Shared responsibility is best for financing long-term care

Asked about approaches to paying for the country's long-term care needs, 61% of health care opinion leaders surveyed by the Commonwealth Fund said government and individuals should share responsibility for financing long-term care about equally. That was the most endorsed approach among leaders from all sectors — academic/research institutions, health care delivery, business/insurance/other health industry, and government/labor/consumer advocacy.

Some 250 opinion leaders participated in this Commonwealth Fund Health Care Opinion Leaders Survey. Potential respondents were identified through a two-step process involving 1) a nomination survey with a core group of experts in multiple fields to nominate additional leaders within and outside their areas of expertise; and 2) a review of published lists and directories of recognized health experts.

Nearly half the panelists (47%) said adult children should take on some of the long-term care financial responsibility for their parents, while 41% believe that government should cover all or most long-term care expenses. Only one in three panelists agreed that employers should be expected to contribute even in part to their employees' and retirees' long-term care costs. The least popular approach among the panelists was to hold individuals most responsible for their own long-term care costs, with only 26% of opinion leaders agreeing with that as a solution. (Panelists from the business/insurance/other health industry sector were more in favor of this approach than those in the other sectors.)

The Commonwealth Fund report said leaders favored two strategies when presented with a range of options to address the growing cost of long-term care services — adding a long-term care insurance benefit to Medicare, financed by a premium (80%), and providing tax incentives for individuals to purchase long-term care insurance (75%). Fewer respondents, but still a majority, favored transferring responsibility for Medicaid long-term care from states to the federal government (68%), letting individuals establish tax-favored medical savings accounts to purchase long-term care insurance (63%), and tighten rules and state enforcement of Medicaid asset transfer restrictions (61%).

Less popular among the panelists was an option of giving frail elderly and disabled Medicaid beneficiaries vouchers to purchase their own long-term care services. As the only proposed policy option in this category not gaining majority support (40%), it was the least favorite among respondents in all sectors. Support of the other strategies varied by sector.

Range of strategies backed

Most panelists said they supported a range of strategies designed to assure and improve quality of care in home health care, nursing homes, and assisted living arrangements, but showed no overwhelming enthusiasm for any of them, the report said. About two-thirds of the leaders rated as effective in improving high-quality care strategies such as increased availability of consumer report cards on nursing home and home health care (66%); payment incentives for quality such as pay-for-performance (66%); and more effective use of state enforcement remedies and sanctions against low quality providers (65%). Most panelists also supported increased payment rates to providers of long-term care services (59%) and establishment of staffing requirements for nursing homes (57%). As usually was the case in this survey, no clear favorite strategy emerged. But less than half of the leaders though that providing technical assistance to improve quality through the Medicare Quality Improvement Organization program would be an effective way to ensure and improve quality of care.

There was substantial consensus among panelists regardless of sector, but respondents from the business/insurance/other health industry sector were more likely than leaders from academia and health care delivery to endorse increased availability of consumer report cards. They also were more likely than those in academia and government/labor/consumer advocacy to consider payment incentives an effective way to improve quality of care.

A commentary on the responses from American Health Care Association executive vice president John Derr noted that while previous generations of elders were placed in facilities when they could no longer care for themselves, today only those who need high-level care around the clock and don't have family members to care for them are likely to be placed in skilled nursing facilities.

"It's essential to build a health system that provides older adults with high-quality care at the right place and time depending on their needs," Mr. Derr said. "The spectrum of care settings could include independent care, home care, day care, assisted living, skilled nursing facilities, hospitals, or hospices. New information technologies such as electronic health records and telemedicine can help compensate for a shrinking health care work force relative to the patient population. Such tools also can help patients communicate with their providers and manage their own conditions."

Reform incident-based care

According to Mr. Derr, changes in financing health care for a growing population of elders should begin with reforming our incident-based system of care. "Health care today is reactive," he said. "If we get sick, we make an appointment to see a physician; if we become seriously ill or injured, we go to an emergency department of clinic. Patients need to take greater responsibility for their own care. Under a patient-driven system, providers would support patients in their preventive and health maintenance efforts through a dynamic system of wellness care….Only when individuals take responsibility for their own care will the U.S. health system become financially viable and be able to provide care at the right place and time for elderly patients."

Mr. Derr said barriers to achieving such a patient-driven elder care system include a lack of financial incentives to make needed capital investments, outdated state and federal regulations, surveyor state operations manuals that mandate paper clinical records and other cumbersome requirements, continuous threats of Medicare and Medicaid reimbursement cuts, and short-term fixes that don't take into account long-term objectives.

To build a viable elder health care system, from Mr. Derr's perspective representing an association that advocates for more than 10,000 nonprofit and for-profit assisted living, nursing facility, developmentally disabled, and subacute care providers, requires six steps:

1. To provide five years of stable reimbursement for elder care so professionals, legislators, and regulators can work together to focus on financial and intellectual strategies.

2. To turn the system for evaluating nursing homes from one based on penalties to one based on partnership, building on the positive results from work done by the Centers for Medicare & Medicaid Services' quality improvement organizations.

3. To provide financial incentives to upgrade elder care facilities and invest in health information technology.

4. To establish financial models for reimbursement based on evidence-based clinical research.

5. To provide government and private financial programs that enable consumers to obtain the care they expect, and possibly deserve, based on individual responsibility for their own wellness.

6. To curb unnecessary lawsuits, which siphon funds from direct care.

In another survey commentary, former U.S. Sen. David Durenberger, chair of the National Institute of Health Policy and senior health policy fellow at the University of St. Thomas in Minneapolis, says there is a problem in that the nation's long-term care system bears little resemblance to the broader health care sector and health professionals who work in long-term care are viewed differently than their colleagues in acute and chronic care.

Americans in denial over aging

"What's more," he said, "most Americans are in denial about the reality that they might live long enough to require some form of long-term care that will make them dependent on people outside of their immediate family. But as we age and become frail, almost all of us will find ourselves in this situation, likewise if we sustain serious physical disability or mental impairment earlier in life."

Mr. Durenberger cautioned that every other developed nation has turned its attention to the problem of its aging population, and each one has found an answer in reform of its social or private insurance systems. And that's because they realize the need for long-term care is truly an insurable event, in which a minority of the population, with little ability to predict on an individual basis, generates very high costs.

He said a number of factors keep the United States from following the lead of the other developed countries, including the fact that we are a young country, so the problem isn't as immediate for us as for other nations. Also, we the notion that there are no problems we can't afford, so why bother. There are no national leaders continually raising long-term care policy to the level of a public priority. And most Americans mistakenly think Medicare covers their long-term care needs, or else simply don't want to think about the problem at all.

From Mr. Durenberger's perspective, solutions to the problem are not that difficult and are not too political to pursue. Financing reform, he said, would take long-term care out of Medicaid and into a combination of private/social insurance coverage.

"Financing reform should combine the existing Supplemental Security Disability Income program with a new Medicare catastrophic benefit and a 14- to 18-month private insurance benefit," he said. "This last benefit could be paid for with premiums funded by a combination of purchaser premiums and tax-subsidized transfers from equity buildup in other tax-subsidized savings and investment plans.

"But financial reform isn't enough. We must also establish national standards on long-term care quality and access that incorporate the expectation of all stakeholders, including providers, regulators, and, more important, consumers and their families. Establishing quality and access standards will either force the necessary system improvements through direct policy changes or create incentives for the system to change under its own momentum.

"Finally, we must educate consumers and their families about the long-term care system, the range of care alternatives, and the intricacies and challenges of long-term care financing. The future of long-term care should permit those who need care to live their lives under their own control, to the degree possible."

National Senior Citizens Law Center executive director Edward King told the Commonwealth Fund pointed out that while no one is satisfied with the long-term care status quo, there has been major progress over the last 15 years. But in response to the approaching wave of Baby Boomers and budgetary pressures, both federal and state governments are beginning to scale back their commitments to quality long-term care by promoting cheaper "flexible" options, he said.

Waiver flexibility

Mr. King said one generally favorable option offering flexibility is the Medicaid Home and Community-Based Services waiver that maintains Medicaid beneficiaries' right to receive nursing home care services, but gives them the option to choose to receive an equivalent level of care while living in the community in an assisted-living facility or at home.

"One major concern about these waivers is the lack of meaningful quality-of-care standards," he said. "As the Government Accountability Office noted in a 2003 report, the federal Medicaid program has little information about — or control over — the quality of care provided with home and community-based service waiver funding. Given that waiver services are designed to substitute for nursing home care, and that federal spending is significant and growing, the absence of federal standards is a troubling weakness. Even more worrying, tightened state budgets, coupled with a new receptive federal administration, have prompted some states, including Florida, Vermont, Kentucky, Idaho, South Carolina, and New Hampshire, to propose broad 'demonstration' waivers of federal Medicaid law….Demonstration waivers can be used broadly to eliminate beneficiaries' entitlements to particular forms of care, including nursing home care; increase cost-sharing; or cap state or federal expenditures for beneficiaries or for particular kinds of services."

Mr. King said analysis of long-term care Medicaid waivers should consider two important questions: 1) Does the waiver eliminate or restrict a Medicaid beneficiary's entitlement to long-term care? and 2) Does the waiver set meaningful quality of care standards for long-term care services?

Comprehensive change needed

He called for a rethinking of the long-term care system in a comprehensive way rather than devising waivers that may deny older Americans their right to high-quality long-term care.

"Many nations have established compulsory and universal public social insurance programs that pool the risk among all members of the public," Mr. King wrote. "Our nation, with its complex public/ private system, has not. Yet health care in this country remains far more costly than in industrialized nations that rely more heavily on publicly administered care, and there is no evidence that our greater expenditures produce uniformly better health care results. Leaders concerned about long-term care in this nation must step forward, providing information to the general public and creating awareness of the need for positive changes that will prepare this country to address the long-term care needs of the Baby Boom generation during the next 40 years."

(The Commonwealth Fund report and the commentaries on the report are available on-line at