The Future of Long-Term Care: What Is Its Place in the Health Reform Debate?

The Future of Long-Term Care: What Is Its Place in the Health Reform Debate?Howard Gleckman

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More than 10 million Americans require long-term care supports and services. Yet the system for delivering and paying for this assistance is deeply flawed. While most of the frail elderly and those with disabilities prefer assistance at home, many must live in nursing homes to receive Medicaid benefits, care coordination for those with multiple chronic illnesses is poor, and the system for financing care impoverishes many middle-income families. The national health reform debate allows policymakers to reconsider long-term care as well. This paper assesses proposals to restructure the delivery and financing of long-term care services.

As the population ages, demand for long-term care supports and services is growing. Today, 10 million frail elderly and adults with disabilities require such care. Nearly 80 percent is provided at home, much of it by family members and friends. In 2007, the cost of paid services was estimated at $230 billion, while the economic value of informal care may have approached $375 billion. As the Baby Boomers age, both demand for this care and its costs are expected to increase dramatically.

Today, most paid care is funded by government, through Medicaid and other programs. Less than 10 percent is financed by private long-term care insurance, and much of the rest is paid for out-of-pocket by families themselves.

Despite the considerable resources devoted to long-term services, many continue to receive poor quality care. As a result, policymakers are pursuing major changes in the way assistance is both delivered and financed.

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Taking Back Our Fiscal Future

Taking Back Our Fiscal FutureJoseph Antos, Robert Bixby, Stuart Butler, Paul Cullinan, Alison Fraser, William Galston, Ron Haskins, Julia Isaacs, Maya MacGuineas, Will Marshall, Pietro Nivola, Rudolph G. Penner, Robert D. Reischauer, Alice M. Rivlin, Isabel V. Sawhill, C. Eugene Steuerle

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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The authors of this paper—longtime federal budget and policy experts— were drawn together by a deep concern about the nation;s long-term fiscal outlook. Despite diverse philosophies and political leanings, they found solid common ground and agree that unsustainable deficits in the federal budget threaten the health and vigor of the American economy and the first step toward establishing budget responsibility is to reform the budget decision process so that the major drivers of escalating deficits—Social Security, Medicare, and Medicaid—are no longer on autopilot. The paper provides specific policy recommendations and outlines the reasons action is critical.

The authors of this paper are longtime federal budget and policy experts who have been drawn together by a deep concern about the nation’s long-term fiscal outlook. Our group covers the ideological spectrum. We are affiliated with a diverse set of organizations. We have been meeting informally for over a year, under the auspices of The Brookings Institution and The Heritage Foundation, to define the dimensions and consequences of the looming federal budget problem, examine alternative solutions, and reach agreement on what should be done. Despite our diverse philosophies and political leanings, we have found solid common ground. We agree that:
Unsustainable deficits in the federal budget threaten the health and vigor of the American economy.The first step toward establishing budget responsibility is to reform the budget decision process so that the major drivers of escalating deficits—Social Security, Medicare, and Medicaid—are no longer on autopilot.More specifically, we recommend that:
Congress and the president enact explicit long-term budgets for Medicare, Medicaid, and Social Security that are sustainable, set limits on automatic spending growth, and reduce the relatively favorable budgetary treatment of these programs compared with other types of expenditures.The programs be reviewed on a regular schedule by the Social Security and Medicare Trustees or the Congressional Budget Office to determine whether they will remain within budgeted amounts.Significant long-term deviations from budgeted amounts trigger automatic adjustments in benefits, premiums, provider payments, or other revenues. These adjustments could only be over-ridden by an explicit vote of Congress and acceptance by the president.We provide examples of specific policies that might be adopted to bring the programs in line with their long-term budgets but believe that the first action needed to restore long-term fiscal balance is a change in the way budget decisions are made.
The remainder of this paper describes why we think this change is so important and what the next steps should be.

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