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The Strains and Drains of Long-Term Care

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Document date: June 01, 2008
Released online: June 09, 2008

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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Abstract

As the nation grows older, it's time to find a better way to care for those who need help as they age. The financial, emotional, and physical costs of providing long-term care often overwhelm families. Unpaid family members supply most of it, struggling to balance these duties with work and other responsibilities. A year's stay in a nursing home averaged $78,000 in 2007, and public assistance is not generally available until residents have exhausted almost all of their financial resources. Policymakers should encourage Americans to prepare for their own long-term care needs or create a larger role for government financing.


Introduction

Before the end of their lives, nearly 7 in 10 of today’s 65-year-olds will need help with basic personal care—bathing, dressing, and eating—and with household responsibilities essential for independent living, like shopping and preparing hot meals. The financial, emotional, and physical costs of providing long-term care often overwhelm families; unpaid family members supply most of it, struggling to balance these duties with work and other responsibilities. The most common alternative to home care is a nursing home, but a year’s stay averaged about $78,000 in 2007, and public assistance is not generally available until the residents have exhausted all of their financial resources. As the nation grows older, it’s time to find a better way to care for those who need help as they age.

In 2004 Americans spent $135 billion on long-term care for older adults. Medicaid, the largest single payer, currently finances 35 percent of the institutional care and home health services for eligible adults who cannot pay the full cost themselves. Although Medicaid also offers home- and community-based services and a variety of nonmedical and social supports designed to keep people with disabilities in the community, most of the program’s spending on the aged and disabled is for institutional care.

Medicaid provides a fairly comprehensive package of services, but individuals must meet strict income and asset tests to qualify for coverage. Eligibility rules are complex and vary by state, but nursing home residents must generally surrender all of their assets, except for about $2,000, and all of their income, except for a small personal needs allowance that may not exceed $90 per month. Participants in special Medicaid programs may protect more of their income to cover community living expenses, but some states do not allow them to keep more than $637 per month, barely enough to live on. Medicaid beneficiaries with community-dwelling spouses are able to shield additional income. By requiring beneficiaries to turn nearly all of their savings over to the state, Medicaid discourages people from putting aside money to cover future long-term care costs.

Medicare is the other major federal program that finances long-term care, but it does so only under certain conditions. Medicare covers the first 100 days in a certified skilled nursing facility after hospitalizations and provides limited home health benefits, including medically necessary skilled nursing care, physical therapy, speech language services, and occupational therapy for homebound beneficiaries.

© American Medical Association. This report is reprinted with permission.

(End of excerpt. The entire report is available in PDF format.)



Topics/Tags: | Health/Healthcare | Retirement and Older Americans


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