State discretion and medicaid program variation in long-term care: when is enough, enough?

Although federal statutes and regulations establish the broad parameters within which state Medicaid programs operate, the federal government grants states substantial discretion over Medicaid and Medicaid-funded long-term care. An appreciation of resulting cross-state variation in Medicaid program characteristics, however, has been lacking in the ongoing debate over whether the federal government should further devolve responsibility for caring for the poor and disabled elderly to the states. To better inform this discussion, therefore, this article documents considerable variation, not only in terms of Medicaid program spending and recipients, but also in terms of strategies chosen to reform long-term care services and financing. Since there is little doubt that states take full advantage of current levels of discretion, advocates of devolution may want to reassess their views to consider whether existing variation has resulted in inequities addressable only through more, not less, federal involvement.     

State Discretion and Medicaid Program Variation in Long-Term Care

Summary

Although federal statutes and regulations establish the broad parameters within which state Medicaid programs operate, the federal government grants states substantial discretion over Medicaid and Medicaid-funded long-term care. An appreciation of resulting cross-state variation in Medicaid program characteristics, however, has been lacking in the ongoing debate over whether the federal government should further devolve responsibility for caring for the poor and disabled elderly to the states. To better inform this discussion, therefore, this article documents considerable variation, not only in terms of Medicaid program spending and recipients, but also in terms of strategies chosen to reform long-term care services and financing. Since there is little doubt that states take full advantage of current levels of discretion, advocates of devolution may want to reassess their views to consider whether existing variation has resulted in inequities addressable only through more, not less, federal involvement.     

Financing Reform for Long-Term Care

The way the nation provides for the financing and delivery of long-term care is badly in need of reform. The principal options for change are private insurance, altering Medicaid, and 110 FROM NURSJNG HOMES TO HOME CARE public long-term care insurance. This article uses the Brookings-ICE Long-Term Care Financing Model to evaluate each of these options in terms of affordability, distribution of benefits, and ability to reduce catastrophic out-of-pocket costs. So long as private insurance is aimed at the elderly, its market penetration and ability to finance long-term care will remain scverely limited. Affordability is a major problem. Selling to younger persons could solve the affordability problem, but marketing is extremely difficult. Liberalizing Medicaid could help solve the problems of long-term care, but there is little public support for means-tested programs. Finally, universalistic public insurance programs do well in meeting the goals of longterm care reform, but all social insurance programs are expensive and seem politically infeasible in the current political environment. The way the nation provides for the financing and delivery of long-term care is badly in need of reform. No other part of the health care system generates as much passionate discontent as does long-term care. At the heart of the problem is the absence of any satisfactory way to help people anticipate and pay for long-term care. The disabled elderly find, often to their surprise, that the costs of nursing home and home care are not covered to any significant extent by Medicare or private insurance. Instead, they must rely on their own savings or, failing that, turn to welfare in the form of Medicaid. At a national average cost of $40,000 a year for nursing home care, long-term care is a leading cause of catastrophic out-of-pocket health care costs for the elderly. In addition, despite the strong preferences of the disabled for home and community-based services, current financing is highly skewed toward care in nursing homes. While the debate over long-term care reform has many facets, it is primarily an argument over the relative merits of private- versus publicsector approaches. Differences over how much emphasis to put on each sector partly depend on values that cannot be directly proved or disproved. Some believe that the primary responsibility for care of the elderly belongs with individuals and their families, and that government should act only as a payer of last resort for those unable to provide for themselves. The opposite view is that the government should take the lead in ensuring comprehensive care for all disabled older people, regardless of financial need, by providing comprehensive, compulsory social insurance. In this view, there is little or no role for the private sector. Between these polar positions, many combinations of public and private responsibility are possible.     

Controlling the supply of long-term care providers in thirteen states

Many states have responded to growing Medicaid long-term care expenditures by limiting the number of long-term care providers through certificate-of-need (CON) programs and moratoriums on new construction or certification for participation in the Medicaid program. This article focuses on the use of these policies in 13 states. Most of the 13 states control the supply of nursing home beds and hospital conversions with CONs or moratoriums, but they are struggling to adapt the role of supply policy to the growth of home health and residential care. As an increasing proportion of Medicaid long-term care spending goes to these nursing home alternatives, supply policy needs to keep pace with the changing provider market and the changing demographics of the consumer market if it hopes to ensure access to long-term care and control Medicaid expenditures.     

Financing reform for long-term care: strategies for public and private long-term care insurance

The way the nation provides for the financing and delivery of long-term care is badly in need of reform. The principal options for change are private insurance, altering Medicaid, and public long-term care insurance. This article uses the Brookings-ICF Long-Term Care Financing Model to evaluate each of these options in terms of affordability, distribution of benefits, and ability to reduce catastrophic out-of-pocket costs. So long as private insurance is aimed at the elderly, its market penetration and ability to finance long-term care will remain severely limited. Affordability is a major problem. Selling to younger persons could solve the affordability problem, but marketing is extremely difficult. Liberalizing Medicaid could help solve the problems of long-term care, but there is little public support for means-tested programs. Finally, universalistic public insurance programs do well in meeting the goals of long-term care reform, but all social insurance programs are expensive and seem politically infeasible in the current political environment.     

Paid family caregiving: a review of progress and policies

Policymakers in the United States have begun to examine solutions that encourage increased sharing of caregiving responsibilities between government and family. Initiatives in Sweden and the United Kingdom are now in place. Support includes a care leave policy implemented at the federal level, paying salaries to family members when caregiving is a regular job, providing job training to salaried caregivers when their personal caregiving experience ends, community-based programs for caregivers, and allowances to be used for providing care to an elderly person. In the United States, 13 states pay caregivers as Medicaid providers. Policymakers have considered tax incentives and, in 1975, U.S. Senate Bill 1161 was introduced but failed as an attempt to provide cash subsidies to families caring for the elderly. A proposal has been made to expand the Temporary Disability Model to include care of family members of all ages by providing adequate wage replacement to assist caregivers. At present, 34 states provide some type of economic support for caregivers. Research is needed to determine what types of programs are most acceptable and beneficial to caregivers as well as cost effective for government.     

Sociological gains and losses: The case of the national health care use and expenditure surveys

This article reflects on the role of sociological concepts and of sociologists in a series of national surveys that have proved important to national health policy in financing and access to health care. The development of the early surveys in a university setting and their migration to the government is discussed, as is the relative influence of sociologists and economists. The changing focus of health policy from access to care through expanded government programs, to cost containment and utilization control, provides an important context for understanding these developments. Areas are identified where sociologists can make significant contributions to health policy in financing and access to care. She received her PhD in Sociology from the University of Chicago. She spent six years as a Senior Sociologist at NCHSR working on all aspects of the NMCES, and three years as an analyst in the Office of Research at the Health Care Financing Administration. He received his PhD in Sociology from New York University. He joined NCHSR to conduct analyses of the NMCES data and has had major responsibilities in the design of NMES.     

The Program of All-Inclusive Care for the Elderly (PACE): an innovative long-term care model in the United States

This article examines the long-term care service system in the United States, its problems, and an improved long-term care model. Problematic quality of care in institutional settings and fragmentation of service coordination in community-based settings are two major issues in the traditional long-term care system. The Program of All-Inclusive Care for the Elderly (PACE) has been emerging since the 1970s to address these issues, particularly because most frail elders prefer community-based to institutional care. The Balanced Budget Act of 1997 made PACE a permanent provider type under Medicare and granted states the option of paying a capitation rate for PACE services under Medicaid. The PACE model is a managed long-term care system that provides frail elders alternatives to nursing home life. The PACE program's primary goals are to maximize each frail elderly participant's autonomy and continued community residence, and to provide quality care at a lower cost than Medicare, Medicaid, and private-pay participants, who pay in the traditional fee-for-service system. In exchange for Medicare and Medicaid fixed monthly payments for each participating frail elder, PACE service systems provide a continuum of long-term care services, including hospital and nursing home care, and bear full financial risk. Integration of acute and long-term care services in the PACE model allows care of frail elders with multiple problems by a single service organization that can provide a full range of services. PACE's range of services and organizational features are discussed.     

Future of Long-Term Care Financing for the Elderly in Korea

ABSTRACT

With rapid aging, change in family structure, and the increase in the labor participation of women, the demand for long-term care has been increasing in Korea. Inappropriate utilization of medical care by the elderly in health care institutions, such as social admissions, also puts a financial burden on the health insurance system. The widening gap between the need for long-term care and the capacity of welfare programs to fulfill that need, along with a rather new national pension scheme and the limited economic capacity of the elderly, calls for a new public financing mechanism to provide protection for a broader range of old people from the costs of long-term care. Many important decisions are yet to be made, although Korea is likely to introduce social insurance for long-term care rather than tax-based financing, following the tradition of social health insurance. Whether it should cover only the elderly long-term care or all types of long-term care including disability of all age groups will have a critical impact on social solidarity and the financial sustainability of the new long-term care insurance. Generosity of benefits or the level of out-of-pocket payment, the role of cash benefits, and the relation with health insurance scheme all should be taken into account in the design of a new financing scheme. Lack of care personnel and facilities is also a barrier to the implementation of public long-term care financing in Korea, and the implementation strategy needs to be carved out carefully.     

Long-term care funding in Canada: a policy mosaic

When Canada was founded, health care was delegated as a provincial responsibility. Although the federal government shares a portion of health care costs, it is not directly responsible for the planning, delivery, and governance of health services. The 1984 Canada Health Act set national standards for the provision of physician and hospital services, but it does not apply to home care and long-term care facilities. Consequently, each province has established a unique approach to long-term care, resulting in a health policy mosaic. This paper examines different approaches to funding long-term care with a particular emphasis on the impacts of regionalization and of the implementation of case-mix-based funding systems.     

Future of long-term care financing for the elderly in Korea

With rapid aging, change in family structure, and the increase in the labor participation of women, the demand for long-term care has been increasing in Korea. Inappropriate utilization of medical care by the elderly in health care institutions, such as social admissions, also puts a financial burden on the health insurance system. The widening gap between the need for long-term care and the capacity of welfare programs to fulfill that need, along with a rather new national pension scheme and the limited economic capacity of the elderly, calls for a new public financing mechanism to provide protection for a broader range of old people from the costs of long-term care. Many important decisions are yet to be made, although Korea is likely to introduce social insurance for long-term care rather than tax-based financing, following the tradition of social health insurance. Whether it should cover only the elderly longterm care or all types of long-term care including disability of all age groups will have a critical impact on social solidarity and the financial sustainability of the new long-term care insurance. Generosity of benefits or the level of out-of-pocket payment, the role of cash benefits, and the relation with health insurance scheme all should be taken into account in the design of a new financing scheme. Lack of care personnel and facilities is also a barrier to the implementation of public long-term care financing in Korea, and the implementation strategy needs to be carved out carefully.     

Health care reform: managed competition and beyond

Since the election, the health care reform debate has focused on three broad features: implementation of managed competition, changes in the tax treatment of health insurance, and the imposition of budget caps or targets. The basic element of managed competition is the creation of sponsors who act as collective purchasing agents for large groups of individuals. One of the potentially most politically difficult issues in implementing any health care reform proposal is likely to be defining the minimum standard benefit package. It will determine the costs society bears, the income of providers, the health of many individuals, and the attributes of a workable health care reform package. Managed competition is intended to foster competition among health plans on the basis of cost and quality. The measures of quality actually employed in the health care system will determine in large part the incentives faced by insurers, providers, and consumers. The problem of adverse selection is potentially the most important issue in reforming the health insurance market. If individuals can opt not to purchase health benefits, poorer risks will be more likely to purchase health insurance than good risks, and at minimum the price of these benefits will be higher than would otherwise be the case. Managed competition requires that individuals share at least some of the financial consequences of their choices among health plans. As a result, most managed competition proposals change the tax code by limiting the exclusion of employer contributions to health insurance from worker's taxable income. Changing the health insurance market, mandating employer health benefits, and changing the tax code may have significant effects on the health care delivery system, but they are unlikely to reduce health care cost inflation in the near term. One of the proposals for restraining the growth in health care costs is the imposition of a budget on the amount spent on health care services. The combination of the constraints placed on federal governmental action by the budget and the significant political problems involved in reaching a consensus on the important elements of health care reform may limit the ability of the federal government to implement national health care reform in the near term. As a result, individual states may be encouraged by the federal government to continue to experiment with their own health reform programs.     

Long-Term Care Funding in Canada

Summary

When Canada was founded, health care was delegated as a provincial responsibility. Although the federal government shares a portion of health care costs, it is not directly responsible for the planning, delivery, and governance of health services. The 1984 Canada Health Act set national standards for the provision of physician and hospital services, but it does not apply to home care and long-term care facilities. Consequently, each province has established a unique approach to long-term care, resulting in a health policy mosaic. This paper examines different approaches to funding long-term care with a particular emphasis on the impacts of regionalization and of the implementation of case-mix-based funding systems.     

Medicaid matching formula, federal subsidies, and Medicaid payments

The federal government uses the Medicaid matching formula to distribute federal funds to states to finance various social welfare programs involving billions of dollars. How does the formula affect the distribution of federal money? How would that distribution change if a revised formula were used? This article presents the results of a regression analysis on Medicaid payments in the states and the federal subsidies for states to finance Medicaid. The findings indicate that under the current Medicaid matching formula, fewer federal subsidy dollars per poor person go to states with lower per capita incomes and to states with a higher percentage of African Americans than to states with the opposite characteristics. Even under the revised formula, states with lower per capita incomes would receive the same amount of federal matching dollars per poor person as would states with higher per capita incomes. The implications for policy are discussed.     

Medicaid Funding for Assisted Living Care: A Five-State Examination

Medicaid waiver programs financing assisted living care are examined in five states to gain insights about program implementation, accomplishments, and challenges. Documents, augmented with stakeholder interviews, are used to describe income eligibility, options for supplementing payments to facilities, risk adjustment payment levels, and participation. Needs determination and waiver-based payments are in place. Eligibility and funding levels are complicated by room and board allocations that are linked to the federal benefit rate for Supplemental Security Income. Provider participation may be diminishing. Many recipients have to accept shared occupancy as program payments are insufficient for single units.     

On the Integration of Science and Practice in College Health

Abstract

College health professionals want to assure the unique healthcare and health education needs of college students will continue to be met under national and state healthcare reform. This may be an “all or nothing” proposition. Either colleges and universities will have exclusive control of healthcare delivery for the college student population or else college health will not be a major force in healthcare reform. If college health is to play a meaningful role in future government-controlled health insurance programs, it must first demonstrate that current health services and insurance financing programs meet minimum quality standards. This proposal calls for expanding existing federal laws to create qualified student health plans and integrating the college health model into a reform package based on employer-sponsored health insurance. The concept of qualified student health plans allows for a high degree of flexibility that can be integrated into the majority of state and federal healthcare reform proposals, including the plan proposed by President Clinton, that are not based on a single-payer system. Ultimately, the authors suggest, their proposed plan would eliminate the current situation, in which large numbers of college students are uninsured or underinsured.     

Elders with Serious Mental Illness: Lost Opportunities and New Policy Options

This article reviews key federal Medicaid policies affecting older adults with serious, long-term mental illness: (a) the Medicaid exclusion of coverage for Institutions for Mental Diseases, (b) the Preadmission Screening and Resident Review Process, and (c) the Medicaid Home and Community Based Services waiver policy. Documenting the incentives and restrictions in these policies provides an historical context for understanding the current gaps in treatment for elders with mental illness. New federal options under the Deficit Reduction Act may provide opportunities for reducing the institutional bias for older adults with mental illness and for improving mental health services for elders under Medicaid.     

Long-term care and the private insurance market

Increased life expectancy and the aging of the baby boom generation will bring rapid growth in the number of people at risk of needing long-term care (LTC). This Issue Brief provides an overview of the current LTC financing and delivery system in the United States, focusing on private-sector initiatives to meet the United States' LTC needs. It discusses private-sector plan design--particularly employment-based plan design--providing an in-depth look at the dramatic changes taking place in the private-sector LTC market since its inception in the early and mid 1980s. Aside from informal care provided in the community, the current system of financing LTC depends largely on the Medicaid program and individual financing. Issues confronting this system include spiraling costs associated with LTC services that may threaten beneficiaries' access to care. Other issues include the potential depletion of personal assets and a bias toward institutionalization (which may not always provide the most cost-effective or desired type of care available). Many leaders regard private long-term care insurance (LTCI) as a way to increase access to financing and as a potential alternative to Medicaid and out-of-pocket financing. By the end of 1993, a total of 3.4 million private-sector LTCI policies had been sold, up from approximately 815,000 in 1987. While the majority of these plans were sold to individuals or through group associations, employment-based plans accounted for a significant proportion of this growth. Premiums for LTCI vary substantially based on age and plan design. Insurers generally attempt to set premiums such that they will remain level over the insured's lifetime. However, because little LTC claims insurance experience yet exists, the actuarial basis for developing premiums and statutory reserves is limited. Several bills over the last three Congresses have been introduced to address the issue of LTC. However, due to cost implications and lack of consensus regarding the optimum overall structure required to finance and deliver care, broad legislation to expand coverage--particularly public coverage--is not likely in the near term.     

Toward Health Reform for Seniors in Bermuda: Historical Constraints on Political Possibilities

In 2009, as the United States moved toward health care reform, the government of Bermuda implemented its FutureCare program to make health care for seniors more affordable. This article investigates how preferences for reform and its eventual design were shaped by the country's social history and commitment to free market values. Data derive from 36 in-depth interviews with key stakeholders deemed knowledgeable about health care financing and delivery in Bermuda, including government officials, provider representatives, insurance executives, and consumer advocates. Data also derive from a variety of documentary sources. Results indicate that although a clear need for health care and the ability to finance it for seniors exists in Bermuda, the scope of reform was circumscribed by preferences for prior policy decisions, creating a favorable tax and business environment for international corporations and a minimalist social welfare state for addressing racial and economic inequality. This suggests that widespread agreement on the challenges in meeting the health and long-term care needs of the elderly does not necessarily lead to equally commensurable solutions to addressing it.