"The Long and the Short of the Long Term Care Financing Crisis" by Anya Rader Wallack and Jean McGuire

In Massachusetts, just 32 percent of enrollees in MassHealth, the state’s Medicaid program, are elders and people with disabilities, yet these groups account for 63 percent of state Medicaid expenditures. The disproportionate share of costs is due, in part, to the expensive and labor-intensive long-term care needs required by many in both demographics. This includes assistance with Activities of Daily Living and Instrumental Activities of Daily Living. The former includes help with bathing, dressing, and getting in and out of bed, while the latter also includes help with preparing meals, paying bills, and managing medication.

State demographic trends show that both populations are going to grow rapidly over the next decade. The total number of individuals with disabilities between the ages of 16 and 64 is expected to increase by 12 percent between 2004 and 2015; subsets of this population, such as those under age 24, are expected to grow by more than 20 percent. Medicaid, in this state and nationally, is the primary payer of long-term support services and yet it covers far less than the nearly 20 percent of the state’s population that at any time could be in need of this assistance.

The amount of money spent on long-term care is considerable. A November, 2007 study by the AARP Public Policy Institute estimated that approximately 700,000 to 1 million Bay State residents provided approximately $8.8 billion

(yes, billion with a ‘b’) worth of services that year for loved ones in need of long-term care that were not covered by private insurance, Medicare, or MassHealth. In 2008, an additional $4.8 billion in long-term care services for elders and people with disabilities was paid by MassHealth ($2.8 billion) and other states agencies ($2 billion) operating under the auspices of the Executive Office of Health and Human Services and the Executive Office of Elder Affairs.

Many of our long-term care dollars are spent on nursing homes and other institutional settings even though the overwhelming preference of those in need of long-term care services is to receive community-based care. The state’s 2008 Community First Olmstead Plan, a community-based long-term care action plan, is based on the understanding that elder and disabled members of MassHealth wanted more access to home- and community-based care, and, if given the choice, would take such services over those provided in institutional settings. These findings echo a 2000 national survey by the AARP of individuals age 45 and over. But we don’t have the services — or the resources — in place to fully meet this demand.

Private insurance may be a part of the answer over time. In fact, the number of Massachusetts residents with long-term care insurance more than doubled between 1998 and 2004 (from 65,928 to 136,287), but approximately six percent of people who turned age 65 in 2005 can expect to incur out-of-pocket expenditures of $100,000 or more on long-term care services. And approximately 12 percent of people who turned 65 in 2005 will spend anywhere from $25,000 to $100,000 on long-term care costs. These costs will come about, in part, because we have relied on a medical insurance model to pay for services that aren’t reimbursable (help getting dressed, for example, or managing medications). Additionally, we have yet to develop an effective strategy that would inter-link public and private financing and support in an effective manner.

Neither the problem of the rising costs of long-term care services nor the desire for increased availability of home- and community-based care options will be solved by simply moving state monies out of nursing homes and into alternative care delivery models. Strategic planning by policy makers, providers, advocates, and consumers is necessary to ensure that capacity is built to provide services in the community, that individuals are appropriately screened for services, and that we don’t simply replace expensive institutional care with equally expensive community-based care.

The challenge we now face is to build a system for delivering and financing the long-term care services that more and more of us are going to need in the years ahead. And we must do so amid an historic economic downturn that is squeezing public and private dollars alike. One of the first steps in meeting that challenge will take place today when more than 100 long-term care policy makers and advocates will convene to talk about the work that needs to be done and how we can get it done. Sponsored by the Massachusetts Medicaid Policy Institute and the Blue Cross Blue Shield of Massachusetts Foundation, in collaboration with Massachusetts Executive Office of Health and Human Services, the confab doesn’t boast the most scintillating title (“Long-Term Care Financing in Massachusetts: Current Challenges, Future Trends and Policy Options”), but the work could not be more critical to the Commonwealth’s future health.

Watch this space for discussion of some of the ideas that come out of today's conference.

Anya Rader Wallack is the Executive Director of the Massachusetts Medicaid Policy Institute. Jean McGuire is Assistant Secretary of the Office of Disability Policy and Programs of the Executive Office of Health and Human Services.