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Long-Term Care for the Elderly: Profiles of Thirteen States

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Document date: August 01, 1998
Released online: August 01, 1998

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.

Note: This report is also available in the PDF format, which many users find more convenient when printing.


Highlights of the Report

Long-term care services for older adults represent a substantial share of total health care spending in the United States and an area of major concern for state policymakers. Nursing home and home health care accounted for almost 12 percent of personal health expenditures in 1995, and they were approximately 14 percent of all state and local health care spending.1 Neither private insurance nor Medicare covers long-term care to any significant extent, and few older adults have private long-term care insurance. The disabled elderly must rely on their own resources or, when these are depleted, turn to Medicaid or state-funded programs to pay for their long-term care. Because of the high cost of long-term care (a year in a nursing home costs an average of $46,000 in 1995), Medicaid coverage for long-term care provides a safety net for the middle class as well as the poor.2 In 1997, 68 percent of nursing home residents were dependent on Medicaid to finance at least some of their care.3 Medicaid long-term care expenditures for the elderly are projected to more than double in inflation-adjusted dollars between 1993 and 2018 because of the aging of the population and price increases in excess of general inflation.4

This report focuses on long-term care for the elderly in each of the 13 states that have received intensive examination in the Assessing the New Federalism study: Alabama, California, Colorado, Florida, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New York, Texas, Washington, and Wisconsin. In particular, this report summarizes efforts within these states to control the rate of increase in Medicaid long-term care expenditures for the elderly. Readers interested in more extensive cross-state analyses (rather than details about individual states) should see Joshua M. Wiener and David G. Stevenson, "State Policy on Long-Term Care for the Elderly," Health Affairs, vol. 17 (May/June 1998), pp. 81-100.

The Assessing the New Federalism project analyzes state health, income support, and social service programs for the low-income population, with special emphasis on the 13 states mentioned above, which account for 54 percent of total Medicaid spending for long-term care for the elderly.5 The information included in this report comes largely from interviews and documents collected at site visits performed in the second half of 1996 and the first half of 1997, with updates obtained from various tracking services and publications. Qualitative data collected from representatives of state health and social service agencies, state legislatures, long-term care provider associations, and advocates for the elderly and disabled provide the basis for the state-specific information presented. Persons interviewed were assured that they would not be quoted by name.

Utilization, Supply, and Expenditures

Table 1 contains demographic characteristics of the 13 focal states and their Medicaid programs. While nearly 13 percent of the U.S. population was over age 65 in 1996, this proportion ranges across these states from 10.1 percent in Colorado to 19.0 percent in Florida. Similarly, the proportion of Medicaid beneficiaries who are elderly varies by state, from 7.4 percent in Michigan to 14.0 percent in Massachusetts and Wisconsin.

Table 2 details some of the characteristics of the long-term care systems in the 13 states studied, including licensed nursing facilities, nonmedical residential care facilities, and home health agencies. These market characteristics vary widely across the states by service provider. The number of nursing home beds per 1,000 elderly age 75 and above among the states ranges from 76.7 in Florida to 211.8 in Wisconsin (the U.S. average is 133.1). Massachusetts has the fewest licensed residential care beds per capita (16.3 beds per 1,000 elderly age 75 and over), while California has the most (106.2 beds per 1,000 elderly age 75 and over). Finally, the number of home health agencies per capita ranges from 0.18 per 1,000 elderly age 75 and over in New Jersey to 3.43 per 1,000 in Texas.

In 1995 the Medicaid program spent almost $54 billion on long-term care for people of all ages, 34 percent of total Medicaid expenditures. Long-term care spending on older beneficiaries accounted for the majority ($30 billion) of this spending. In that same year, older persons were 11.1 percent of all Medicaid beneficiaries but accounted for 26.3 percent of total Medicaid expenditures. As shown in figure 1, three-fourths of Medicaid expenditures for the elderly were for long-term care services. Almost 85 percent of these long-term care expenditures were for institutional care, around 10 percent were for home care services, and the remaining 5 percent were for intermediate care facilities for the mentally retarded and mental health services. Medicaid long-term care spending for the elderly is more institution based than it is for younger people with disabilities.

Table 3 shows Medicaid long-term care spending on the elderly for the focal states and the United States, spending on these services as a percentage of total Medicaid spending, spending per elderly enrollee and resident, and the proportion of expenditures by type of service. There is considerable variation across states. While long-term care expenditures for the elderly were almost 20 percent of all Medicaid spending in the United States, among the study states this proportion ranged from 11.1 percent in California to 31.7 percent in Minnesota. Spending for long-term care per elderly resident varies from $475 in Florida to $2,444 in New York. The proportion of long-term care spending for the elderly that is for nursing facilities ranges from 66.4 percent in New York to 98.6 percent in Mississippi. These same states were the extremes in the proportion of Medicaid spending for home care. The share of long-term care expenditures spent on home care was uneven across the study states and varied from 0.2 percent in Mississippi to 23.1 percent in New York. In 1995, New York alone accounted for over 40 percent of all Medicaid home care expenditures for the elderly. The proportion of Medicaid long-term care expenditures spent on home care falls from 10.3 percent to 7.3 percent if New York is left out of the calculation. In addition, states such as California, Florida, Massachusetts, and Wisconsin have significant state-funded long-term care programs that do not appear in these data.

Table 4 presents trend data for total Medicaid long-term care expenditures for the elderly between 1990 and 1995. Medicaid long-term care spending for the elderly increased an average of 10.7 percent annually from 1990 to 1995 (compared with 16.7 percent growth for total Medicaid expenditures over the same period) and has grown more slowly in recent years. More than 40 states, including 11 focal states, reported lower growth rates for these expenditures for 1993 to 1995 than for 1990 to 1993 (not shown). Finally, the emphasis on institutional care for the elderly mentioned above has not changed substantially since 1990. Recent growth rates for Medicaid home care expenditures for the elderly have usually been below growth rates for nursing facility spending.

Notes from this section of the report

1. Katharine Levit et al., "DataView: National Health Expenditures, 1995," Health Care Financing Review, 18 (Fall 1996): 175-214.

2. Unpublished estimates of nursing home revenue per day, Office of National Health Statistics, Office of the Actuary, Health Care Financing Administration (HCFA), January 1997.

3. Ibid.

4. Joshua M. Wiener, Laurel H. Illston, and Raymond J. Hanley, Sharing the Burden: Strategies for Public and Private Long-Term Care Insurance (Washington, DC: The Brookings Institution, 1994).

5. Unless otherwise noted, all Medicaid data presented in this paper come from Urban Institute analysis of HCFA Form 64 and Form 2082 data.

Note: This report is also available in the PDF format, which many users find more convenient when printing.



Topics/Tags: | Retirement and Older Americans


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