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Long-Term Care Housing and Service Evolution
Addresses “Longevity Revolution”
There are currently 35 million Americans age 65 or older and 78 million baby boomers will turn 65 in six years. As a result, the over-85 segment of the population—nearly half of whom are nursing home residents—is projected to triple by 20501. The increased elderly population does not simply reflect overall population growth; this segment is also becoming a larger proportion of the population. In 2000, one-in-eight U.S. residents was 65 or older, but Census projections anticipate one-in-five residents in that age group by 2030.
The Centers for Disease Control and Prevention has called this age shift a “longevity revolution.”2 These demographic trends are amplified by concerns about the mounting costs of traditional long-term care delivery, with the estimated cost for a private room in a nursing home now averaging more than $70,000 a year.3
Efforts to Control Long-Term Care Costs
Long-term care costs, projected to increase exponentially as the baby boomers age, are an important focus of the ongoing debate about Medicaid reform. The Medicaid program currently covers two-thirds of the nation’s 1.6 million nursing home residents. 4 Various proposals for Medicaid reform have included: 1) increasing penalties for those who transfer assets to acquire Medicaid eligibility; 2) using home equity to pay for long-term care by requiring recipients who own homes to secure reverse mortgages or allowing state governments to place liens on the homes to reimburse Medicaid for the cost of care and; 3) offering incentives such as tax credits or deductions to encourage individuals to privately purchase long-term care insurance.5 There have been concerns raised, however, about each of these policy recommendations. 6 7 8
A bill currently being considered by the Senate Committee on Banking, Housing, and Urban Affairs would establish an Interagency Council on Meeting the Housing and Service Needs of Seniors. The Council would emphasize collaboration and create more uniform regulations and application language, so the elderly could obtain the combination of health, housing, transportation and other services needed to “age in place” and remain in the community.9
Demographics and Demand
To examine the impact of demographics on long-term care preferences and demand, HCFO grantee Richard Johnson, Ph.D., of The Urban Institute, is developing a model of informal family care, nursing home care, paid home care, and residence in assisted-living settings. Preliminary descriptive findings indicate that most frail Americans age 65 and older are disproportionately older widowed women with limited education who receive little income and hold few assets. In fact, more than one-third of older people with severe disabilities live in or near poverty, start off with less wealth than those without disabilities, and lose more wealth over time. Johnson notes that “the low levels of assets cast doubt as to the extent to which this population could transfer large amounts of assets to become prematurely eligible for Medicaid.” Similarly, a Kaiser Family Foundation issue paper released in June 2005 examined the assets of elderly individuals still living in the community who are at highest risk for needing nursing home care, and found that 84 percent of the elderly most likely to need such care would exhaust their assets within one year in a nursing home.10
Seeking Alternatives
During a recent colloquium sponsored by The Commonwealth Fund and conducted by AcademyHealth, long-term care researchers, policy leaders, providers, consumer representatives, and funders met to discuss high-priority long-term care issues. The 2005 Building Bridges: Making a Difference in Long-Term Care Colloquium featured the presentation of commissioned papers by Stephen Golant, Ph.D., of the University of Florida, and Randall Brown, Ph.D., of Mathematica Policy Research Institute. Golant’s presentation addressed the link between affordable housing and long-term care, while Brown’s discussed the implications of consumer-directed care for state and federal long-term care policy.
Golant proposed consideration of a housing-care model that would create affordable clustered housing, enabling more efficient delivery of coordinated care in facilities built for or adapted to the needs of people with disabilities. Brown’s research on consumer-directed care suggests if elderly consumers are given control of their Medicaid health care dollars, overall long-term care costs may be contained. Housing and service delivery alternatives are important for individuals who do not need the high level of care and supervision provided by nursing homes or prefer to receive care in non-institutional settings.
Innovation and Implementation
In addition to proposals to manage long-term care costs being considered by the Medicaid program, legislation now being considered in Illinois would allow residents to choose how public money is spent on their care, and would enable them to remain in the community and pay for care in smaller settings rather than enter an institution.11 The bill has received support from the Illinois Council on Long-Term Care, and may result in significant cost savings for the state. A 2004 report estimates that in Illinois, providing personal assistance or “supported living” in the community costs $12,000 per year, compared to annual institutional costs ranging from $44,000 to $115,000.12 However, the savings in cost per person may be offset by an increase in demand for community-based care that exceeds current demand for institutional care.
In a similar effort to encourage community-based care, a new non-profit group in Boston has created a “virtual retirement community” to provide services, such as grocery delivery, housekeeping, and home health, to older adults in their homes.13 Continuing Care Retirement Communities (CCRCs) “cover the spectrum at one site—from independent living to nursing home services,” to prevent people from needing to relocate to new facilities as their medical and service needs change; however, they may only be affordable for a small segment of the elderly population.14 HCFO grantee Frank Sloan pioneered research on the effects of CCRCs on institutional long-term care, and found that affordability is an important issue; CCRC residents with extensive (fully pre-paid) contracts were wealthier than were other CCRC residents.15
To avoid “elder segregation” in retirement communities, Boston-based Hebrew SeniorLife is developing an intergenerational campus community in Dedham, Mass., in which senior supportive housing, assisted living, long-term care, and other senior services will share a campus with a K-8 school and an early childhood education curriculum.16
Elsewhere, efforts are being undertaken to revolutionize both the physical and operational structure of nursing homes. The Green House Project model, developed by William Thomas, Ph.D., aims to create autonomy, dignity, and choice for residents.17 The first such nursing home, in Tupelo, Miss., is comprised of small inconspicuous buildings that blend in with their surroundings and look like homes, with only 10 residents in each.18 Features like access to outdoor space, intelligent use of adaptive devices, and private bedrooms opening onto a central hearth space transform the long-term care setting from a medical to a social model.19
Obstacles to Change
More innovative housing and service models, such as use of assistive technologies and “service-enriched” housing, could provide individuals with the choice to avoid or delay admission to nursing homes, leading to both cost savings and increased independence For example, when a hospital in Pennsylvania built a complex of 18 accessible apartments, one resident referred to it as her “dream…to be out on my own, have my own independence, do what I want, when I want.” Analysis of costs showed that over the first year, residents required 61 percent less public financing to live. However, the hospital depended upon alternative funding to build the apartments and equip them with assistive technologies, because despite the medical savings they create, the apartments are considered housing and therefore not eligible for Medicaid reimbursement.20 As a result, people needing assistance may still be placed in nursing homes rather than provided with supportive services in the community, due to incentives inherent in the structure of Medicaid reimbursement.
Health and Human Services Secretary Mike Leavitt and Centers for Medicare and Medicaid Services (CMS) Director Mark McClellan have “implied that the administration hopes to drastically loosen the requirement that states provide long-term care in nursing homes,” but removing the requirement for states to obtain waivers in order to shift elderly patients to home and community-based care would require congressional action.21
Next Steps
While much work is being done by policymakers, researchers, and innovative providers, many questions remain about how best to control long-term care costs, provide access to care in appropriate settings, and measure and improve quality of care. Completed and ongoing HCFO work can help to inform the debate.
Read About HCFO-Funded Research on Long-Term Care:
Title: Meeting the Future Long-Term Care Needs of the Baby Boomers: How the Changing Structure of Families Will Affect Paid Helpers and Institutions
Institution: The Urban Institute
Time: December 2003 – November 2005
Principal Investigator: Richard W. Johnson, Ph.D.
How do families choose among types of long-term care services for older adults and what will be the demand for these services over the next 40 years? The researchers will estimate a model of informal family care, nursing home care, paid home care, and residence in assisted living settings. The model will show the impact of health status, financial resources, family networks, and relative prices, determined in part by family characteristics and in part by public policy. They will then use the model to simulate the effects of potential changes in public policy on long-term care decisions, including the impact of an expansion of Medicaid eligibility or of expansions in Medicare coverage of long-term care services. The objective of the project is to better understand how competing social, demographic, and economic trends combine to determine future demand for long-term care services.
For more information about this grant, contact Dr. Johnson: rjohnson@ui.urban.org
Title: Impact of Private Long-Term Care Insurance on Demand for Care: Setting and Intensity
Institution: Brandeis University
Time: November 2003 – October 2004
Principal Investigator: Christine Bishop, Ph.D.
How does long-term care (LTC) insurance affect decisions about the setting of care and the level of service received among elders with disabilities? The researchers will answer the following research questions: 1) How does LTC insurance affect the probability of receiving care in a residential setting compared with the probability of receiving care in a community setting? 2) How does LTC insurance coverage affect the amount of formal and informal care used? Through their analyses, the researchers will estimate the future expenditures for LTC, future service capacity needs, and future burdens on families providing informal care. The objective of the project is to provide policymakers with better information as they consider decisions that would expand the use of LTC insurance and as they think about the future demand for LTC services.
For more information about this grant, contact Dr. Bishop: bishop@brandeis.edu
Title: Impact of the Medicare Home Health Prospective Payment System on Beneficiaries and Program Costs
Institution: Center for Home Care Policy and Research
Time: November 2003 – October 2004
Principal Investigator: Christopher M. Murtaugh, Ph.D.
How does long-term care (LTC) insurance affect decisions about the setting of care and the level of service received among elders with disabilities? The researchers will answer the following research questions: 1) How does LTC insurance affect the probability of receiving care in a residential setting compared with the probability of receiving care in a community setting? 2) How does LTC insurance coverage affect the amount of formal and informal care used? Through their analyses, the researchers will estimate the future expenditures for LTC, future service capacity needs, and future burdens on families providing informal care. The objective of the project is to provide policymakers with better information as they consider decisions that would expand the use of LTC insurance and as they think about the future demand for LTC services. Murtaugh presented early findings from this grant at AcademyHealth’s 2004 Annual Research Meeting.
For more information about this grant, contact Dr. Murtaugh: cmurtaug@vnsny.org
Title: Assessing the Impact of Medicaid Equalization Policies on Access to Nursing Home Care
Institution: Syracuse University
Time: January 2002 – July 2003
Principal Investigator: Madonna Harrington Meyer, Ph.D.
What is the impact of Medicaid equalization policies for nursing home admissions on older persons and their families, the nursing home industry, and state Medicaid programs? The researchers had three objectives: 1) identify which states have passed provisions that limit the discrepancy between private and Medicaid rates; 2) assess the impact of that legislation on nursing home profits, closures, waiting lists, occupancy rates, and state Medicaid budgets; and 3) trace the passage of each state-specific policy to assess the feasibility of developing a model for a national Medicaid equalization law. The objective of the study was to inform policymakers about the implications of revising the Medicaid and long term care systems through a national Medicaid equalization policy.
For more information about this grant, contact Dr. Meyer: mhm@maxwell.syr.edu
Title: Continuing Care Retirement Communities (CCRCs): An Efficient Alternative for Long-Term Care Provision and Financing?
Institution: Duke University
Time: January 1992 – December 1994
Principal Investigator: Frank A. Sloan, Ph.D.
This study examined who enters CCRCs and why, which factors influence nursing home utilization in CCRCs, and financial stability of CCRCs by conducting a survey of CCRC residents and analyzing data from the 1989 National Long-Term Care Survey and the American Association of Homes for the Aging survey of CCRCs. Investigators also gathered primary data from selected states to evaluate CCRC financial solvency. Finally, by studying specific regulations, they assessed the potential of CCRCs as mechanisms for providing and financing long-term care for the low- and moderate-income elderly.
The researchers found that, compared with other types of CCRCs, those offering completely prepaid LTC coverage reduced use of nursing home care by 13 percent and personal care by 5 percent. CCRCs with prepaid LTC coverage did not use more stringent health screening at entry, so “cream-skimming” does not appear to explain this result. However, affordability is an important issue: CCRC residents with extensive contracts were wealthier than were other CCRC residents.
Grantee Publications:
“Continuing Care Retirement Communities: Prospects for Reducing Institutional Long-Term Care,” Journal of Health Politics, Policy, and Law, Spring 1995
http://www.hcfo.net/grantees/GranteePub.cfm?id=%20203
“Bankruptcy Risk and State Regulation of Continuing Care Retirement Communities,” Inquiry, Winter 1995
http://www.hcfo.net/grantees/GranteePub.cfm?id=%20202
“Case Shifting and the Medicare Prospective Payment System,” American Journal of Public Health, May 1988
http://www.hcfo.net/grantees/GranteePub.cfm?id=%20208
“Hospital Care for the Self-Pay Patient,” Journal of Health Politics, Policy, and Law, Spring 1988
http://www.hcfo.net/grantees/GranteePub.cfm?id=%20207
“Medicare Prospective Payment and Post-Hospital Transfers to Subacute Care,” Medical Care, September 1988
http://www.hcfo.net/grantees/GranteePub.cfm?id=%20205
“Effects of the Medicare Prospective Payment System on Hospital Cost Containment: An Early Appraisal,” Medical Care, September 1988
http://www.hcfo.net/grantees/GranteePub.cfm?id=%20204
Title: Evaluation of New York City Model to Provide Home Care Services: The Cluster Care Demonstration
Institution: Harvard University, School of Public Health
Time: November 1990 – July 1993
Principal Investigator: Penny H. Feldman, Ph.D.
Cluster care—where a team of workers provide home care services to a population clustered in a small geographic area—was evaluated as an alternative to traditional one-on-one home care services in New York City housing projects to inform city health officials of costs/benefits of reorganizing home health and social services. The evaluation documented the implementation of and assessed costs and outcomes associated with: 1) consolidating services at elderly housing sites; 2) deploying teams of home attendants and on-site supervisors rather than individual workers; 3) restructuring home attendant jobs; 4) adapting administrative systems to a new delivery model; and 5) helping clients gain access to a broader array of community services.
For more information about this grant, contact Dr. Feldman: pfeldman@vnsny.org
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Gross, J. “In Effort to Pare Medicaid Rolls, Long-Term Care is the Focus,” The New York Times, June 27, 2005, p. A1.
Martin, A.M. “The Facts of (Older) Life,” Chicago Tribune, March 16, 2005, p. C1.
Ibid.
Gross, J. “In Effort to Pare Medicaid Rolls, Long-Term Care is the Focus,” The New York Times, June 27, 2005, p. A1.
Ibid.
Ibid. [A recent Georgetown University Health Policy Institute study found that people qualifying for Medicaid gave gifts of less than $5,000 on average.]
Robertson, T. “More retirees pay the bills with reverse mortgages,” The Boston Globe, April 25, 2005. [Reverse mortgages allow seniors “to convert a portion of the equity in their homes into cash without selling their home. The mortgage is not due until they move or die, when proceeds from the sale of the property can be used to satisfy the loan.” But “the loans have high upfront costs, and interest rates can exceed those of conventional mortgages.”]
Gross, J. “In Effort to Pare Medicaid Rolls, Long-Term Care is the Focus,” The New York Times, June 27, 2005, p. A1. [Many available LTC insurance plans are prohibitively costly, and when not indexed to inflation can fail to provide enough coverage to prevent people from outliving their savings.]
U.S. Senate Committee on Banking, Housing, and Urban Affairs, S. 705, To establish the Interagency Council on Meeting the Housing and Service Needs of Seniors, introduced April 5, 2005.
Lyons, B. et al. “The Distribution of Assets in the Elderly Population Living in the Community,” Kaiser Family Foundation, June 2005.
Tsouderos, T. “Disabled Push for Care at Home; State Funding Goes Only to Institutions,” Chicago Tribune, February 27, 2005, p. C1.
Ibid.
[H. 3465, Creates the Illinois Community First Act. Provides that all persons who reside in, or are eligible to reside in, institutional care facilities have the right to have the amount of public funds that are or would have been expended on him or her for services provided by an institutional facility transferred to pay for community services, introduced February 23, 2005. Companion bill S.1324, introduced February 18, 2005.]
Whitaker, B. “These Days, ‘Retirement Living’ Can Mean Many Things,” The New York Times, February 6, 2005.
Ibid.
Sloan F.A. et al. “Continuing Care Retirement Communities: Prospects for Reducing Institutional Long-Term Care,” Journal of Health Politics, Policy and Law, Vol. 20, No. 1, Spring 1995.
Douglas, B. “A New Model for Senior Housing: Intergenerational Campuses (Promoting Generational Interaction through Creative Site Design),” Geller Devellis Insite. Summer 2005.
The Green House Project
Hamilton, W.L. “The New Nursing Home, Emphasis on Home,” The New York Times. April 23, 2005, p. A1.
Shapiro, J. “Reformers Seek to Reinvent Nursing Homes,” NPR Morning Edition, June 22, 2005.
Schwartz, J. “One by One, Apartment House Lifts Barriers for the Disabled,” The New York Times, April 5, 2005, p. F3.
Connolly, C. “Bush Plans to Broaden Health Care; Proposal to Reach Millions Echoes Ideas Outlined in First Term,” Washington Post, February 4, 2005, p. A2.
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