July 2009

Grant Results

SUMMARY

The nation faces an increasing need for expensive long-term care, especially for its growing elderly population. From 2001 to 2007, researchers at Georgetown University's Health Policy Institute produced and commissioned a range of studies on long-term-care needs, costs and financing options.

Key Findings

  • People currently turning 65 will need long-term care for three years on average.
  • The need for long-term care—and the financial and personal burdens it entails—will be distributed very unevenly.

Key Conclusions

  • Absent policy changes, the use of private long-term-care insurance will likely grow, but the public safety net may deteriorate under the pressure of growing demand.
  • Policy changes can improve and expand private insurance, but the benefits will accrue largely to the top income tier.
  • Spreading risk across the broad population will require public insurance.
  • The gaps left by any strategy to improve either private or public insurance will require the nation to maintain an adequate safety net.

Funding
The Robert Wood Johnson Foundation (RWJF) supported this solicited project from February 2001 through July 2007 with a grant of $3,416,040.

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THE PROBLEM

According to two surveys from 2000 (the National Health Interview Survey and the National Nursing Home Survey), about 10 million Americans in 1999 needed help with basic tasks of daily life such as bathing, toileting, getting around the house and preparing meals. Most were age 65 or older (50 percent were age 85 and older), but 37 percent were younger than age 65. Of the 10 million needing care, more than four-fifths did not reside in nursing homes but lived in the community.

These numbers will increase. A federal study in 2003 (The Future Supply of Long-Term Care Workers in Relation to the Aging Baby Boom Generation, Report to Congress) suggests that the number of elderly adults needing long-term care could more than double by 2050.

Who Provides Care Now?

More than three-quarters of adults with long-term-care needs living in the community rely exclusively on unpaid assistance from family members, friends or volunteers, according to the 1994 and 1995 National Health Interview Surveys on Disability. The other 22 percent receive varying amounts of paid assistance—usually in combination with unpaid assistance—including:

  • Services provided by home health or home care agencies
  • Self-employed individuals
  • Adult day care providers

Only 8 percent of adults receiving long-term care at home have depended solely on paid care.

The Cost of Professional Care and the Safety Net

Paid long-term care can be costly. The MetLife Market Survey on Nursing Home and Home Care Costs found that the annual cost of nursing home care for an individual in 2002 averaged $52,000 for a semiprivate room and $61,000 for a private room. Four hours of daily home care cost about $26,000 annually.

Long-term-care insurance coverage is expensive and in limited supply. Many Americans face the risk of impoverishment in the event that they need extensive care, according to the Long-Term Care Financing Project at Georgetown University. That is, they are forced to "spend down" to qualify for Medicaid, the nation's safety net for individuals with long-term-care needs. Even that safety net is uncertain given the tremendous variation in state Medicaid programs and their vulnerability to changing state budgets.

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RWJF STRATEGY

RWJF has supported a large number of projects and programs in the area of long-term care. Much information can be found through the RWJF's Web site's home page for long-term care.

Grant Results Topic Summaries on RWJF-funded projects and programs cover the following topics:

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THE PROJECT

In this project, researchers at Georgetown University's Health Policy Institute sought to renew interest in and debate about the problem of long-term-care financing by:

  • Establishing a broader understanding of the problem
  • Developing a range of potential policy solutions
  • Analyzing the costs of these proposals

They also sought to nurture a research network on long-term care that included university-based researchers, analysts and policy-makers.

The institute solicited ideas for long-term-care financing options and received 20 proposals. It commissioned reports on eight of these options, in four areas:

  • Promoting private long-term-care insurance.
  • Expanding the long-term-care safety net for people with limited means.
  • Establishing public catastrophic long-term-care insurance and promoting complementary private insurance.
  • Establishing universal public long-term-care insurance.

Members of the project team also produced reports, fact sheets, issue briefs and other materials about long-term-care financing. These materials, as well as related reports, are available online.

A 14-member project advisory group (see the Appendix for its membership), drawn largely from leaders in long-term-care policy, helped select financing options for the project's commissioned studies and helped develop the economic assumptions affecting each option's cost.

A Setback

Initially, the project was to estimate the potential cost and other effects of deploying each of the eight commissioned long-term-care financing proposals using a simulation model being developed by The Lewin Group, a Falls Church, Va., consultant and a subcontractor to the project. The proposal papers would then be published as a group, perhaps in a special journal issue.

However, Lewin did not have the model ready on time, and once it was done, the project team continued to have problems with its base-case assumptions. Meanwhile, the authors of the financing proposal papers were told not to publish their work.

In the spring of 2006, after conferring with RWJF, the project staff decided to substitute available economic data and research for the model in estimating the effects of the alternative proposals. By this time, however, the policy environment had changed and the papers were less relevant. As a result, the project's work was far less influential than it otherwise might have been, according to RWJF's senior program officer for the project, Nancy Barrand.

Communications and Dissemination

The project team produced an extensive body of written materials, all available on the project's Web site, including:

  • An article, "Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect?" appearing in the Winter 2005–06 issue of the journal Inquiry. (Abstract available online.)
  • Eight commissioned reports outlining long-term-care financing options.
  • An overview report, Long-Term Care Financing: Policy Options for the Future (available online), examining a range of financing options, including those covered in the commissioned reports.
  • Five issue briefs.
  • Twelve fact sheets.
  • Four other reports.

Details on all of these materials can be found in the Bibliography.

The Web site also includes:

The institute publicized its materials through an e-mail list that grew to 8,000 correspondents during the course of the project.

The project also held two conferences and a workshop:

  • "The 21st Century Challenge: Providing and Paying for Long-Term Care," a conference held in Washington in May 2003. Approximately 115 researchers, academics, policy-makers and other interested individuals attended. C-Span covered the event. A webcast by the Kaiser Network and a transcript are available online. Also available online are the remarks, "Long-Term Care and the Policy Agenda," delivered at the conference by William Scanlon, director of the federal General Accounting Office.
  • "Toward a More Efficient and Effective System of Financing Long-Term Care," a conference held in Washington in June 2007. About 180 people attended. The conference featured presentations on the project's eight long-term-care financing proposals. A Kaiser Network webcast and transcript are available online.
  • "Financing Long-Term Care: Exploring Incremental Reform," a workshop held in Washington on April 21, 2004. About 53 individuals attended representing research organizations, foundations, interest groups—such as AARP, America's Health Insurance Plans and the National Alliance for Caregiving—and staff from the federal Department of Health and Human Services and congressional offices.

Members of the project team provided congressional testimony on four occasions during the project (see the Bibliography) and presented at outside conferences.

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FINDINGS

Researchers reported the following findings in their article, "Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect?" in Inquiry (abstract available online):

  • People currently turning 65 will need long-term care for three years on average. About two-thirds of this need will be met at home with a combination of unpaid family care and paid home health care. The remaining third will be provided in nursing homes and assisted living facilities. Public and private insurance will pay for 55 percent of the cost, with families paying the other 45 percent out of pocket.
  • The need for long-term care—and the financial and personal burdens it entails—will be distributed very unevenly. Three out of 10 seniors will require no long-term care, whereas two out of 10 will need five years or more. Similarly, half of those currently retiring will not have to pay any costs associated with their care, whereas 6 percent will need savings of at least $100,000 at retirement to meet their subsequent care expenses.
  • Policy debates focused on income security and acute care miss the third risk that retirees face-that they will require expensive long-term care. Social Security and Medicare are public programs that spread risks broadly. Neither private long-term-care insurance nor public programs (such as Medicaid, which pays for long-term care once individuals have depleted their savings) pool the risk of needing long-term care to the same degree.

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CONCLUSIONS

Researchers offered the following conclusions about options for financing long-term care in a report, Long-Term Care Financing: Policy Options for the Future (available online):

  • Absent policy changes, the use of private long-term-care insurance will likely grow, but the public safety net may deteriorate under the pressure of growing demand for long-term care. The primary beneficiaries will be upper-income families that can afford private insurance.
  • Policy changes can improve and expand private insurance, but the benefits will accrue largely to the top income tier.
  • The addition of publicly funded catastrophic coverage also will primarily benefit upper-income elderly. Both moderate-income elderly and younger people with disabilities will face high costs before the catastrophic policy provides benefits.
  • Spreading risk across the broad population will require public insurance. "Making private long-term-care insurance policies better for those who can afford them makes sense, but making it the centerpiece of the nation's long-term-care policy does not."
  • Public insurance, to be fiscally manageable, may offer only basic benefits and may phase in those benefits over time. No matter how generous, it will not cover everything or relieve families of the need to provide resources for their own care. But those private efforts will build on a predictable public core.
  • The gaps left by any strategy to improve either private or public insurance will require the nation to maintain an adequate safety net. Substantial numbers of people will always lack the resources to meet all of their potential needs. "Now and in the future, policy must therefore place a high priority on improving that safety net … assuring that everyone, regardless of the state in which they live, has access to services that assure a safe and decent quality of life."

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LESSONS LEARNED

  1. Commissioning papers is an excellent way to involve the broad policy community in developing and exploring ideas. The authors of the eight papers on financing options occupied a variety of positions within the field of research in long-term-care financing policy. Thus, their work to clarify a set of distinct policy options and consider their consequences had the effect of highlighting the problem for the field. (Project Director/Feder)
  2. Have a research tool in hand before you promise it to those doing work for you. In this project, a subcontractor could not deliver a complete model for simulating costs for financing options in time for project staff to use it. This not only undercut the overall effectiveness of the project, but also reduced the significance of the commissioned papers as individual contributions to their field. (Project Director/Feder)
  3. Reframing old policy discussions in somewhat new terms is a good way to energize a policy discussion. Situating alternative policy strategies along a spectrum defined by different degrees of a public-private engagement in the financing of long-term care helped soften the differences between those who strongly advocated a "market-oriented" approach and those advocating a "public" approach. It also allowed critics and proponents alike to talk about a mix of strategies. (Project Director/Feder)

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AFTER THE GRANT

The project Web site remains available as a resource for those interested in the project's reports. Project researchers anticipate giving future presentations based at least in part on the project's work and the expertise they developed through it.

The project director pointed to several other organizations that have relied on the project's publications in their continued work on long-term-care financing, including:

  • The National Academy of Social Insurance
  • The Center for American Progress
  • The Kaiser Family Foundation
  • AARP

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GRANT DETAILS & CONTACT INFORMATION

Project

Promoting long-term care policy development and debate

Grantee

Georgetown University (Washington,  DC)

  • Amount: $ 3,416,040
    Dates: February 2001 to January 2004
    ID#:  040524

Contact

Judith Feder, Ph.D.
(202) 687-8397
federj@georgetown.edu

Web Site

http://ltc.georgetown.edu/index.html

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APPENDICES


Appendix 1

Project Advisory Group

Susan Dentzer—Chair
Correspondent
The NewsHour with Jim Lehrer

Stuart Butler, Ph.D.
Vice President, Domestic and Economic Policy
Heritage Foundation
Washington, D.C.

Marc Cohen, Ph.D.
President
LifePlans
Waltham, Mass.

David Durenberger, J.D.
Chairman
The National Institute of Health Policy
University of St. Thomas and the University of Minnesota
Minneapolis, Minn.

Lex Frieden, M.S.
Senior Vice President
The Institute for Rehabilitation and Research
Houston, Texas

James Jackson, Ph.D.
Director
Institute for Social Research, University of Michigan
Ann Arbor, Mich.

Jim Knickman, Ph.D.
President and Chief Executive Officer
New York State Health Foundation
New York, N.Y.

Nelda McCall
President
Laguna Research Associates
San Francisco, Calif.

Larry Polivka, Ph.D.
Director
Florida Policy Exchange Center on Aging
University of South Florida
Tampa, Fla.

Richard Price, M.A.
Director of Grassroots and Communications
Hart Health Strategies
Washington, D.C.

David Pryor, LLB
Professor and Founding Dean
University of Arkansas Clinton School of Public Service
Little Rock, Ark.

William Scanlon, Ph.D.
Health Policy Consultant
Oak Hill, Va.

Shyrl Sistrunk, M.D.
Assistant Professor, Department of Medicine
Georgetown University Hospital
Washington, D.C.

Joshua Weiner, Ph.D.
Senior Fellow and Program Director
Aging, Disability, and Long-Term Care
ETI International
Washington, D.C.

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BIBLIOGRAPHY

(Current as of date of this report; as provided by grantee organization; not verified by RWJF; items not available from RWJF.)

Articles

Kemper P, Komisar H and Alecxih L. "Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect?" Inquiry, 42(4): 335–350, 2006. Abstract available online.

Reports

Financing Proposals
Bishop C. A Federal Catastrophic Long-Term Care Insurance Program: Working Paper No. 5. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Burman L and Johnson R. A Proposal to Finance Long-Term Care Services Through Medicare With an Income Tax Surcharge: Working Paper No. 8. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Chen Y-P. A Trade-Off Proposal for Funding Long-Term Care: Working Paper No. 7. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Cutler J, Shulman L and Litow M. MEDI-LTC: A New Medicare Long-Term Care Proposal: Working Paper No. 1. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Knickman J. Forced Savings as an Option to Improve Financing of Long-Term Care: Working Paper No. 3. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Lynch M, Estes C and Hernandez M. Long-Term Care Policy Option Proposal: Consumer Controlled Chronic, Home, and Community Care for the Elderly and Disabled: Working Paper No. 4. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Tumlinson A and Lambrew J. Linking Medicare and Private Health Insurance for Long-Term Care: Working Paper No. 6. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Warshawsky M. The Life Care Annuity: A Proposal for an Insurance Product Innovation to Simultaneously Improve Financing and Benefit Provision for Long-Term Care and to Insure the Risk of Outliving Assets in Retirement: Working Paper No. 2. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Overview Report
Feder J, Komisar H and Friedland R. Long-Term Care Financing: Policy Options for the Future. Washington: Georgetown University Long-Term Care Financing Project, 2007. This overview is available online.

Issue Briefs
Friedland R. Caregivers and Long-Term Care Needs in the 21st Century: Will Public Policy Meet the Challenge? Washington: Georgetown University Long-Term Care Financing Project, 2004. Available online.

Kofman M and Thompson L. Consumer Protection and Long-Term Care Insurance: Predictability of Premiums. Washington: Georgetown University Long-Term Care Financing Project, 2004. Available online.

O'Brien E. Medicaid's Coverage of Nursing Home Costs: Asset Shelter for the Wealthy or Essential Safety Net? Washington: Georgetown University Long-Term Care Financing Project, 2005. Available online.

Summer L. Community-Based Long-Term Services Financed by Medicaid: Managing Resources to Provide Appropriate Medicaid Services. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Thompson L. Long-Term Care: Support for Family Caregivers. Washington: Georgetown University Long-Term Care Financing Project, 2004. Available online.

Fact Sheets
Kofman M. Private Long-Term Care Insurance. Washington: Georgetown University Long-Term Care Financing Project, 2003. Available online.

Komisar H and Thompson L. National Spending for Long-Term Care. Washington: Georgetown University Long-Term Care Financing Project, updated 2007 (2005 data). Available online.

Komisar H and Thompson L. National Spending for Long-Term Care. Washington: Georgetown University Long-Term Care Financing Project, 2007 (2004 data). Available online.

Komisar H and Thompson L. Who Pays for Long-Term Care? Washington: Georgetown University Long-Term Care Financing Project, 2004. Available online.

Merlis M. Medicaid and an Aging Population. Washington: Georgetown University Long-Term Care Financing Project, 2004. Available online.

Merlis M. Tax Code Treatment of Long-Term Care and Long-Term Care Insurance. Washington: Georgetown University Long-Term Care Financing Project, 2003. Available online.

O'Brien E. Medicare and Long-Term Care. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

O'Brien E and Merlis M. Medicaid's Spousal Impoverishment Protections. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Rogers S and Komisar H. Who Needs Long-Term Care? Washington: Georgetown University Long-Term Care Financing Project, 2003. Available online.

Shirey L and Komisar H. Who Pays for Long-Term Care? Washington: Georgetown University Long-Term Care Financing Project, 2003. Available online.

Summer L. Medicaid and Long-Term Care. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Summer L. Medicaid and Long-Term Care. Washington: Georgetown University Long-Term Care Financing Project, 2003. Available online.

Other Reports
Friedland R. Faces of Long-Term Care: A Look in the Mirror. Washington: Georgetown University Long-Term Care Financing Project, 2007. Available online.

Merlis M. Home Equity Conversion Mortgages and Long-Term Care. Washington: Georgetown University Long-Term Care Financing Project, 2005. Available online.

Summer L. Choices and Consequences: The Availability of Community-Based Long-Term Care Services to the Low-Income Population. Washington: Georgetown University Long-Term Care Financing Project, 2003. Available online.

World Wide Web Sites

http://ltc.georgetown.edu. Georgetown University Long-Term Care Financing Project— contains a project description, project papers, fact sheets and issue briefs, facts about long-term care, useful links, a listing of project advisory board members and contact information. Washington: Georgetown University Long-Term Care Financing Project, 2003.

Presentations and Testimony

Judith Feder, "Long-Term Care," to the Subcommittee on Health of the House Committee on Ways and Means, April 19, 2005. Available online.

Judith Feder, "Medicaid Waste, Fraud and Abuse: Threatening the Health Care Safety Net," to the Committee on Finance, U.S. Senate, June 29, 2005. Available online.

Judith Feder, "Long-term Care and Medicaid: Spiraling Costs and the Need for Reform," to the Subcommittee on Health, Committee on Energy and Commerce, U.S. House of Representatives, April 27, 2005. Available online.

Robert Friedland, "Long-Term Care: Are Americans Prepared?" to the Special Committee on Aging, U.S. Senate, March 9, 2006. Available online.

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Report prepared by: James Wood
Reviewed by: Robert Narus
Reviewed by: Molly McKaughan
Program Officer: Nancy Barrand

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