You Can Run, But You Cant Hide: Facing the Costs of Long-Term Care - - PowerPoint PPT Presentation

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You Can Run, But You Cant Hide: Facing the Costs of Long-Term Care - - PowerPoint PPT Presentation

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You Can Run, But You Cant Hide: Facing the Costs of Long-Term Care Harriet L. Komisar, Ph.D. New York Institute of Technology Center for Gerontology and Geriatrics Second Annual Conference on Aging and Society: Second Annual Conference on

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You Can Run, But You Can’t Hide: Facing the Costs of Long-Term Care

Harriet L. Komisar, Ph.D.

New York Institute of Technology Center for Gerontology and Geriatrics Second Annual Conference on Aging and Society: Second Annual Conference on Aging and Society: Reforming Long-Term Care -- Back to the Future October 7, 2009

The Hilltop Institute was formerly the Center for Health Program Development and Management.

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Outline

Background: The long-term care (LTC)

population

LTC Costs: Individual perspective

What is the lifetime risk of needing LTC? What is the lifetime risk of needing LTC?

LTC Costs: National perspective

p p

Challenges we face as a nation

Conclusion: Policy priorities

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Conclusion: Policy priorities

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SLIDE 3

Background

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SLIDE 4

What is long-term care?

Services and supports needed when the ability to care for oneself has been compromised by chronic illness or disability. Consists predominantly of assistance from another person with routine daily activities such as bathing, getting around the house, preparing meals, or managing medications.

Variety of settings: at home, assisted living, nursing homes y g g g Majority of assistance at home is family care

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Long-term care is distinct g from health care

There are important overlaps and connections between LTC and health care Many individuals need both, often stemming from same health condition Some providers deliver both, sometimes delivered together Coordination between long-term care and health care is important to quality of care

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The long-term care population

Community Residents ( )

Under 65 4.2 million

8.8 million (86%)

A 6

Nursing Home Residents Under 65 = 42% 65 or over 58%

Age 65+ 1.3 million Under 65 Age 65+ 4.6 million

Total = 10.3 million in 2005 1.5 million (14%) 65 or over = 58%

5 0.2 million

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Source: Feder, Komisar & Friedland, 2007.

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SLIDE 7

Most people w ith LTC needs rely Most people w ith LTC needs rely solely on unpaid care

None 2% Paid Only

Distribution of community adults with LTC needs, by type of assistance received

Both Paid and Unpaid 2% y 8% Unpaid Only 76% and Unpaid 14%

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Source: Based on analysis of data from the National Heath Interview Survey on Disability, 1994-1997.

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Individual Perspective

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What can individuals now age 65 What can individuals now age 65 expect over the rest of their lives?

What is the lifetime risk of needing LTC?

Likelihood of ever needing LTC? How much LTC needed? What will be spent on LTC?

Findings

LTC is about risk LTC is about risk Wide variation among individuals in lifetime

need and cost

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Averages

Among all people turning age 65:

Two-thirds will need some LTC over the rest of

  • t

ds eed so e C o e t e est o their lives

Average LTC need will be for 3 years Average LTC need will be for 3 years About half the years of LTC need will be

addressed solely with family care addressed solely with family care

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Years of LTC need w ill vary y w idely among individuals

Percent of people now age 65

20% 12% 31% 17% 20% Zero 1 year or less 1‐2 years 2‐5 years More than 5 years years

Years of LTC need after age 65

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Source: Kemper, Komisar & Alecxih, 2006.

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Spending for LTC w ill vary p g y w idely among individuals

Percent of people now age 65 Average = $47,000

42% 8% 14% 11% 19%

Average $47,000

Zero Less than $10 000 $10,000 ‐ $25 000 $25,000 ‐ $100 000 $100,000 ‐ $250 000 $250,000 or more

8% 14% 11% 5%

$10,000 $25,000 $100,000 $250,000 more

Total LTC cost after age 65 (all sources of payment) Present discounted value in 2005 dollars

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Source: Kemper, Komisar & Alecxih, 2006.

5

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LTC risk is largely uninsured

Unpaid care (family and friends): Large role Medicare Medicare

Limited coverage of nursing home and home health

care for medically related, rehabilitative services

Medicaid: Safety net Few people have private LTC insurance

0.2% of age 20-49; 6% of age 50-64; 10% of age 65+

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Why the private LTC y p insurance market is limited

Underwriting means many people can’t purchase it

An estimated 28% of people age 65-69 would not pass

underwriting

Demand is low

Premiums are high relative to resources of many people

g y p p who cannot afford or have higher priorities: medical insurance, medical care, education, retirement savings

High administrative costs make premiums high relative High administrative costs make premiums high relative

to expected claims

Uncertainty about stability of premiums and insurer

C b t b fit d

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Concern about benefit adequacy

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LTC services are expensive

Nursing home

Nationwide average: $77,400 per year in 2008 More than $125,000 per year, on average, in several of the most

expensive market areas (including New York metro area)

Assisted living

Nationwide average: $41,000 per year (base rate $36,400 plus

$4,600 for ADL support). Wide range among, and within, locations.

Home care (home health aide)

Nationwide average: $20 per hour. Varies by location: $12 to $28 20 hours/week @ $20/hour = $20,800 per year

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Sources: The MetLife Market Survey of Nursing Home & Assisted Living Costs, 2008; and The MetLife Market Survey of Adult Day Services & Home Care Costs, 2008.

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Most people have limited p p savings at retirement

M di h f h h ld 6 6

$238 000

Median net worth of households age 65‐69 (excluding home equity), by income groups , 2000

$238,000 $94,000 $3,000 $53,000 $22,000

Less than $15,650 $15,650‐$29,110 $29,110‐$45,760 $45,760‐$71,860 $71,860+ (27%) (27%) (21%) (15%) (11%)

Household Income (% of households)

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Source: Orzechowski & Sepielli, Net Worth and Asset Ownership of Households, U.S. Census Bureau, 2003.

Household Income (% of households)

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…even w hen home equity is q y included

Median net worth (in $1000s) of households age 65‐69 in 2000

Excluding Home Equity Including Home Equity

$450

Excluding Home Equity Including Home Equity

$105 $223 $238

$155

$94 $ Less than $15,650 (27%) $15,650‐$29,110 (27%) $29,110‐$45,760 (21%) $45,760‐$71,860 (15%) $71,860 or more (11%) $3 $ 5 $94 $22 $53 $32 (27%) (27%) (21%) (15%) (11%)

Household Income (% of households)

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Note: Income groups are income quintiles for households of all ages. Source: Orzechowski & Sepielli, Net Worth and Asset Ownership of Households, U.S. Census Bureau, 2003.

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Summary: Individuals

Individuals face a significant risk of needing

LTC in the future

The risk is largely uninsured Thus, in the event of needing extensive

LTC t l t i k f h ti LTC, most people are at risk of exhausting resources and relying on Medicaid

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National Perspective

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Medicaid and out-of-pocket p spending pay for most LTC

43%

Distribution of national spending for LTC, by payer

28% 18%

M di id O t f P k t M di P i t H lth & Oth

7% 4%

Medicaid Out‐of‐Pocket Medicare Private Health & LTC Insurance Other

Total = $231 billion in 2006

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Source: Avalere Health, Long-Term Care--An Essential Element of Healthcare Reform, The SCAN Foundation, 2008.

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Too many people go w ithout y p p g needed care

Prevalence of unmet need among community adults who need LTC Unmet Need Met Need 80% Unmet Need 20%

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Source: Based on analysis of data from the National Heath Interview Survey on Disability, 1994-1997.

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Unmet need is even higher Unmet need is even higher among people w ith low incomes

F tl N d

Among community Medicare‐Medicaid dual‐eligibles who need help with activities of daily living

No Unmet Need Frequently Need More Help 28%

More than half go without

No Unmet Need 42% Occasionally Need More Help 24%

go without needed assistance

24% Seldom Need More Help 5%

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Source: Komisar, Feder & Kasper, Unmet Long-Term Care Needs: An Analysis of Medicare-Medicaid Dual Eligibles, Inquiry 42(2), 2005. Based on a survey in six states.

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In the future, seniors w ill be a In the future, seniors w ill be a grow ing share of the population

People age 65 and older, as a percentage of total population

Age 65‐84 Age 85+

19 3% 20.0% 20.2% 1.5% 1.9% 1.9% 2.3% 3.5% 4.3% 12.4% 13.0% 16.1% 19.3% 5

2000 2010 2020 2030 2040 2050

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Source: U.S. Census Bureau Projections, August 2008.

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And the risk of needing LTC And the risk of needing LTC rises steeply w ith age

P f l i h Percentage of people in age group who have moderate to severe LTC needs, 2005 29% 1% 4% 10%

18‐64 65‐74 75‐84 85+

Age

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Note: Estimate for 2005, based on nursing home residents and community residents needing assistance with activities of daily living.

g

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SLIDE 25

In future decades, the LTC In future decades, the LTC population w ill grow in number

15

Projected number of adults with moderate to severe LTC needs, 2010‐2050

(in millions)

10 15 5 2010 2020 2030 2040 2050

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3 4 5

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And as a percentage of the And as a percentage of the population

Projected adults with moderate to severe LTC needs as a percent of the total adult population, 2010‐2050 3.0% 4.0% 1.0% 2.0% 0.0% 2010 2020 2030 2040 2050

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Summary

LTC is a risk faced by people of all ages –

and that risk is mostly uninsured

Thus, most people are at risk of financial

catastrophe and reliance on Medicaid, in the event of needing extensive LTC

Often, LTC needs are not adequately met

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Preparing for the future

Improve financing to share the financial risk

  • f LTC in an equitable way

Better financing will reduce unmet need

National cost of LTC is likely to grow

But by a manageable amount! Better LTC will reduce adverse medical events

There are a lot of ways to move forward

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There are a lot of ways to move forward

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Sources:

Komisar, H., Tumlinson, A., Feder, J. & Burke S. (2009) Long-term

Care in Health Care Reform: Policy Options to Improve Both. Long Beach, CA: The SCAN Foundation.

htt // th f d ti / ti l / i i d t / t ht l http://www.thescanfoundation.org/article/commissionedreports/reports.html

Feder, J., Komisar, H., & Friedland, R. (2007) Long-Term Care

Financing: Policy Options for the Future Washington D C : Financing: Policy Options for the Future. Washington, D.C.: Georgetown University Long-Term Care Financing Project. http://ltc.georgetown.edu/papers.html

Kemper, P., Komisar, H., & Alecxih, L. (2006) “Long Term Care Over

an Uncertain Future: What Can Current Retirees Expect?” Inquiry, 42(4), 335-350.

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About The Hilltop Institute

The Hilltop Institute at the University of Maryland, B lti C t (UMBC) i ti ll i d Baltimore County (UMBC) is a nationally recognized research center dedicated to improving the health and social

  • utcomes
  • f

vulnerable populations. Hilltop p p p conducts research, analysis, and evaluation on behalf of government agencies, foundations, and other non-profit

  • rganizations at the national state and local levels
  • rganizations at the national, state, and local levels.

www.hilltopinstitute.org

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Contact Information

Harriet L. Komisar, Ph.D. Senior Research Analyst Senior Research Analyst The Hilltop Institute University of Maryland, Baltimore County (UMBC) 410.455.6740 hkomisar@hilltop.umbc.edu www hilltopinstitute org

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www.hilltopinstitute.org