GAO Long Term Care Study
Given the anticipated increase in demand for long-term care services resulting from the aging of the baby boom generation, the concerns about the availability of services, and the expected further stress on federal and state budgets and individuals’ financial resources, some policymakers and advocates have called for long-term care financing reforms.
Indeed, we identified options for rethinking the federal, state, and private insurance roles in financing long-term care as one of the key questions that our nation needs to face as it addresses 21st century challenges.15 The Comptroller General previously testified in 2002 on several considerations for policymakers to keep in mind when considering reforms for long-term care financing, and these considerations remain relevant today.
At the outset, it is important to recognize that long-term care services are not just another set of traditional health care services. Meeting acute and chronic health care needs is an important element of caring for aging and disabled individuals. Long-term care, however, encompasses services related to maintaining quality of life, preserving individual dignity, and satisfying preferences in lifestyle for someone with a disability severe enough to require the assistance of others in everyday activities. Some long-term care services are akin to other health care services, such as personal assistance with activities of daily living or monitoring or supervision to cope with the effect of dementia. Other aspects of long-term care, such as housing, nutrition, and transportation are services that all of us consume daily but become an integral part of long-term care for a person with a disability. Disabilities can affect housing needs, nutritional needs, or transportation needs.
But, what is more important is that where one wants to live or what activities one wants to pursue also affects how needed services can be provided. Providing personal assistance in a congregate setting such as a nursing home or assisted living facility may satisfy more of an individual’s needs, be more efficient, and involve more direct supervision to ensure better quality than when caregivers travel to individuals’ homes to serve them one on one. Yet, those options may conflict with a person’s preference to live at home and maintain autonomy in determining his or her daily activities.
Keeping in mind that policies need to take account of the differences involved in long-term care, there are several issues that policymakers may wish to consider as they address long-term care financing reforms. These include:
• Determining societal responsibilities. A fundamental question is how much the choices of how long-term care needs are met should depend upon an individual’s own resources or whether society should supplement those resources to broaden the range of choices. For a person without a disability requiring long-term care, where to live and what activities to pursue are lifestyle choices based on individual preferences and resources. However, for someone with a disability, those lifestyle choices affect the costs of long-term care services. The individual’s own resources—including financial resources and the availability of family or other informal supports—may not be sufficient to preserve some of their choices and also obtain needed long-term care services.
Societal responsibilities may include maintaining a safety net to meet individual needs for assistance. However, the safety net may not provide a full range of choices in how those needs are met. Persons who require assistance multiple times a day and lack family members to provide some share of this assistance may not be able to have their needs met in their own homes. The costs of meeting such extensive needs may mean that sufficient public support is available only in settings such as assisted living facilities or nursing homes. More extensive public support may be extended, but decisions to do so should carefully consider affordability in the context of competing demands for our nation’s resources.
• Considering the potential role of social insurance in financing. Government’s role in many situations has extended beyond providing a safety net. Sometimes this extended government role has been a result of efficiencies in having government undertake a function, or in other cases this role has been a policy choice. Some proposals have recommended either voluntary or mandatory social insurance to provide long-term care assistance to broad groups of beneficiaries. In evaluating such proposals, careful attention needs to be paid to the limitations and conditions under which services will be provided. In addition, who will be eligible and how such a program will be financed are critical choices. As in establishing a safety net, it is imperative that any option under consideration be thoroughly assessed for its affordability over the longer term.
• Encouraging personal preparedness. Becoming disabled is a risk. Not everyone will experience disability during his or her lifetime and even fewer persons will experience a severe disability requiring extensive assistance. This is the classic situation in which having insurance to provide additional resources to deal with a possible disability may be better than relying on personally saving for an event that may never occur. Insurance allows both persons who eventually will become disabled and those who will not to use more of their economic resources during their lifetime and to avoid having to put those resources aside for the possibility that they may become disabled.
The public sector has at least two important potential roles in encouraging personal preparedness. One is to adequately educate people about the current divisions between personal and societal responsibilities. Only if the limits of public support are clear will individuals be likely to take steps to prepare for a possible disability. Currently, one of the factors contributing to the lack of preparation for long-term care among the elderly is a widespread misunderstanding about what services Medicare will cover. Another public sector role may be to assure the availability of sound private long term care insurance policies and possibly to create incentives for their purchase. Progress has been made in improving the value of insurance policies through state insurance regulation and through strengthening the requirements for policies qualifying for favorable tax treatment enacted by the Health Insurance Portability and Accountability Act of 1996.16
Furthermore, since 2002 the federal government has offered long term care insurance to federal employees, military personnel, retirees, and their families, providing the largest offering of long term care insurance. While the federal government’s program is still very new, other employers and policymakers will likely be carefully watching the federal government’s experience in offering long-term care insurance. long term care insurance remains an evolving product, and given the flux in how long-term care services are delivered, it is important to monitor whether long term care insurance regulations need adjustments to ensure that consumers receive fair value for their premium dollars.