Long-Term Care for the Disabled Elderly:
Current Policy, Emerging Trends and Implications for the 21st Century
By Robyn I. Stone, DrPH
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SINKING OR SWIMMING INTO THE FUTURE?

 

Given the rapidly changing health and long-term care environments, it is very difficult to predict what kind of financing and delivery system or set of systems will emerge in the future. There are, however, several givens as we approach the 21st century. The first is the major demographic shift which is about to overtake this country. Clearly, the number and proportion of elderly--particularly the very old--will increase dramatically, and with it the demand for long-term care. Despite a trend toward declining disability rates among the elderly, the sheer volume of the oldest-old projected to be alive in the first half of the 21st century suggests that we must continue our quest for more effective and efficient ways to finance and deliver long-term care.

Another trend which will undoubtedly prevail is the pivotal role of family and friends in providing long-term care assistance to disabled elders. Despite the ongoing myth of family abandonment, we have not seen a diminution of informal care, and there is no reason to believe that families will act differently in the future. Policy discussions about the financing and delivery of care in the United States will continue to focus on how to support informal caregiving, with the implicit or explicit objective of avoiding any substitution of formal, paid care for family care.

What may change is the nature and character of the informal networks available to provide those services. In the short term, there will be more adult children than are currently available to this cohort of elderly because of the very low fertility rates among this generation of "Depression Mothers". As we approach 2025 and beyond, however, the potential pool of adult child caregivers will begin to decrease. Coupled with more women remaining in the workforce and the trend toward delayed childbearing, an increasing "sandwich generation" will have to juggle the multiple demands of work, child care and elder care. To date we have not seen families substantially reduce their contributions to elder care, but if these trends are borne out, there may be a greater demand on the formal, paid sector to help adult daughters, in particular, juggle their competing demands.

Given the current fragmentation of long-term care policy in the United States and the underlying values of rugged individualism and market competition, it is unlikely that we will develop a unified, comprehensive financing and delivery strategy in the future. My ideal framework for reform is person-centered and, to the extent that relatives are involved in decisionmaking and provision of care, family-centered. The selection of services, providers, settings and systems linkages is based on the disabled elderly person's need for care over time and the personal, social, and environmental constraints within which the individual lives. Together with family members and formal care providers, individuals choose those services and setting which best meet the needs, preferences and desires of the consumer at a particular point in time, with alternatives available if needs and circumstances change.

We are unlikely to develop such a system anytime in the near future. However, this conceptual framework provides a tool for critically assessing financing, delivery and training strategies as we move into the next century.

Implications for Long-Term Care Financing

Based on data from the Long-Term Care Financing Model and the National Long-Term Care Survey, the Congressional Budget Office (1999) estimates that inflation-adjusted expenditures for long-term care for the elderly will grow annually by 2.6 percent between 2000 and 2040. Expenditures are projected to reach $207 billion in 2020 and $346 billion in 2040. Projections beyond the next 20 years should be viewed with caution because of uncertainties about demand as well as the nature, scope and costs of services in the long-term. For example, the estimates assume that the prevalence of disability will decline, on average, by 1.1 percent per year. If the projected elderly population in 2040 had the same prevalence of disability as that projected for 2000, total long-term care expenditures would be an estimated $484 billion, about 40 percent higher than CBO's estimate of $346 billion.

On the other hand, CBO's estimates include Medicare and Medicaid spending for skilled nursing facility and home health care as well as the non-medical institutional and home care services. These medically-oriented costs are currently included in our health care spending as well as our long-term care spending; in effect, we are double-counting these expenditures. If we were to separate these expenses from our long-term care accounting, estimates of future spending on long-term care would be reduced substantially.

How will we pay for the long-term care needs of an increasingly elderly population? After 30 years of debate about how to finance long-term care, it is almost certain that the United States will maintain its patchwork approach by incrementally tinkering with public and private funding strategies. We will continue to rely primarily on the unpaid labor of wives and adult daughters to provide the bulk of long-term care to disabled elderly family members. As caregivers become more recognized as the "unsung heroes" and as future generations of caregivers face more competing demands on their time, policymakers may pursue modest approaches to supporting informal care. President Clinton's proposed $1,000 tax credit to families caring for disabled elders is one example of such an initiative, one which resonates with Americans from a wide political spectrum because it uses the tax code, and not social programs, to provide financial assistance. Another modest effort is the Family and Medical Leave Act of 1993 which allows caregivers working for employers with at least 50 employees to take unpaid leave for up to 12 weeks per year to care for a severely disabled spouse or parent. These are relatively inexpensive ways to demonstrate that we appreciate the significant contributions of families.

More substantial benefits for caregivers would include requiring employers to let workers take time off with pay to care for a disabled family member, and including the accumulated caregiver years in calculating Social Security benefits. While several European countries already provide such benefits to their informal caregivers, we are not likely to see such actions any time in the near future. Policymakers and much of the American public fear that such generosity would lead to informal caregivers, primarily women, abrogating their responsibilities to provide the "free" care that has been part of their domestic obligations for centuries.

Tomorrow's elderly individuals and families, on average, will be wealthier than today's generation although there will be much variation within new generations of elderly. Baby boomers have more experience with using formal, paid care, including purchasing long-term care for their parents and grandparents, than the current cohort of elders. It is likely, therefore, that more elderly will be willing and able to purchase services in the future. At the same time, it is important to note that because of the positive correlation between lower incomes and disability, those most likely to need long-term care in the future are also the least likely to be able to pay for services out-of-pocket.

Just as we have failed to achieve universal coverage of health care for all Americans, it is unlikely that the United States will emulate the example of other Western industrialized countries which have spread the long-term care risk across populations and generations. We have neither the underlying philosophy of social solidarity nor the political will to create a social insurance program for long-term care similar to the one that was legislated in Germany in 1995. Through a combination of mandatory payments from workers (1.7 percent of gross income) and employers, including the sacrifice of one paid holiday annually, disabled Germans of all ages and incomes have access to a flexible array of home and community-based and institutional long-term care services. The home and community-based options include a case-managed service package and a discounted cash benefit that can be used at the discretion of the disabled person, including paying family members. Japan passed similar long-term care legislation in 1998, although a cash benefit option is not offered. In both countries, the payment levels are not estimated to cover the full costs. The systems are designed around informal care, to the extent that such care is available. The room and board charges for nursing home and residential care are expected to be paid for privately.

In this country, Medicaid is likely to continue to play a major role in financing long-term care at the state level, with increasing flexibility from the federal government to expand home and community-based options. If the economic boom of the late 1990s continues, some state and local governments may augment Medicaid funding to expand coverage to low and modest income elderly who do not financially qualify for the Medicaid program. As the proportion of elderly increases in communities across the country, we may also see more efforts by elderly advocates to pass the kinds of local levies that are currently being used to support long-term care in several counties in Ohio.

Medicare, on the other hand, is likely to finance less long-term care in the future. The pendulum has already swung in that direction with the ratcheting back of the home health benefit in the provisions of the 1997 BBA and the implementation of prospective payment for skilled nursing and home health care. While Medicare managed care may continue to enroll more elders, particularly those who have aged in from the commercial market, increased coverage for the more traditional low-tech personal care services provided at home, in assisted living or in nursing homes is not likely to develop in the near future. As post-acute and subacute benefits provided through skilled nursing facilities and home health agencies are limited by Medicare, it will be interesting to see whether there will be an increased demand on state Medicaid and state-only funded programs to fill in the gaps. Many state budgets are currently in good shape. If we were to experience a significant economic downturn, however, states would be hard pressed to meet the increasing demands of an aging population at the same time that potentially negative impacts of welfare reform were putting pressure on state coffers.

The future role of private long-term care insurance remains the subject of much debate, with one camp arguing that it will never be more than a "niche" market for relatively well-off young-old and others envisioning substantial growth in the market as baby boomers and their children age. The wild card in this debate is the extent to which an employer-based, group market will emerge to offer quality, affordable products to people at younger ages. Assuming that President Clinton's proposal to allow the federal government to experiment with a long-term care policy for its workers and retirees is passed by Congress, it will interesting to watch the evolution of this program. In particular, it will be important to see if and how participation grows over time, and what happens to the program when large numbers of participants file claims and are actually receiving services.

A wealthier and more highly educated population will probably want more choices of services and settings in the future. Financing strategies that offer flexibility in how dollars are used should appeal to more elderly Americans and their families in the 21st century. Policymakers in the public and private sectors should, therefore, be exploring the merits of a disability-based approach rather than financing strategies that limit consumer choices to a defined set of benefits. While I have argued above that a purely public financing model through a social insurance mechanism is not likely to be embraced in the United States, some have suggested (Rother, 1998) that the Social Security program could be the base for cash payments to people with long-term care needs. On the private side, a few insurers (e.g., UNUM, Aetna) currently offer a long-term care product that provides the claimant with a set dollar amount tied to level of disability, rather than access to a set of discrete services. Because of the discretion allowed, these policies are currently more expensive than the indemnity products. However, new generations of these plans could be designed and priced to meet a growing demand for more flexibility and choice. Furthermore, such products may be more appealing to individuals who purchase products at a relatively young age and who are not locked into a set of service options that may not be available 30 years later when the care is needed.

This monograph has highlighted the importance of housing as well as services in defining the needs of the elderly long-term care population. Several trends identified herein suggest that policymakers should consider separating or unbundling the financing of care from the financing of room and board. This would certainly help to level the playing field between institutional care and home and community-based care, since the costs of housing are currently recognized only in payment for nursing home care. Such a policy would support person-centered and family-centered care, where the service dollars could be used in the most appropriate and preferred setting.

The basis for the separation can become an arbitrary accounting exercise (Kane et al, 1998). Once a base price for room and board is set (based on real costs or linked to minimum ability to pay), individuals with varying levels of resources could purchase a range of amenities, as presently occurs in the general housing market. This is, in essence, what occurs in other countries such as Canada and Germany, where the basic price for room and board is set within the financial means of the poorest pensioner. This separation of services from room and board empowers the individual and the family in the marketplace; the service dollars can be expended wherever the disabled elder lives.

Several key points to be drawn from this discussion of long-term care financing include:


Implications for Service Delivery

Elderly and their families continue to express their preferences for home and community-based care. Despite the elderly mantra-"I never want to be a burden on my children"-most people, regardless of level of disability, do not want to go into a nursing home; most families don't look forward to nursing home placement. As the American population ages and future generations of elderly are, as a whole, wealthier and more highly educated than today's seniors, there will undoubtedly be increased demand for choices of provider and long-term care setting, with the overarching desire to remain in one's home for as long as possible. Furthermore, as more acute and post-acute care delivery shifts from the hospital and institution to the community, we are likely to see an expansion of high tech as well as low tech services being provided in the home environment.

With the aging of the baby boomers, housing developers are likely to pay more attention to the physical design of homes, and there may be more pressure to construct homes in which people can "age in place". Ramps instead of steps, grab bars in the bathroom and door handles that accommodate arthritic fingers may become the norm rather than the exception. Technological advances, ranging from telemedicine in rural areas to robots performing personal care functions may enhance the ability of disabled elders to remain independent in their own homes.

The growth of the assisted living industry in the 1990s is projected to continue into the 21st century. Given the fact that tomorrow's elderly are less likely to be homeowners than the elderly of today, the development of a variety of residential options is essential. Information to date, however, suggests that most assisted living is designed for the more well-to-do elderly, and that there is frequently very little assistance provided. Policymakers will need to address the question of how to make assisted living affordable for modest and low-income elders. In addition, if residential care is to meet the long-term care, and not just the housing, needs of the disabled elderly, policymakers will have to ensure that incentives are in place to encourage the provision of services, particularly for the cognitively impaired.

Despite the desire of many nursing homes to expand into subacute care and assisted living markets, demand for the more traditional, long-term, custodial level of care will remain in the future. A minority of severely disabled elders without adequate informal supports and housing arrangements will rely on the nursing home in the 21st century. One of the important questions that to date has only been addressed by a fraction of the industry is how to create environments that do not mimic hospitals, but that provide living spaces that are more home-like and inviting. Similarly, more attention needs to be paid to the visual and auditory limitations of residents, so that we minimize glare, improve acoustics and create environments that limit confusion and encourage independence.

The integration of services is an emerging issue in long-term care policy, but the rhetoric is much stronger than the reality. The extent to which this rhetoric becomes a reality depends, in part, on the degree to which funding for services becomes more streamlined in the future. While the incrementalist approach to policymaking in the United States lends itself to continued fragmentation, the movement towards managed care for the elderly may provide an infrastructure that allows for better coordination and integration of services for the chronically disabled in the future. This can only happen, however, if the initiatives go beyond the integration of governance and administration to the integration of providers and services.

As was noted above, the first generation of SHMO experiments failed to integrate care because of a lack of communication and coordination between acute and long-term care providers. We have a lot to learn from the PACE programs, which have successfully integrated care across the spectrum for the most chronically disabled elders living in the community. The challenge will be to figure out how to expand integrated models of service delivery to a larger population of individuals who may be less disabled and where an integrated approach could potentially delay or minimize further deterioration and reliance on more costly interventions.

With the increased focus on the development of outcome measures and evidence-based medicine to link quality of care to performance of providers, researchers in academic and clinical settings have been developing protocols for managing the treatments of chronically disabled patients. While most activity has been in disease management (for example, how to manage the care of a diabetic), a number of providers, including several members of the NCCC, are developing protocols that recognize multiple comorbidities and functional limitations and that assess and monitor the social as well as medical needs of the chronically disabled. These tools, however, are only as good as the information that supports them. While MCOs and provider organizations pay tremendous lip service to the need to manage patients, they are loathe to invest substantial sums into data systems that will not significantly enhance quarterly earnings. Policymakers in the private and public sectors must consider integrated management information systems as long-term investments that may be costly in the short-run, but that could produce cost savings and better quality of care over time.

One issue which still remains unresolved is the extent to which services integration can only occur where one entity is responsible for both funding and clinical outcomes (e.g., through some type of capitated, managed care system. This author believes that good coordination across services and systems of care, with ongoing communication between providers, sharing of data, and involvement of the individual and family in care planning, can be achieved without fully integrating the financing. Management of transitions, from the hospital to a nursing facility to the home, or even from formal home health care to informal caregiving in the home, must be coordinated and monitored to ensure continuity of care in appropriate settings. This may be difficult to achieve when there is lack of clarity about the onus of responsibility. Effective care management and linked information systems may, however, make it possible to successfully coordinate acute, post-acute and long-term care service delivery without requiring formal integration.

The trends suggest that the concept of "the elderly as a health consumer" will continue into the next century. As new generations of elderly are more highly educated and are more sophisticated about the health and long-term care marketplace, there will likely be a demand for more consumer-directed care. To date, long-term care policymakers have been ambivalent about this movement. On the one hand, the potential for less bureaucracy and administrative costs, coupled with a philosophy that resonates with the "rugged individualism" of our American psyche, is appealing. At the same time, policymakers have been concerned about too much consumer control. If the ultimate in consumer-direction-cash payments-were allowed, many fear that the dollars would be misused by the families or the elders themselves. Furthermore, the belief still prevails that elderly individuals, including those who are cognitively intact, are not willing or able to make prudent choices. Providers who have had a vested interest in the development of care industries are also loathe to give up clients who may opt for hiring and firing their own workers or paying a family member to provide care. Many providers (and some consumer advocates) argue that disabled elders will jeopardize their health and well-being by being subjected to poorer quality care with less oversight and monitoring.

More flexibility and choice also means more personal responsibility for the consumer. There must be a serious educational campaign associated with the expansion of consumer-directed care so that elders and their families understand the tradeoffs and the risks involved in choice. At the same time, they need guidance in how to become an empowered consumer in long-term care, including how to select the best and most cost-effective service modality, how to be an employer, and when it may be appropriate to give up some consumer control.

One of the more controversial aspects of this emerging trend is its challenge to the regulatory structure that was designed to improve quality of care in nursing homes and home health care. The enforcement of strict regulatory standards is difficult, if not impossible, to achieve in a consumer-directed environment. Furthermore, this approach is viewed by many advocates as antithetical to the philosophy of consumer direction which is built on individual autonomy and choice, including the choice to make mistakes. A consumer-directed service delivery system must encourage the development of alternative models of ensuring quality of care. This includes strengthening the long-term care ombudsman program (both financially and politically), empowering individuals and their families to monitor the quality of care and providing avenues for rectifying problems through public authorities and other intermediary organizations, and developing information on quality outcomes that can be made available to elderly consumers.

To summarize the discussion of the future of long-term care service delivery:


Impact on Workforce Development and Training

The preparation of a trained workforce is the weakest dimension of the three-legged stool of long-term care policy. The graying of America and the trend toward a more chronically rather than an acutely disabled population, cries out for health and long-term care professionals who understand how to treat the whole individual and the family. This monograph has pointed out the current dearth of physicians, nurses, therapists and social workers who have been exposed to some level of geriatric training. In their current zeal to encourage the development of primary care expertise in this country, policymakers have woefully neglected the skill sets which will be essential for meeting the needs of tomorrow's elderly. This lack of interest in and awareness of the need for geriatric concepts to permeate training programs is exemplified by the small geriatric branch in the U.S. Department of Health and Human Services' Heath Resources and Services Administration.

Clearly, more resources must be targeted to the development of geriatric training activities at the professional school level, in residency and fellowship programs, and in on-going in-service programs. As policymakers debate whether to reduce the amount of graduate medical education dollars provided through the Medicare program, it will be difficult to argue that some of those funds should be redirected toward geriatrics. On the other hand, future generations of health professionals will not be adequately prepared to care for disabled elders if we continue to ignore the problem.

We also need more research and demonstration projects that develop and test new curricula to attract trainees entering the health and long-term care professions. This includes more model development and evaluations of training materials and techniques that work best in different settings. Acute and long-term care providers must partner to offer integrated settings where physicians, nurses and therapists can learn how to coordinate services and manage care across time and care environment. Most of the limited federal support for geriatric training comes from the National Institute on Aging; the John A. Hartford Foundation is currently the only major non-profit source of funding for experimentation in this area. A major educational campaign is required to encourage other funders in the public and private sectors to invest in this critical area of professional development.

Perhaps the most important implication to be drawn from the review of data presented here is the looming crisis in the availability of committed and qualified paraprofessional workers to provide the basic long-term care services to disabled elders in institutions and in the community. The trends which warrant the most serious attention include the increased educational status of women, particularly minority women, in the next century and the tightening of immigration policies to limit those coming to the United States for family unification. These combined trends could significantly reduce the pool of potential workers interested in being employed by nursing homes, home care agencies or individuals and their families. While there is no way to predict the future health of local economies across the country, it is clear that in times of low unemployment, the competition for low wage workers will affect the pool of potential caregivers.

Future strategies for insuring the adequacy of this workforce must include as a major priority the development of monetary (wages and benefits) and more intrinsic incentives (such as career ladders) for recruitment and retention of paraprofessional workers. In addition, we must begin to explore the development of alternative labor pools, including older women who may want to continue working following formal retirement, former welfare recipients who see this opportunity as a prudent career move, and employees of temporary agencies. Finally, we must develop ongoing training programs that go beyond the basic entry requirements by periodically updating paraprofessional workers about new advances and technologies that will improve the efficiency and quality of their work. A special emphasis on culturally sensitive caring techniques will be required as intra and intergenerational relationships become more racially and ethnically diverse.

Finally, in this new age of the consumer, we must not forget that individuals also need information and training in how to manage their own care and how to manage the care provided to them by others. As more elders become computer-proficient, it may be possible to develop software packages and interactive programs that provide training without the disabled person ever having to leave her house. Families will also require better training about the aging process itself, the management of long-term care services, and how to be an effective caregiver without burning out. Policymakers must understand that an informed consumer is not a "free good." Resources will be required to assist in the development and dissemination of training materials and programs.

To sum up the compelling issues around workforce development and training: