Friday, January 21, 2005
Restoring nursing home viability
[Stephen Moses, "So What If the Government Pays for Most LTC, 2003 Data Update," LTC Bullet, The Center for Long Term Care Financing, 19 January 2005.]
Purchase of long-term care insurance continues to be a low priority for most people. At the same time, the quality of nursing home care continues to be a concern, and some facilities are shutting down as a result of being unable to turn a profit. As Center for Long Term Care Financing president Steve Moses explains in this recent piece, these two issues are bound together:
America spent $110.8 billion on nursing home care in 2003. The percentage of nursing home costs paid by government (mostly Medicaid and Medicare) has been going up for the past 15 years (from 49.6% in 1988 to 58.5% in 2003, up 8.9% of the total) while out-of-pocket costs have been declining (from 38.5% in 1988 to 27.9% in 2003, down 10.6% of the total).
So what? The consumer's liability for nursing home costs has gone down precipitously (from 38.5% in 1988 to 27.9% in 2003, a decline of 27.5%), while the government's liability has increased dramatically (from 49.6% in 1988 to 58.5% in 2003, a rise of 17.9%). No wonder people are not as eager to buy LTC insurance as insurers would like them to be! No wonder nursing homes are struggling financially--their dependency on stingy government reimbursements is increasing while their more profitable private payers are disappearing.
Bottom line, people only buy insurance against real financial risk. As long as they can ignore the risk, avoid the premiums, and get government to pay for their long-term care when and if such care is needed, they will remain in "denial" about the need for LTC insurance. As long as Medicaid and Medicare are paying for a huge proportion of all nursing home and home health care costs while out-of-pocket expenditures remain only nominal, nursing homes and home health agencies will remain starved for financial oxygen.
The solution is simple. Target Medicaid financing of long-term care to the needy and use the savings to fund education and tax incentives to encourage the public to plan early to be able to pay privately for long-term care.
[Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center, January 2004.
Matthew Hisrich, "First Things First: Kansas Medicaid Program Must Get its House in Order Before Expanding Home-based Care," The Flint Hills Center, 20 August 2004.]
[Stephen Moses, "So What If the Government Pays for Most LTC, 2003 Data Update," LTC Bullet, The Center for Long Term Care Financing, 19 January 2005.]
Purchase of long-term care insurance continues to be a low priority for most people. At the same time, the quality of nursing home care continues to be a concern, and some facilities are shutting down as a result of being unable to turn a profit. As Center for Long Term Care Financing president Steve Moses explains in this recent piece, these two issues are bound together:
America spent $110.8 billion on nursing home care in 2003. The percentage of nursing home costs paid by government (mostly Medicaid and Medicare) has been going up for the past 15 years (from 49.6% in 1988 to 58.5% in 2003, up 8.9% of the total) while out-of-pocket costs have been declining (from 38.5% in 1988 to 27.9% in 2003, down 10.6% of the total).
So what? The consumer's liability for nursing home costs has gone down precipitously (from 38.5% in 1988 to 27.9% in 2003, a decline of 27.5%), while the government's liability has increased dramatically (from 49.6% in 1988 to 58.5% in 2003, a rise of 17.9%). No wonder people are not as eager to buy LTC insurance as insurers would like them to be! No wonder nursing homes are struggling financially--their dependency on stingy government reimbursements is increasing while their more profitable private payers are disappearing.
Bottom line, people only buy insurance against real financial risk. As long as they can ignore the risk, avoid the premiums, and get government to pay for their long-term care when and if such care is needed, they will remain in "denial" about the need for LTC insurance. As long as Medicaid and Medicare are paying for a huge proportion of all nursing home and home health care costs while out-of-pocket expenditures remain only nominal, nursing homes and home health agencies will remain starved for financial oxygen.
The solution is simple. Target Medicaid financing of long-term care to the needy and use the savings to fund education and tax incentives to encourage the public to plan early to be able to pay privately for long-term care.
[Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center, January 2004.
Matthew Hisrich, "First Things First: Kansas Medicaid Program Must Get its House in Order Before Expanding Home-based Care," The Flint Hills Center, 20 August 2004.]
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