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Comprehensive Analysis of Long-Term Care Financing
By
Michael A. Piekarz
Staff Writer
Concerns
over financing long-term healthcare in both the public and private
sectors have resulted in the first comprehensive review and analysis
of research
on the topic in order to provide policymakers with a framework to guide
them in the decision-making process.
Over the next several decades, the population of U.S. seniors is expected to
experience heavy growth, more than doubling by 2040 while the population as a
whole grows by only one-third. That surge will probably produce a similar increase
in the demand for long-term care (LTC) services, according to the Congressional
Budget Office.
The anticipated growth in demand for LTC provided the impetus for a review done
by the National Investment Center for the Seniors Housing & Care Industry
(NIC). The review, conducted by RTI International for NIC, involved compiling
and analyzing all major studies and projection modeling to date on the issue.
The resulting report, called “The NIC Compendium Project: A Guide to Long-Term
Care Projection and Simulation Models” is expected to help policymakers
and others determine the best combination of public and private sector funding
that will be needed to pay for the nation’s growing LTC concerns.
“In a short 20 years from now, our nation’s economy will face an
enormous challenge,” said Robert G. Kramer, president of NIC. “That
is, how are we going to pay for the massive numbers of baby boomers who will
move through the long-term care system?”
“The real impact of long-term care needs won’t be felt until around
2030-2050,” continued Kramer.
“How much will this care cost? How will the nation pay for it? And how
can policymakers, seniors housing and care industry leaders, researchers and
other decision-makers agree on the best plan to meet those needs? This Compendium
will focus attention on the need for long-term care research and help stimulate
a policy debate at the national level.”
Among the significant findings was that the need for long-term care is a “normal” life
experience. Among those turning 65 now, nearly 70 percent will need some form
of long-term care before they die. Twenty percent will need it for more than
five years. This includes informal care, paid homecare, nursing home care and
assisted-living facility care.
Analysis also revealed that the number of people with disabilities is likely
to increase substantially, even if disability rates fall. Recent projections
indicate that the number of older people with disabilities will grow from 10
million in 2000 to between 15.1 million and 24.6 million in 2040.
Policymakers cannot assume that declines in disability rates will solve LTC issues.
Demand for LTC is expected to double by 2040. The use of paid homecare will increase
from 2.2 million people in 2000 to between 3.9 million and 6.2 million in 2040.
During that same period, the number of older Americans using nursing care will
increase from 1.2 million to 3.1 million.
While a big concern in LTC is a possible increase in the cost of medical services – a
driving factor in most projections is the system-wide cost. And not all of the
future events that must be considered by policymakers are negative.
Despite a few problems with the pension system, the financial status of older
Americans will improve over time. One projection shows a decline in the proportion
of seniors who would be likely to use Medicaid to pay for a significant period
of LTC.
The analysis also found that most Americans will not have private LTC insurance
due to its high cost.
The NIC Compendium also found limitations with projection models in use now.
One flaw found was that they do not address the substitutability of services
such as homecare and assisted living facilities for nursing home care.
Also problematic was a lack of data on which to determine the impact of price
changes on the use of services … or “price elasticity.”
The Compendium also found that younger people with disabilities are not included
as part of the projections for increased Medicare expenses despite the fact that
22 percent of Medicaid nursing home expenditures in 2003 were for people under
age-65.
“This issue on how we will fund future long-term care has huge implications
for the seniors housing and care industry, and its leaders need to work closely
with government and research communities to craft ongoing, relevant research,
especially in those areas that have been lacking in previous studies,” stated
Anthony J. Mullen, senior fellow for NIC.
“In addition to full micro-simulation models, stakeholders also need to
develop simpler projection models that allow for easier input of ‘expert
opinion.’ And the results of government-funded projection models should
be more publicly available,” Mullen continued.
It is anticipated that the NIC analysis and other studies under development will
be used to help determine the course of policy affecting LTC during the upcoming
boomer generation.
This page and its contents ©2008
Metropolitan News Company, Inc.
