LTC

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Medicaid and Long-Term Care Services

November 17, 2010 in Medicaid, Nursing Homes | 1 comment

The increased use of long-term care (LTC) services has been one of the forces increasing health care cost and utilization.  Currently, 10.3 million Americans use LTC services.  The Kaiser Family Foundation provides a summary of LTC Services and Supports in the U.S.

Who uses LTC?

One can divide LTC services into those who receive care in the community (a.k.a at their home) compared to those who are institutionalized in a nursing home.  The vast majority of individuals receiving LTC services are community based (8.8 million) and these individuals are roughly divided equally between the elderly (4.6 million) and non-elderly (4.2 million).  Nursing home residents, on the other hand, are mostly elderly (87% of the 1.5 million nursing home residents).

Elderly individuals often require assistance from the symptoms of diseases such as Alzheimer’s, diabetes, pulmonary diseases, and other severely disabling chronic diseases.  Many children also require LTC services.  Examples include children with mental retardation, developmental disabilities (e.g autism), spinal cord injuries, traumatic brain injuries, and serious mental illness.

These individuals receive services that “range from providing assistance with eating, dressing, and toileting, to assisting with managing a home, preparing food, and medication management.”

Who pays for LTC?

In 2008, LTC services cost $177.6, of which $124.9 billion was spent on nursing home care.  “Nursing home care averages $70,000 per year, assisted living facilities average $36,000 per year, and home health services average $29 per hour.”

Although Medicaid pays for the largest share of services, benefit eligibility is limited. Eligibility for Medicaid nursing home benefits are often tied to SSI eligibility. “Additionally, elderly and disabled individuals who qualify for Medicaid must have very few assets ($2,000 for an individual and $3,000 for a couple, in most states).” Some states exclude home equity in this asset maximum while others do not.

What Does Medicaid Provided
“Over 3 million individuals, or 7 percent of the Medicaid population, rely on Medicaid long-term care services for a range of physical and mental health care needs. Over half of those who use Medicaid long-term care services are individuals age 65 and older, but 45 percent are disabled children and adults.”

Home and community based care (HCBS) has been growing as a share of Medicaid expenditures over time.

“Spending patterns for Medicaid home and community-based services vary widely among states although demand for services in the community is growing as evidenced by the number of beneficiaries on waiting lists for home and community-based waiver services – 331,689 individuals in 33 states in 2007 – an 18 percent increase over the previous year.”

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Labor Day Post I: A Dangerous Occupation

September 5, 2010 in Nursing Homes | No comments

For Labor Day, I will profile a group of workers who are underappreciated: long-term care workers.  These posts are typically filled by certified nurse’s aids (CNAs).  Despite the importance of their job, their remuneration is far from generous.  In The Politics of Medicaid, Laura Katz Olson reports that CNA hourly wages were only $10.61 in 2008.  This compares to wages of $12.59 for customer service representatives or $11.78 for manufacturing receptionists.

In addition, being a nursing home caregiver is a dangerous job. These workers “…experience an exceedingly high rate of on-the-job injuries, 18.2 per 100 workers, as compared to people engaged in coal mining (6.2) construction (10.6) and warehousing or trucking (13.8).  In fact, nurse’s aides, attendants and orderlies have the third-highest rate of nonfatal occupation-related mishaps in the nation.“

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Income and Long Term Care

August 10, 2010 in Nursing Homes | No comments

Almost 7 out of every 10 of individuals living to age 65 will require some long-term care (LTC) assistance.  Of these, over one-third will spend some time in a nursing home.  In general, however, the elderly strongly prefer home based LTC if possible.   “Mattimore and colleagues (1997) found that 30% of elderly survey respondents would rather die than enter a nursing home and an additional 26% indicated they were very unwilling to move to an institutional setting.”

A recent paper Goda, Golberstein and Grabowski (GGG hereafter) examines how permanent income shocks affect LTC utilization.

The estimation equation used is the following:

  • Uhi = βIh + δXh + ε

where U refers to a LTC utilization measure (e.g., nursing home, paid home health care, unpaid care), I is annual household Social Security Income, and X is a set of exogenous controls.

Identifying income and LTC choices independently is difficult.  Individuals with a high probability of needing LTC may more years or longer hours per year to accumulate additional assets to fund LTC expenses.  Ideally, identification requires an income shock that is exogenous to the individual’s labor market choices.  For that purpose, GGG rely on natural experiment known as the “Social Security Benefits Notch” to serve as an instrument for the income variable.  The authors define the Notch as follows:

“Prior to 1972, neither lifetime earnings nor post-retirement payments were indexed for inflation, but rather periodically adjusted by the Congress. In 1972, Congress amended the Social Security Act to provide automatic indexation of credited earnings for those workers who had not yet retired, which created an unanticipated windfall for workers from certain birth cohorts because of an error that led the prior earnings of these workers to be doubly indexed for inflation. The high rate of inflation over the following years led to a large increase in benefits for the affected cohorts. In 1977, Congress passed another law to eliminate the double indexation for future cohorts of retirees.  This law change created a large reduction in Social Security payments for those cohorts born in 1917 or later relative to the preceding cohorts. Importantly however, cohorts born prior to 1917 (near retirement in 1977) retained doubly indexed benefits under a grandfather provision. Taken together, these law changes and the high rate of inflation over the mid 1970s created a large and permanent difference in Social Security payments across birth cohorts, which came to be called the Social Security Benefits Notch.”

Econometrically, GGG use a dummy variable for being born in the notch years (i.e., 1915-1917).  To apply their model, the authors use data from the 1993 and 1995 waves of the Assets and Health Dynamics Among the Oldest Old (AHEAD).  The authors find that this instrument is weak for richer households who have at least a high school education, but much stronger for households whose heads have at least a high school diploma.  Due to this result, GGG limit the sample only households without a high school education.  Using this specification,  the authors find the following results:

“…positive income shocks had a negative effect on nursing home entry, but a positive effect on the use of paid home care. Specifically, a $1,000 (or 10.2 percent) increase in annual Social Security income for those in this low-education group would decrease the likelihood of any nursing home use by 22%-30% (relative to mean) and increase the likelihood of receiving any paid home care use by 24%-34%. Social Security income was not systematically related to the receipt of any informal (unpaid) care across the different specifications.”

At first glance, one might perceive that increased income leads to less nursing home care due to substitution for home health care.  Alternatively, higher income could improve health directly and thus lessen the need for institutionalized care.

One obvious mechanism by which increased income would decrease nursing home use is through disqualification of Medicaid eligibility.  The authors claim that assets rather than income are the key driver of Medicaid eligibility for nursing home care, but do not investigate how asset accumulation and the Social Security notch are related.

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No Wrong Door

August 2, 2010 in Medicaid, Nursing Homes | No comments

In Virginia, there are over one million people age 60 and older and over 90,000 Virginians age 85 and older. These figures will only grow in the upcoming decades.  Thus will put increasing strain on public programs and will require service providers to reorient medical care toward providing continued, high-quality long term care services.  Long term care is of growing importance to health care sector.  Although the aged and disabled populations make up 30% of Virginia’s Medicaid population, these individuals account for 70% of the state’s $4 billion Medicaid budget.

Yet providing long term care to those in need is a confusing a bureaucratic process.  For instance, in Virgina, there are 6 agencies that provide long term care services:

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