"Elderly population growth is not being acknowledged...."

For nearly 20 years, Joshua M. Wiener, PhD has served as a virtual one-man "think tank" on America's long-term care policymaking. In a varied career spanning service with state governments in Massachusetts and New York, as a HCFA analyst and acting director of its Long-term Care Division, as a Senior Fellow at The Brookings Institution and, most recently, as a principal research associate at The Urban Institute, Dr. Wiener has produced seven books and more than @O articles, organized numerous conferences and testified frequently at Congressional hearings on the questions of long-term care financing and organization. Three years ago he played a prominent role on the large, and ultimately benighted, White House Task Force on National Health Care Reform -- and, would say, this is his touchstone, placing him among health care's "blue ribbon" liberals. Others counter that, rather than bias, his positions reflect more thoroughgoing knowledge, or at least less financial self-interest, than characterize many commentators in this field. However one might view his thoughts and work, Dr. Wiener continues to analyze the nation's long-term care system and generate provocative findings about it. Most recently he focused, for the American Geriatrics Society, upon recent efforts to integrate acute and long-term care through the use of managed care. Nursing Homes Editor Richard L. Peck asked Dr. Wiener to summarize progress, as he sees it, along long-term care's "cutting edge," and where the field seems to be heading.

Peck. Would you briefly summarize some of the major long-term care financing alternatives underway?

Dr. Wiener. There are three principal initiatives: Social HMOs add a modest level of long-term care benefits to the standard Medicare HMO package. They a broad cross-section of people with respect to disability and income, and while their benefits vary widely, they fall into a mid-range -- i.e., not covering entire long-term care stays, but providing more generous coverage than standard Medicare. In recent years a second generation of social HMOs has been trying to offer a more extensive set of benefits.

A second initiative, the On Lok/PACE model, serves only those patients who are severely disabled, physically or mentally. The premiums are very high -- several thousand dollars a month -- and so these sites can serve only Medicaid/ Medicare-eligible patients, with all programs contributing their fair share. Services are very comprehensive, with an emphasis on adult day care programs. The sites are very small -- only about 200 enrollees per site, for a total of about nationwide, compared with social HMOs, enrollment of as high as at one point.

The third initiative is the Arizona Long-Term Care System (ALTCS), which puts out bids for contractors to provide care, on a capitated basis, for Medicaid-eligibles who are institutionalized or at-risk of institutionalization. Though this has been billed as a private market-oriented "competition" approach, the contractors for the two largest metropolitan areas, Tucson and Phoenix, are the respective county governments, so this can also be viewed as an experiment with government-run programs. Compared to the social HMOS and On Lok/PACE demonstrations, this program serves large numbers of Medicaid-eligible elderly, physically disabled and developmentally disabled persons.

Peck: How have these programs fared with respect to enrollment?

Dr. Wiener: The social HMOS and PACE sites have had difficulties enrolling large numbers. This may change as the elderly become more comfortable with HMOS and with managed care in general. There is some evidence that the social HMOS are selecting relatively healthy patients, though they dispute this on methodological grounds. To the extent favorable selection exists, it may be due to the tendency of disabled patients to have very established relationships with specific providers and thus a strong desire to retain provider choice. Similarly with the PACE sites, though they are supposed to be serving a nursing non-comparable population, there is evidence that their populations are not as severely disabled as the typical nursing home population.

Peck: How about quality of care? Any evidence as yet?

Dr. Wiener: There aren't many data, though there are a couple of slim pieces of evidence: First, the quality of nursing home care in Arizona appears not to be as good as in New Mexico, but it's hard to know what to make of that. Arizona has not had a traditional Medicaid program, and its nursing homes are therefore less experienced with this type of program. Second, some subgroups in social HMOs have somewhat higher mortality rates than comparable fee-for-service groups, but the social HMOs hotly dispute this research. Also, the impaired population in social HMOS seems more satisfied with their services than the comparable fee-for-service group, but the non-impaired seem less satisfied. As for PACE, there is no direct quality-related evidence as yet, aside from the fact that their disenrollment for causes other than death appears to be very low.

Peck: How about managed care's strong point, cost savings?

Dr. Wiener: The evidence is not as strong as one would like. It appears that there are acute care savings with social HMOs through reduced hospitalization, but it's not clear yet whether integrating acute and long-term care produces any further savings, or whether the acute care savings go to fund more long-term care benefits. With PACE, preliminary evidence suggests substantially reduced hospital use, but this has been partly offset by increased long-term care use. Federal reimbursement methods permit only crude assessments of this, though.

The Arizona program has received a great deal of play in the Medicaid debate, with Congressional Republicans making much of its cost savings. If you look a little closer, though, it's not that clear. For one thing, because Arizona never had a traditional Medicaid program, a standard of comparison has been difficult; the research has relied upon data from other states, mainly because they were available, not because the states were comparable to Arizona. Second, the program is serving fewer elderly and disabled than a traditional Medicaid program would. Perhaps Arizona is more successful at targeting these populations than other states have been.

Peck: What in general, do you think the future of capitation is for long-term care?

Dr. Wiener: There will be attempts to bring long-term care into managed care using this approach because the current system is so highly fragmented and uncoordinated. There are some problems, though. First, HMOs know virtually nothing about the elderly and disabled populations, and even less about long-term care. I'm not saying they can't learn, but they're starting from a very small knowledge base. Second, long-term care has already been criticized for being over-medicalized, but managed care organizations are medically-oriented, and it's entirely possible that acute care could gobble up most funding for long-term care. Third, while there's been a trend toward more consumer autonomy in long-term care, with managed care the balance of power actually shifts toward third parties, such as HMOS, utilization reviewers and so on.

Peck: There has been a move in many states toward deinstitutionalizing the elderly, i.e., getting them out of nursing homes into more homelike levels of care. What's your view of that?

Dr. Wiener: There is no question that assisted living is growing, but many sites are still quite experimental and they have been largely unable as yet to target low- and middle-income populations. Oregon has been a leader in moving in this direction, but many states have yet to try to duplicate its efforts.

Actually, the notion that there are a substantial number of inappropriately placed nursing home residents who could be managed in noninstitutional settings has been around for decades. In recent years, though, evidence has accumulated that the level of disability seen in nursing homes has increased substantially. Meanwhile, the ratio of nursing home beds to population has declined 15%. While it is true that nursing home census has declined in some areas of the country, the most recently available national data from show nursing home census in general at well over 90%. Nursing homes are not going away.

Peck: In line with the state-level experimentation going on, what is your view of the Medicaid block grant concept?

Dr. Wiener: Several points: First, it is difficult to see how we can achieve the claimed 30% savings in Medicaid without severely impacting access and quality of care. Managed care can be effective on the acute care side, but in long-term care there really is no magic bullet available to save large amounts of money. That is why I think that if we're going to do away with the Boren Amendment, as nearly everyone proposes, we had better come up with a replacement. I'm not sure what it would be, but you can only cut reimbursement so far before you begin impacting on quality of care. The long-term care industry had better come up with some middle ground proposal, or it stands to lose all its protections within the next couple of years.

Also, proposals to eliminate Federal enforcement of OBRA regulations raise the question, do we want minimum standards for nursing homes or not? There is no doubt in my mind that, without these, quality would vary dramatically from state to state, just as it did before OBRA.

Peck: Let's talk about financing. Have you modified your views of late concerning the ability of private long-term care insurance to meet the needs of more than a small minority of elderly residents.

Dr. Wiener: No. In my most recent book on the subject, written with Laurel Hixon Illston and Raymond J. Hanley (Sharing the Burden, The Brookings Institution, 1994), we projected that only about 10 to 20% would find private long-term care insurance to be affordable within the next years. It is true that our data indicate that, if you can get people in their, to purchase long-term care insurance, you can in fact solve the financing problem. The fundamental dilemma is that people just don't think about long-term care insurance seriously until they are too old to afford it. People in their are thinking about child care, paying off mortgages, saving for their kids, college education. And most don't see themselves as candidates for nursing home care, even though data indicate that they have a 40% lifetime chance of this when they reach age 65.

Peck: Wouldn't public education along these lines help?

Dr. Wiener: Education is a wonderful thing, and probably it would have some effect. But changing the mindset of typical year-olds is a difficult matter, and I'm pessimistic about that.

Peck: Stephen Moses of LTC, Inc. has noted that the elderly themselves could solve their long-term care financing problem by converting their home ownership to this end. Your thoughts?

Dr. Wiener: There is not as much money there as one might think. True, of the elderly do own their own homes, but the data indicate that this is true of only 55% who do enter nursing homes. And there are some data from a Government Accounting Office study -- it's old, from the mid-1980s, but it's the only study we have -- indicating that only of elderly nursing home residents applying for Medicaid own homes.

Home equity conversions, in any event, have gone nowhere. There are more pages written about them than actual transactions. Why? The elderly are risk-averse, and the last thing they want to do is use up their home equity, especially after having spent a lifetime paying off a mortgage. Also, in periods of low property appreciation and modest interest rates, conversions aren't a very good financial deal. You don't get that much money, and a good part of it is paid out in interest payments. The person living in a triple-decker in Boston purchased 50 years ago for and now valued at might do well, but the more typical person owning a home won't get that much money, especially in a stable real estate market.

Peck: Still, the argument is made that people had better start thinking about private financing alternatives government entitlements in general are on the way out. What's your view of the fate of entitlements?

Dr. Wiener: As I mentioned, private long-term care insurance has a limited role, and it is even more limited as a substitute for Medicaid. True, doing away with entitlements has budgetary advantages for government, but in all the debate over block grants there has been a troubling factor: elderly population growth is not being acknowledged. Even if you accept that reducing entitlements in long-term care and allowing for more flexible financing makes more sense than it does for acute care, the question remains about available funding. Funding for long-term care could be based on an arbitrary and capricious figure having no relation to reality. That is a real possibility.

Peck: Do you foresee long-term care financing, other than private pay, meeting the elderly's real needs any time soon@

Dr. Wiener: There have been so many incredible flip-flops in recent years that the short-term future is very difficult to predict. In 1992 and 1993, it seemed all but certain that comprehensive health reform would be enacted, but it didn't happen. Then, in and after the Republican sweep, Medicare cutbacks and block grants were all but a done deal," and he didn't happen.

There's no question that we're living in a relatively observative environment and that there will be cuts, but how much is very much open to question. I would assume that if Dole wins the Presidency, the recent Congressional initiatives will be enacted. If Clinton wins, we could have four more years of gridlock.

Peck: In a sense, though, does it matter who wins, in that there seems to be a long-term diminishment of resources available to fund entitlement programs?

Dr. Wiener: There has certainly been a long-term decline in the faith of the American people in government, s ability to solve problems. That's why I'm very pessimistic, for example, about our ability to solve the problem of the uninsured in this country. It is inconceivable to me that we can deal with this problem without greater involvement by government. The problem will only continue to grow.

Peck: Leaving reality (thankfully) aside, how do you envision the "ideal" long-term care system?

Dr. Wiener: We would start by treating long-term care as a normal risk of aging, and funding for it would be available without regard to financial need. It would make a wide range of services available to people, and would give them a great deal of say in putting services together in meeting their individual needs.

Peck: Which is similar to what others have said in this space, and from all political persuasions. The question, apparently, is the source of that funding, correct

Dr. Wiener: Yes, that's the big question. What's frustrating is that although long-term care financing has traditionally been viewed as an unsolvable issue, it is actually one of the most tractable social problems facing the United States. Indeed, unlike crime, poverty, racism and teenage pregnancy, financing long-term care has a range of known and feasible solutions. The question becomes whether we as a society have enough political will and ingenuity to choose among them and put an improved system into place.