The Long-Term Care Conundrum

Long-term care is a patchwork quilt of personal savings, caring relatives and an already burdened Medicaid program.


By: Peter Weaver
NCPSSM,Vol.11,N 4

 September-October 2002

More than 13 million Americans require long-term care services—65 percent are seniors and 35 percent are younger people with various disabilities. More than 11 million family members provide daily caregiving services for disabled relatives. And most important, 77 million baby boomers will begin retiring in 2010, weakening the already burdened Medicaid system and intensifying the call to find more ways to finance long-term care.

"Reforming Social Security and Medicare cannot realistically take place without long-term care financing reform," says Patrick Brady, executive director of the Washington, DC-based Citizens For Long Term Care (CLTC) organization, a coalition comprised of the National Committee to Preserve Social Security and Medicare, AARP, long-term care employee unions, medical professionals and some insurance companies that offer long-term care coverage. Neither Social Security nor Medicare covers long-term care. Brady says we must reform the way we pay for long-term care because our current system will only get worse, leaving millions with inferior care and many with no care at all.

Today, long-term care financing is comprised of a combination of funding, such as the individual's personal savings, possibly buttressed with long-term care insurance coverage, contributions from the patient's family, and Medicaid resources funded by the state and federal government.

"Our system, which is supposed to assist seniors and the disabled, is dangerously fragmented because it's primarily financed with people's out-of-pocket expenditures and through Medicaid benefits," says Robert B. Friedland, who heads the Center on an Aging Society at Georgetown University.

Eligibility for Medicaid, Friedland says, is restricted to poverty level beneficiaries who must qualify for assistance. If you don't qualify as being "officially poor," you have to spend down your lifetime savings until you reach the poverty level at which time Medicaid coverage kicks in. Not everyone, he says, realizes that Medicare only pays for brief stays in nursing facilities for recovery and rehabilitation after being hospitalized.


Citizens For Long Term Care is leading a national coalition, which includes the National Committee, with Long-Term Care Awareness Week, Oct. 1 through Oct. 7.

The purpose of the national effort is to begin educating consumers, the media and elected officials about the importance of addressing long-term care issues, both in family conversations and as part of a national political dialogue. During the week, candidates are encouraged to participate in town hall meetings, spend time with a caregiver, visit a long-term care facility or deliver meals.

This year's theme is C.A.R.E.: Conversation, Action, Reform, Experience. It outlines the basics for moving forward with a national dialogue on long-term care financing reform.

  • Conversation: People need to address their long-term care needs with family members, and elected officials must lead a national conversation on long-term care issues.
  • Action: Learn about the types of long-term care available in your area including where, how and by who it is delivered.
  • Reform: Current national and state policies must be reformed. We must develop a comprehensive national long-term care policy.
  • Experience: Other people's experiences can be the best resource for educating yourself.
For more information about Citizens for Long Term Care, call 202-347-2582.


According to the American Health Care Association (AHCA), Medicaid is the largest payer for long-term care in the nation, paying for more than two-thirds of nursing facility patient days annually. Under Medicaid, each state sets a daily patient care reimbursement rate supposedly tied to the "allowable costs" of providing care in that state—costs such as 24-hour nursing care; three meals per day; other essential care services for grooming, personal care, bathing and eating; supplies such as beds and wheelchairs; social activities, and more in some states.

Each year, more and more people qualify for Medicaid benefits, while many state governments suffer from hefty budget deficits due in part to a troubled economy. This additional burden means there is less money to go around, and long-term care costs must compete with other priorities in state and federal budgets.

An analysis of the Medicaid program, commissioned by the AHCA and conducted by BDO Seidman, a national accounting firm, reveals that states are under-funding nursing homes by at least $3.5 billion annually, and the report predicts, "Medicaid shortfalls will continue to significantly increase for a variety of reasons." Joe Lubarsky, national director of BDO Seidman's Long-Term Care Services division, says the increasingly symbiotic budgetary relationship between Medicare and Medicaid—in addition to an increasingly negative fiscal outlook—is placing the nation's system of long-term care in greater danger. "While historically, Medicaid programs have always cost-shifted to other payers, the problem is compounded by the potential reductions in Medicare revenue due to elimination of certain payment add-ons effective Oct. 1, 2002, and current budget deficits facing most states, called the Medicare cliff," Lubarsky says.

"The National Committee is supportive of extending funding to nursing homes to prevent this shortfall, however, facilities must be held accountable for using that money on improving patient care and staffing levels," says Sharon Brigner, RN, a senior health policy analyst for the National Committee.

Sum: The cost of long term care has the potential to bankrupt most families very quickly. The current Medicaid based financing of long term care is an ineffective system. Using Medicaid as the primary payer for long term care is a demeaning outdated approach to As the baby boomers begin to utilize Medicaid, we will see a dramatic increase in government expenditures to pay for long term care.

Nursing home and long-term care facilities usually are the first to feel the brunt of a budget crunch, because facility administrators feel the pressure to cut staff in order to save money. When this happens, patients may be in danger. A recent report by the Centers for Medicare and Medicaid Services (CMS) noted that more than 97 percent of nursing homes are inadequately staffed. In addition to the findings of this alarming report, many part-time workers are not equipped to handle long-term care patients with special needs, or patients who may not be able to communicate clearly, such as patients with Alzheimer's disease.

The nursing home industry is concerned about the CMS report, which recommends adequate staffing levels, especially now when owners and managers claim they don't have enough money to keep existing employees.

"Staffing is becoming a major problem," says Susan E. Polniaszek, senior financial policy analyst with the American Association of Homes and Services for the Aging, which represents not-for-profit nursing homes and some assisted living facilities. To bolster staffing at labor-intensive times, nursing facilities would like to use "single-task" employees trained to cover, for instance, mealtime feeding chores. "These people could be part-time workers, such as stay-at-home moms, or other employees at the nursing home—administration staff, secretaries, activities directors, even receptionists," Polniaszek says. This additional staffing wouldn't cost a lot of extra money and could significantly reduce the daily workload for regular staffers.

While the single-task employment idea is embraced by both for-profit and not-for-profit nursing homes, the National Committee and the National Citizen's Coalition for Nursing Home Reform, a consumer advocacy group based in Washington, DC, vigorously oppose it. "We believe assigning single-task workers or feeding assistants to feed frail, elderly nursing home residents is reckless and we oppose this concept," says Donna R. Lenhoff, the coalition's executive director. She cites the potential danger of residents aspirating food (inhaling into the lungs and choking) delivered by poorly trained, part-time help. The National Committee and Lenhoff's organization want nursing homes to be required to hire more certified nursing assistants and registered nurses who are trained and licensed to feed, bathe, transfer and dress residents. The National Committee feels that federal regulations that would allow nursing homes to hire single task workers is a slippery slope that can easily lead to facilities trying to substitute these single task workers for qualified, licensed workers.

Many people who cannot perform certain everyday tasks want to stay in their own homes as long as possible with necessary services supplied by family members or home-care agencies.

According to a CLTC policy paper, the amount of money available to families for in-home care actually has decreased in recent years, despite Medicaid waivers in some states. In an attempt to reverse this trend, the U.S. Department of Health and Human Services, in partnership with the Robert Wood Johnson Foundation, is working on an experiment in three states (Arkansas, New Jersey, Florida) in which Medicaid cash payments are given to qualified disabled citizens who may use the money to pay for in-home caregiving services.

Another alternative is assisted-living facilities where patients receive professional help in an apartment or cottage with meals served in attractive, restaurant-style dining rooms. Most assisted-living residents pay for lodging and services out of pocket—as much as $2,500 to $3,500 a month.

Long-term care insurance pays as much as $3,500 to $4,500 a month for services provided by a skilled nursing facility including room, board, medical supervision and personal services. And, in most cases, there is coverage for in-home care or assisted-living costs. Premiums vary widely depending on age, medical history, geographic location and various add-on services. Purchasing long-term care insurance can be complicated, and consumers are advised to research the subject before buying individual coverage.

"The way to encourage more people to purchase long-term care insurance," Brigner says, "is to get state and federal governments to offer tax deductions to help cover premium costs and get more employers to provide low-cost group coverage." In fact, the federal government is offering its 20 million employees and retirees the opportunity to purchase affordable, group-purchase long-term care insurance starting this fall. "This is a huge step forward," Brigner says, "because the federal plan will also include employees' spouses, parents—even in-laws. "Our organization is looking forward to monitoring the purchasing trend of long-term care insurance policies. We certainly feel that long-term care insurance can be a wonderful option for some seniors—if they can afford it. However, long-term care policies should contain more consumer protections for the senior."

According to the Washington, DC, office of the Denver-based National Conference of State Legislatures, 24 states now offer tax relief to help cover premium costs. The National Committee endorsed legislation (HR. 831/ S 627) sponsored by Sens. Bob Graham (D-FL) and Chuck Grassley (R-IA) in the Senate and sponsored by Reps. Nancy Johnson (R-CT) and Karen Thurman (D-FL) in the House, called the "Long-Term Care and Retirement Security Act." The bill would provide tax deductions for premiums of qualified long-term care policies, a tax credit of up to $3,000 for caregivers, and incentives to employers who provide long-term care insurance options to their employees in cafeteria plans. With more than 52 million Americans who currently provide informal family caregiving services, the National Committee takes the position that family caregivers should receive tax relief for time spent providing caregiving services.

Anyone who needs or provides long-term care, in his or her own home, in a nursing home facility or in an assisted-living facility, knows that long-term care financing reform is severely needed and overdue. Most Americans still have not experienced the rigors of providing or receiving long-term care, and they are ignoring the financial burden soon to land upon them. But it will be obvious in the next few years, as baby boomers age and state budgets are squeezed, that the patchwork quilt called long-term care is destined to unravel.

"People need to find out what's going on," says Brady of CLTC. "Take a tour of a nursing home. See what home care is like. Then get in touch with members of Congress and our state legislators. Because, sooner or later, most of us are going to become involved, one way or another, with long-term care for ourselves or for a family member."


National Committee staff member Sharon Brigner, RN, contributed to this article.



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