Background Brief
Long-term care (LTC) refers to the services and supports needed when the ability to care for oneself has been reduced by chronic illness, disability, or aging. Long-term care is provided in a number of different settings, including at home by family and friends, in the community through services such as home health and adults day care, or in institutional settings, such as nursing homes. Often, long-term care users will need a combination of these types of care over the course of their lifetimes.
Almost all Americans will require long-term care in their lifetimes, either for themselves or for a loved one. It is estimated that there are about 9.5 million Americans with long-term care needs, but this number is only expected to grow with the aging of the population and growing numbers of people with disabilities. It is estimated that the elderly population will double by 2030, and the 85 and older population, the group most likely to have long-term care needs, will quadruple by 2050. But the elderly are not the only users of long-term care. Nearly four in ten (38%) long-term care users are under age 65 with some sort of physical or mental limitation. Of Americans with long-term care needs, 17% reside in nursing homes while the other 83% live in the community, often cared for by family members.
Long-term care can be very expensive. Over $158 billion was spent on long-term care in 2004 and the average annual cost of nursing home care is $74,000, while the average rate for a home health aide is $19 an hour. Long-term care is paid for by a combination of both public and private payers. Medicaid, the nation's health insurance program for the poor, low-income elderly and the disabled, is by far the largest financier of long-term care services, paying for 42% of all long-term care services and 43% of all nursing home care in 2004. Direct out-of-pocket spending comprises the next largest payer accounting for 23% of total long-term care spending. Medicare, the federal program for the nation's seniors and people with disabilities, provides very limited long-term care benefits, so Medicaid often fills the gap for poorer Medicare beneficiaries. Finally, private long-term care insurance has been limited because these policies are expensive and many cannot afford the cost - only 6.3 million total policies were in effect in 2002.
Medicaid is intended to assist low-income individuals, but is not available to everyone who needs long-term services. Those who need long-term services must meet both financial and functional eligibility criteria to qualify for the program. The income thresholds for Medicaid eligibility can be very low, but states can, and often do set higher limits. Still, many people in need of long-term care services “spend down” their assets and income in order to qualify for Medicaid coverage of long-term care services. Medicaid provides coverage in both community-based and institutional settings. Recent efforts by state and federal policy makers have focused on providing better access to community-based services under Medicaid that would allow individuals to remain in the community longer and to retain more independence.
Policymakers and health care experts have been trying to provide better access to long-term care in the most appropriate and cost effective setting. Some states have extended more support to individuals who care for their elderly or disabled family members at home, including reimbursement for healthcare supplies and respite care programs, but the reach of these programs is limited. In the coming decades, long-term care reform will be an increasingly important focus of our health care system as government and healthcare leaders look for sustainable ways of caring for our elderly and disabled population.
• What different groups use long-term care services? How is this demographic going to change in the next several decades and what impact will that have on the provision of long-term care services?
• Who are the major players in financing long-term care in America and what are their strengths and limitations?
• What are the barriers to private long-term care insurance? Should the government or private industry leaders try to expand participation in private long-term care insurance? What are different ways they could do this?
• What advantages or disadvantages do home and community based services have in comparison with institutionalized long-term care? Should more be done to prioritize home and community based services?
Acknowledgements: Prepared by Becca Miller, Usha Ranji, Heidi Hisey and Alina Salganicoff of the Kaiser Family Foundation.
Updated: March 2007.
Back to top
