Elderly in long-term care use Medicare resources disproportionately
Elderly Medicare beneficiaries who receive help with three or more activities of daily living constitute only 7 percent of the Medicare population but account for nearly 25 percent of Medicare Part A and B spending.
According to research by Avalere Health, these beneficiaries consumed nearly 4.5 times more per person in Medicare spending ($18,902) than those without disabilities ($4,289) in 2005, the most recent year for which data is available.
By law, Medicare does not pay for extended nursing home stays, but does pay for limited post-acute care. Avalere's analysis, commissioned by the California-based SCAN Foundation, shows that some Medicare services which transition beneficiaries from acute to long-term care settings may be filling-in for long-term care needs.
"As we enter serious discussions on health reform, policymakers need to have a full understanding of the cost-drivers in our entitlement programs," said Anne Tumlinson, lead researcher of the analysis. "Our work shows that paying for long-term care cannot be categorized simply as a Medicaid or individual family problem, and that more integrated solutions need to be considered."
Medicare covers palliative care and support services for beneficiaries who are terminally ill and have a life expectancy of six months or less. Research shows that hospice lengths of stay from 2000-2005 took double-digit leaps for those suffering from Alzheimer's disease and senile dementia, suggesting that the Medicare hospice benefit may be addressing a shortfall in long-term care services.
About 35 percent of long-term care is privately financed. In its analysis of U.S. spending on nursing homes, home care and assisted living, Avalere found that in 2006, individuals and their families contributed an estimated $64 billion of their own funds, out-of-pocket, on these services. Families and communities also played a central role in the nation's long-term care system by providing unpaid care giving valued at $350 billion. Private health and long-term care insurance played a much smaller role, contributing a little over $16 billion.
Institutional care still accounts for the majority of Medicaid long-term care spending. Despite efforts to increase the number of people treated in home and community-based settings, nursing homes and other institutional settings still receive more than half of all Medicaid long-term care dollars. Medicaid spent close to four times as much on services for the elderly and disabled than on services for children and adults in 2007.
The 85-and-older population is growing rapidly and has the greatest need for long-term care services. By 2050 they are expected to represent nearly one quarter of the Medicare population.
