Where We Are Today
In the U.S. and around the globe, longevity on a mass scale is posing new challenges for health care systems. In addition to medical services, millions of older adults with disabilities and serious chronic conditions need supportive services such as personal care, meal preparation, chores, adapted housing, and transportation to remain in their communities. Our fragmented health care system is not well configured to meet these needs—yet more than half of older adults are estimated to develop a disability serious enough to need long-term services and supports (LTSS) during their lifetime.
Although Medicaid is the largest single public payer for LTSS supports, private out-of-pocket costs paid by families account for about 55% of all LTSS spending, compared to 45% for all sources of public-sector funding. Beyond that, most LTSS in the home are provided voluntarily by unpaid family caregivers. However, because demographic shifts occurring over the next three decades are projected to result in a sharp decline in the availability of traditional family caregivers to provide in-home support—and in view of low retirement savings, poor take-up of long-term care insurance, and possible structural and financing changes in Medicaid—now is the time to examine sensible reforms that can meet rising demand without shifting more costs onto elders and their families. We can start by looking at the costs associated with seniors who need LTSS, which analyses of Medicare claims data show are significantly higher than those who do not. From there we can progress to considering how to adapt existing programs and models of care and how to encourage development of affordable private-sector options that can both help finance LTSS while preserving assets.
Four Things You Need to Know about LTSS
1. Functional Limitations are Associated with Increased Health Care Spending: Analyses of national datasets suggest that health care spending for individuals with functional limitations—who need LTSS—is substantially higher. A recent analysis by The Commonwealth Fund exposes the impact on health care costs and quality for persons living with both chronic conditions and functional limitations. Additionally, the lack of coordination of health care services with reliable, affordable sources of LTSS imposes significant difficulties on unpaid caregivers. Conversations about improving an ailing health care delivery system require significant attention to this population and those who care for them.
2. LTSS Receive Inadequate Attention in Discussions about Health Policy: Most national policy discussions of health care spending and delivery system reform pay scant attention to LTSS, despite the substantial health care need and cost associated with this population. As several policy experts have correctly noted, long-term care was mostly brushed aside during the 2016 campaign—even though election eve and election day polling showed no partisan divide and a plurality of support for key policy solutions. Similarly, recent debates about broader health care reform have been conspicuously silent about the potentially devastating impact of proposals on older and disabled adults. At the same time, current dependence on Medicaid as the main government payer for LTSS is increasing financial and political pressure on that program year-to-year, while funding for community-based supports through the Older Americans Act are significantly underfunded relative to steadily rising need. Creating a better system requires more focused attention on how our current health care system can be adapted to both recognize and reliably address LTSS needs.
3. Financing LTSS Requires Attention to Private and Public Approaches: The private market for long-term care insurance has been sluggish as few families consider purchasing insurance to protect the financial risks associated with LTSS. Additionally, retirement savings for many are inadequate to cover LTSS for more than a short period, prompting many to “spend down” to become eligible for Medicaid. This phenomenon is untenable. New, practical approaches for improving LTSS financing have been proposed (see work from the Bipartisan Policy Center and Convergence Center for Policy Resolution by way of examples) and the state of Minnesota is preparing to pilot affordable LTSS through coverage by Medigap and Medicare Advantage plans. More creative approaches to private coverage should be included in larger conversations about health and tax policy and delivery system reform.
4. Innovative Approaches to LTSS are Badly Needed: There is wide variation in how states deliver LTSS through their Medicaid programs. While there has been marked improvement in the development of home and community-based service delivery over the last two decades, dissemination of best practices that improve quality and foster cost-effective innovations should be encouraged. We must pick up the pace of change as indicated in the recent AARP Long-Term Services and Supports State Scorecard. States should also focus attention on delaying spend-down to Medicaid. This can be done by focusing on buttressing delivery of community-based supportive services financed through the Older Americans Act and through expanding and scaling current and evolving comprehensive models of care such as PACE (the Program of All-Inclusive Care for the Elderly). At the national level, policymakers are in a good position to open up new possibilities for Medicare beneficiaries to access cost-effective LTSS through Medicare Advantage and by allowing greater flexibility in the PACE program.
LTSS Solutions and Sustainable Health Spending
The need for thoughtful, constructive, and practical solutions to create a better, more financially sustainable health care delivery system is imperative. On July 18, Altarum’s Center for Sustainable Health Spending, with funding from the Robert Wood Johnson Foundation will present its seventh annual symposium: Beyond the ACA: Health Policy and Sustainable Health Spending. During the symposium, a distinguished panel consisting of John Cutler, Anne Montgomery, Hemi Tewarson, and Rodney Whitlock will discuss the current health policy landscape with a specific focus on viable financing options for LTSS. You are invited to attend this even in person or virtually. We need your ideas and voice in creating a better system to support individuals living with individuals with functional limitations, disability, and frailty.