Long-term care - another budget buster?

AS PEOPLE LIVE LONGER AND THE POPULATION OF THOSE OVER 85 SKYROCKETS, DEMANDS WILL ESCALATE FOR LONG-TERM CARE.

If you're worried about your state's rapidly aging population and you want to know what troubles are ahead for long-term care - look to Florida. The Sunshine State is 15 to 20 years ahead of the nation in the sheer number of elderly citizens and knows how complicated it is to provide the special services they require.

"Long-term care is the black hole of state government," says former Florida Senator Curt Kiser. Nursing home costs in his state (and many others) are increasing at more than twice the rate of most budget line items.

Twenty years ago, older couples with healthy checkbooks retired to Florida to enjoy leisure activities and life in the sun. "Now many of these seniors have had a spouse die, their resources are depleted, and they aren't playing golf anymore," explains Kiser. "Florida has the most rapidly rising population of 85-year-olds in the country. We can't be putting everyone in nursing homes. We must help them stay in the community where they want to be."

For the past 15 years, states have been testing and developing programs that help older people stay in their homes and communities.

What does an elderly woman need to be able to stay in her own home? A hot meal delivered every day, transportation to the doctor, the pharmacy and the grocery store, transportation to social activities to keep her active. She might need someone to stop by to help pay bills, clean her house, do laundry. Eventually, she might need someone to come in to help her bathe, go to the bathroom, dress and eat. She might need nursing services once or twice a week.

When an old person has to leave her home, where does she go? If she has the resources, to a private nursing home or community that offers meals, nursing care, transportation. If not, to live with her children or a niece or nephew or a sibling. Then she might need day care and her family, other kinds of respite help, because 75 percent of those who care for an elderly relative are working women.

NUMBERS OF ELDERLY WILL EXPLODE

The fastest growing segment of the population is the very oldest, and the aging of the huge baby boomer population looms in the future. The number of 85-year-olds will explode from 3.6 million today to 17.6 million by 2050. Florida knows what this means. Its rapidly growing older population is expected to increase by 25 percent between 1990 and 2000. During that time, the number of citizens over 85 will increase by 78 percent. As the population changes, funding pressures for long-term care and public pressure for alternatives to nursing homes will continue to grow.

Will states be ready?

So far, efforts to redesign long-term care programs to meet the changing needs and preferences of older citizens have come from the states. With a growing number of services that delay or eliminate the need for institutionalization, states as a whole have managed for the last 10 years to keep increases in the nursing home population to 24 percent despite a 35 percent increase in the number of people over 85. Except for the Older Americans Act, which provides little funding, there is no definitive federal policy on long-term care. To leverage federal participation, state programs have been built on Medicaid and Medicare, the social insurance for poor and elderly citizens that came out of the '60s before we knew how many Americans would be living longer and healthier lives. Medicaid, which pays for much of long-term care both for the poor and the one-time middle class (made poor through spend-down qualifications), is biased heavily toward institutional care. So biased and "rigid," according to the National Association of State Units on Aging (NASUA), that "complicated and unwieldy 'waiver' programs have had to be introduced to enable states to divert a modest level of resources toward long-term care programs that keep people in their homes."

States have been aggressive in the past decade in developing systems that more closely meet the needs and preferences of their older citizens and finding ways to pay for them. But there's a long way to go. Most state programs use cost-sharing mechanisms so that people who aren't poor can get services if they need them. And about half the states put money unmatched by federal funds into expanding their programs.

These are the problems that still plague most state programs:

* States don't have the data they need to serve the growing elderly population. They don't know what kinds of services the elderly really use or want. Lawmakers don't know where money is going or what the state might qualify for.

* There are more people in need than there are programs to serve them.

* When states and communities develop programs, they often lack the manpower to fully implement them.

* Communities lack coordinated systems - programs jump from agency to agency because funding can come from many sources.

* Alternatives to institutional care don't always decrease state costs.

* Even where services are available, they're often hard to find.

* There's not enough support for the families and friends who care for three-quarters of the older people who need assistance.

A handful of successful state programs have already found the answers to some of these problems, and others like Florida and Minnesota are about to try new ways to manage long-term care. The Robert Wood Johnson Foundation has been active on both the federal and state levels, helping to finance studies, experiments and efforts to replicate successful public/private partnerships. New York uses Medicaid money to fund personal care services provided by churches and charities.

CUTTING COSTS

Alternative programs are often viewed as money savers with the potential to stop or slow growth in nursing home costs. Florida knows this isn't always true. "Alternative services can prevent people from going into institutional care, but they can't, by themselves, reduce nursing home costs," says Charles Liem, chief of planning for Florida's Department of Elder Affairs. The biggest challenge for states is to target community alternative services to the same population that would otherwise depend on nursing home care. This is hard to do. Even if programs are in place that do a great job of diverting an individual from institutional care, someone else is ready to fill that bed. In Florida they call this phenomenon the "field of dreams effect," Liem says. "If you build it, they will come."

"You haven't decreased your overall caseload or cut state spending," he says. "This factor is difficult to manage directly because system incentives do not encourage empty beds in nursing homes."

WISCONSIN DOES IT

One state that has cut nursing home costs is Wisconsin, where lawmakers in 1981 set a moratorium on nursing home growth and began shifting money from institutional expansion to community care. In 14 years, the state has reduced Medicaid-paid nursing home use by 13 percent. Equally impressive: More than 90 percent of those using home managed care are eligible for Medicaid funding in a nursing home. Careful targeting and eligibility screening have made this possible. "In exchange for tightly controlled access; consumers get a very flexible and responsive program," says Donna McDowell, director of the Wisconsin Bureau on Aging.

McDowell says her state has achieved these cost savings because of "our willingness to be very flexible and consumer-centered." In Wisconsin, the money follows the client so "we are spending what 'the individual needs - hopefully not more and hopefully not less than what the individual needs - as opposed to old models of financing agencies or particular services in which the provider really determined how much ultimately was going to get spent."

Flexibility to make trade-offs in the plan is important because older people are prudent purchasers of care. "If you have to choose between a Medicare providers' ability to save the taxpayer money or the instincts of an 87-year-old widow, you ought to go with the widow every time," McDowell says.

Flexibility like Wisconsin's also helps when there's a shortage of providers. "One suggestion is not to rely only on agency providers, but to qualify independent providers and family members who can give certain kinds of help," says Loretta Williams of the National Association of State Units on Aging. "Certainly when a nurse's services are needed, it has to be a nurse, but when it's performing tasks that any of us would do for our own parents, we should be flexible."

"Most frail older and disabled people want less help than professionals think they need," McDowell says. Policymakers must get out of the rut of thinking that only a medical professional can provide services; that "only a nurse can do this, only a certified home health aide can do that." The patients themselves and family members can be trained to give a lot of the care, and professionals can be brought in when they're really needed, she says.

Wisconsin's statewide Community Options Program (COP) serves not only the elderly, but also its physically disabled, developmentally disabled, chronically mentally ill and chemically dependent citizens. State and Medicaid funds are channeled to counties through a formula based on need and population.

To guarantee that the people who don't get care in institutions are able to get the care they need in other (and with luck, less expensive) settings, states will have to get a handle on something they haven't been very good at, says Florida's Liem. "They will have to learn how to plan across agency lines and coordinate systems in a way that recognizes that changes in one part of the long-term care system often have unanticipated results in some other part," he says.

OREGON'S DONE IT

Oregon, the first state to license assisted living as a long-term care service, has jockeyed funding from the Older Americans Act, Title V, Title XX, state funds and Medicaid waivers into a statewide program that provides home- and community-based services to the elderly, all under the same agency.

The Senior Services Agency, created in 1981 through legislation that specifies that "home- and community-based services are best, and nursing homes are to be used as a last resort," is considered one of the state's major accomplishments.

Programs dealing with the elderly were merged into the agency, which now coordinates and supervises all long-term care services, licensing and enforcement. Susan Dietsche, assistant administrator in the Senior and Disabled Services Division, says this was a "true merger" that makes it possible to base decisions on the needs of the consumer instead of "turf."

Another success story for Oregon: Its long-term care program serves all people - the rich and middle class as well as the poor. The impetus for this came in 1976 from a group of senior citizens who were searching for alternatives to nursing homes for people not eligible for Medicaid. Their efforts prompted a sliding fee payment for services to the elderly. With costs one-third of nursing home care, home- and community-based services have saved the public and the state big money over the last 12 years. According to Dietsche, 84 percent of nursing home beds are occupied, and there are 2,000 fewer beds licensed today than in 1981. This achievement is exceptional, given a 20 percent increase in Oregon's overall population.

BETTER DATA AHEAD

Florida is creating the country's first standardized data base for assessing its elderly population. "Good data will enable policymakers to see who is being served in communities, in assisted living arrangements and in nursing homes," says Liem. The tool, which will compare "apples to apples for once," will allow lawmakers to see if and where state money is being wasted.

Liem says states lack adequate databases for making the right kinds of decisions. "States need systems that can make accurate comparisons between the people we serve both in community care and in institutional care," he says. "Data are already being collected in nursing homes for federal reporting purposes." Ideally, states should develop systems to collect similar data from community programs and residential alternatives, so the two can be compared. If legislators are going to understand the cost-effectiveness of a program, they need information that shows all the money that goes into it - Medicaid, Medicate and private funds.

GOOD CARE FOR ALL

While the quality of long-term care is a major concern in all states, Minnesota Senator Linda Berglin believes that her state's "equal rating" system goes a long way to ensure that everyone gets good care. "Equal rating" means that nursing home residents, paying with their own money, spend no more than the rate for Medicaid patients. As a consequence, all but four or five nursing homes out of 144 in the state accept Medicaid patients. Equal rating, also used in Connecticut, was developed in Minnesota with the help of private businesses - a step Senator Berglin says "contributed greatly to its success." She maintains that in other states where fees from private pay patients help subsidize the care for indigent elderly, the private pay residents spend down faster and go on Medicaid sooner. Many share her doubts about real cost savings in any state that does not use equal rating.

Alternative care in Minnesota is largely state-funded. Minnesotans are eligible for home care if. going into a nursing home would cause them to use up their resources within 180 days. Home care averages between $400 to $500 per month. "Compared to $3,000 a month for average nursing home care," says Senator Berglin, "this is cheap!"

Minnesota's next step is to link long-term care to the managed care system, a move that might be the next wave of reform in long-term care efforts. The state has applied for a federal waiver for a Long-term care Options Project (LTCOP), which would test the feasibility of joining long-term and acute care for elderly citizens who are eligible for both Medicare and Medicaid. "Nursing homes are now providing some of the services that are available to the elderly only in hospitals. We're trying to create a continuum of acute care, home care and nursing home care in the same system," Berglin says. "This ensures that only people who need to be in nursing homes are there."

Under the LTCOP waiver, Minnesota would test the program over the next five years in counties that use managed care. The state would contract with health plans that can manage a broad range of primary, acute, long-term care and social services. Nine large health plans and provider networks are interested in participating.

If Minnesota gets its waiver, the state can expect a small cost savings as well as reductions in incentives for cost shifting between Medicare and Medicaid.

DAY CARE FOR THE FRAIL ELDERLY 

Another program of the future might come out of a long-term care experiment from 20 years ago that is supported by the Robert Wood Johnson Foundation. San Francisco's On Lok - meaning "peaceful, happy abode" in Chinese - Senior Health Services was the first program to provide day-only services to the frail elderly. In 1983, with waivers from Medicare and Medicaid, On Lok became the first organization to assume 100 percent financial risk to care for this group.

Now, Congress has issued 15 waivers to private providers willing to replicate the successful model. The new programs, called PACE (Program of All-inclusive Care for the Elderly), are in operation or are being developed in various cities across the country. Touted as "a substitute for nursing homes for people who have graduated from home-and community-based programs," PACE serves only the frail elderly who would otherwise be institutionalized.

The program attempts to avert many of the problems states have with community-based programs. Consumers learn about PACE from social workers, hospitals, doctors and other community resources. A day care center is the foundation of the program, so family caregivers can continue working while their parent is cared for during the day. Other services might include dental checkups, podiatry services, 24-hour emergency care, transportation, home chore and meal services, as well as special medical services. A team of physicians, nurses, home care providers, day care attendants and other paraprofessionals are involved in every aspect of care for an elderly participant. The team reviews each case at least every three months, but as often as every day in cases of injury or medical problems.

A CHALLENGE FOR STATES

There's no arguing against the need to keep at long-term care reform - a necessity for today and for the future. "And it isn't just an old person's issue," says Van Ellet of the American Association of Retired Persons. "Forty percent of the people who need long-term care services are not elderly. As we develop national or state policy, we have to make sure that it addresses the needs of all people with disabilities and the needs of their children, their parents, their spouses."

"The challenge to states is to build a system that targets scarce state resources to the right mix of institutional, residential and community long-term care," says Florida's Liem. "In an age of high demands, it is critical that we provide long-term care in the least expensive setting, which, at the same time, provides the level and quality of services that people need."

RELATED ARTICLE: WHERE MEDICAID MONEY GOES

Medicaid plays many roles: health insurer for low-income families; a supplement to Medicare (medigap) and long-term care provider for elderly Americans; and health insurer and long-term care provider for people with disabilities who are under age 65.

While children are the largest Medicaid group, spending is highest for the elderly and the blind and disabled, according to an Urban Institute study for the Kaiser Commission on the Future of Medicaid. Of the $124,9 billion spent on Medicaid in 1993, $45.8 billion went to the disabled, $36.3 billion for the elderly, $16.9 billion for adults and $21.8 billion for children. In contrast, the elderly represent only 11.5 percent of beneficiaries; adults under 65, 23 percent: and children, 50.1 percent.

RELATED ARTICLE: LONG-TERM CARE IS EXPENSIVE FOR EVERYBODY

Today, the people over 65 make up 14.2 percent of the population. By 2050, they will represent neatly a quarter of the nation. During that 55 years, the number of workers for each person in retirement will drop drastically, and more and mote women will remain childless. That means growing concern over long-term care.

States shoulder much of the responsibility for long-term care. They regulate nursing homes and home health agencies and disburse federal and state funds. And although three-quarters of the elderly are cared for informally by family and friends, state spending for long-term care for those without help or resources has jumped significantly in recent years.

For most of the early 1990s, Medicaid spending was the fastest growing line in state budgets and long-term care costs the fastest growing area of Medicaid. In 1991, Medicaid spending increased by 26.7 percent; in 1992, it jumped 28.8 percent. Nationwide, those steep increases may be over. This fiscal year, Medicaid spending is up 4.9 percent (corrections is the big spender with an 8 percent growth rate). But 18 states plan to increase Medicaid spending at double-digit rates including 33.6 percent in Wyoming and nearly 21 percent in Nevada and Oregon.

The rising cost of long-term care is a big expense for disabled people and their families as well as state and federal governments. According to the American Association of Retired Persons (AARP), the average cost of a nursing home stay in 1991 was $30,000 a year. Of the $59.9 billion spent on nursing home care in 1991, patients and their families paid $25.8 billion. Medicaid and Medicare spending amounted to $28.4 billion and $2.7 billion, respectively. Private insurance paid $600 million and other private sources paid $2.3 billion.

Home- and community-based care is also becoming a big expense. In 1991, older people receiving home health care paid out of pocket about $1.2 billion, Medicare paid $4.4 billion, federal Medicaid kicked in $1.4 billion, and state and local governments contributed another $1.3 billion. Spending from private health insurance and other private sources totaled about $2.6 billion.

RELATED ARTICLE: ON THE AGENDA THIS SESSION

* Eighty percent of the 32 states responding to an NCSL survey of major health care issues for 1995 said that they are likely to initiate or expand long-term care services for the elderly through alternatives to institutionalization such as home- and community-based services, adult day care, assisted living or respite care.

* Thirty percent predict their state will initiate or expand services for the elderly through nursing home regulation.

* Fewer expect to expand long-term care services for the elderly through insurance mechanisms, with only 22 percent predicting legislative support for long-term care coverage or Medicaid or Medicare supplemental plans.

Candace Romig is a former NCSL staff member who specialized in human services. Shelda Harden and Julie Poppe also contributed to this story.