); or private homes.

Despite the widespread demand for long-term care services, there is a common misperception in our society about who pays for it. Many people believe that Medicare or employer-provided medical insurance covers the majority of long-term care expenses. In most cases they do not. The Medicaid program--designed originally as a safety net for low-income women and children, as well as people with disabilities and the elderly--has become the primary source.

Medicare covers acute care like physician and hospital services. It has high copayment requirements, does not cover outpatient prescription drugs and pays for nursing home care only in specific circumstances. Because most people do not have private long-term care insurance, they pay these costs out of pocket. This often causes elders to spend all their savings, and they end up impoverished and relying on Medicaid. Because states hold the Medicaid purse strings, they, along with the federal government, are the largest public payer for long-term care services.

Most experts agree that there is no quick fix to improve long-term care and that many strategies are needed. Given their dual role as major payer and principal regulator, state legislatures can play a significant part in changing the system.

EXPANDING THE 'CONTINUUM OF CARE'

A critical factor in reform is "expanding home and community-based services to rebalance the system, which is too heavily weighted toward nursing homes," says Paul Saucier of the Muskie Institute at the University of Southern Maine. Three out of four Medicaid long-term care dollars go to institutional care, even though most people would prefer to remain in their homes for as long as possible.

When states want to offer community and home care options that are partially funded by the federal government, they...