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How Will We Pay for LTSS Needed by an Aging Population?

Jerlene Rodriguez, Sarah Sahili, Melissa Malrechauffe, Stephanie Malabag

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What is LTSS?

LTSS stands for long-term services and supports.

LTSS refers to the types of assistance provided to people with functional or cognitive limitations to help them perform routine daily activities.

Millions of Americans need long-term care services as a result of disabling conditions and chronic illnesses.

America’s population is aging and with that comes unprecedented rates of chronic conditions and related care and support needs.

What It Means:

Why It’s Important:

What’s the Problem?

We currently do not have a way to pay for all of the Long-Term Services and Supports that citizens need and will require as our aging population grows with time.

5 main types of LTSS:

Home Health Agencies
Nursing Homes
Hospices
Residential Care Communities
Adult Day Service Centers

Types of LTSS:

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Impact on Growing Elderly Population

Challenge 1

Unpaid Caregiving

Emotional, physical, and financial stress
Costs difficult to estimate
17% of working adults care for a family member or friend and provide unpaid care valued at $470 billion annually

Challenge 2

LTSS Needs

By 2055, there will be almost 90 million people aged 65+
½ of these older Americans will be over age 75
# of people age 85+ will more than double by 2055

Challenge 3

Out-of-pocket Expenses

In 2014, individuals aged 65 and over had median financial assets of $75,750

median home equity of $80,600

Challenge 1: SARAH--4 in 10 consider it to be highly stressful emotionally

-Costs difficult to estimate b/c so much is done behind the scenes

-Families continue to do all they can. Often, however, their resources are stretched to the breaking point. Caregiving can negatively affect the health and financial well-being of caregivers. It can also impact their productivity at work.

-As the population of aging Americans continues to grow, more people will be called on to provide unpaid care. This situation promises to put a strain on our workforce and the livelihood of our citizens.

Challenge 2: MEL

Challenge 3: STEPH

-have to pay for loved one’s services because the care recipient can no longer afford to pay for that care

-middle- and low-income families rarely are prepared for the financial impact of paying for LTSS.

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Impact on Growing Elderly Population (Continued)

Challenge 4

Challenge 5

Challenge 6

Women and LTSS

Women have a 23% greater risk of needing LTSS than men.
Women are more likely to be the primary, unpaid caregiver for a relative or friend.

Impact on Medicaid

As of 2013, over ⅓ of all Medicaid expenditures went towards paying for LTSS
Expenditures for older adults will increase and will exceed $1 trillion by 2070

Public Education

Many Americans mistakenly believe that Medicare covers the cost of LTSS
Difficult to spur Americans to plan ahead for LTSS needs

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Data & Statistics

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Medicaid

Second largest payer of LTSS; Coverage is limited

Medicare

Largest payer of LTSS; primary payer for institutional and community-based LTSS

Out of Pocket

Biggest source of private spending for LTSS

Private Long-Term Care Insurance

Pays for only a small share of total spending on LTSS

Other

VHA, CHIP; private philanthropic contributions

Prior/Current Proposals

Public Sources

Private Sources

Past proposal: CLASS Act

Sarah, mel, steph, jer, sarah

Sarah - MEDICAID:

Main public health insurance program for people with low income
Accounts for about 28% of total Medicaid service expenditures in 2013
Progress towards having several options for states to serve more Medicaid beneficiaries through home- and community-based services has been uneven

Mel: MEDICARE:

Covers both acute care and post-acute services for people who have a qualifying work history and are age 65 and older, receiving Social Security Disability insurance for more than 24 months, or have end-stage renal disease
home health services are only covered for beneficiaries who are homebound; personal care services are not covered

Steph - OUT OF POCKET:

Accounts for 19% of total national LTSS expenditures
Individuals not eligible for Medicaid would have to pay for LTSS directly out-of-pocket

Jer - PRIVATE LONG-TERM CARE INSURANCE:

Primarily purchased by middle-aged and older adults who are assessed by insurance companies as having less health risk and have higher than average incomes
Provides financial protection against the risk of the potentially high costs associated with LTSS

Sarah - OTHER:

Other public sources of funding: Veterans Health Administration (VHA), Children’s Health Insurance Program (CHIP)
Other past proposals: CLASS Act which was part of the Patient Protection and Affordable Care Act; programs was later repealed due to concerns of the program’s ability to meet long-term financial obligations and its adequacy of the cash benefit

Institutional care: includes the cost of stays, including room and board as well as assistive services, in skilled nursing facilities, nursing homes, and nursing facilities housed inside continuing care retirement communities

Community-based: Includes the cost of assistive services provided in all other settings, including private homes, adult day care facilities, and facilities that are not nursing homes

https://www.cbo.gov/publication/44363#section1

http://cdn.bipartisanpolicy.org/wp-content/uploads/2016/01/BPC-Health-Long-Term-Care.pdf

http://kff.org/medicaid/report/medicaid-and-long-term-services-and-supports-a-primer/

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Possible Solutions

New Insurance Programs

Front-end-only Benefit

Back-end Benefit

Combined Comprehensive Benefit

While it is difficult to determine a perfect insurance program that will help with costs

People have offered suggestions for new insurance programs that can improve financing for LTSS

Provide coverage relatively early in the period of disability, but caps benefits

Would begin paying a benefit after the first 90 days of need and continue coverage for up to 2 years

No lifetime limit

Consumers would be responsible for the first two years of expenses after developing a need for high level of care.

But after two years, they would receive the daily benefit for the rest of their lives

Combines both the front-end and back-end benefit: once triggering the benefit, a consumer would pay for 90 days of care

The program would then pay a daily benefit for life

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References

"Foundation Funding In Long-Term Services And Supports." Health Affairs 31.6 (2012): 1360-362.

Rising Demand for Long-Term Services and Supports for Elderly People. (2015). Retrieved December 11, 2016, from https://www.cbo.gov/publication/44363

Burke, S., Butler, S., Claypool, H., Jennings, C., Lieberman, S., & Westmoreland, T. (n.d.). Initial Recommendations to Improve the Financing of Long-Term Care. Retrieved December 11, 2016, from http://cdn.bipartisanpolicy.org/wp-content/uploads/2016/01/BPC-Health-Long-Term-Care.pdf

Dec 15, 2015 | Erica L. Reaves and MaryBeth Musumeci. (n.d.). Medicaid and Long-Term Services and Supports: A Primer. Retrieved December 11, 2016, from http://kff.org/medicaid/report/medicaid-and-long-term-services-and-supports-a-primer/

Colello, K. J., & Talaga, S. R. (2015, July 27). Who Pays for Long-Term Services and Supports? A Fact Sheet. Retrieved December 11, 2016, from https://fas.org/sgp/crs/misc/R43483.pdf

Perspectives on the Challenges of Financing Long-Term Services and Supports. (2016, February). Retrieved December 11, 2016, from https://www.leadingage.org/uploadedFiles/Content/Members/Member_Services/Pathways/Pathways_Report_February_2016.pdf

Harris-Kojetin L, Sengupta M, Park-Lee E, Valverde R (2013). Long-term Care Services in the United States: 2013 Overview. National Center for Health Statistics. Vital Health Stat 3(37). Retrieved December 7, 2016 from, http://www.cdc.gov/nchs/data/nsltcp/long_term_care_services_2013.pdf

Favreault, Melissa M. How Much Might New Insurance Programs Improve Financing for Long-Term Services and Supports?

Favreault, M. M., Gleckman, H., & Johnson, R. W. (2016, February). How Much Could Financing Reforms for Long-Term Services and Supports Reduce Medicaid Costs? Retrieved December, 2016, from http://www.thescanfoundation.org/sites/default/files/how_much_could_financing_reforms_for_ltss_reduce_medicaid_costs_feb._2016.pdf