Long-term care is an increasingly important and rapidly changing component of today's health care delivery system. Four out of every ten people turning age 65 will use a nursing home at some point in their lives, and many will need home care and other related services as well. As the population ages, the need for these services will continue to grow, particularly for women. Long-term care services are essential to many younger populations as well—children with disabilities, people with mental health problems, people with Alzheimer's disease, people with acquired immunodeficiency syndrome (AIDS), and others (Saltman 2006).
The increasing need for these services is creating significant budget concerns for Federal and State Governments, as well as straining family finances. Combined Medicare and Medicaid outlays have been growing dramatically. About 40 percent of long-term care costs are paid by the Federal/State Medicaid program. Although the Medicare program accounts for only a small share of total expenditures, its share has been growing. Despite rising Government expenditures, out-of-pocket payments continue to be a large source of financing for long-term care. As a result, for many individuals who have chronic care needs, long-term care remains a catastrophic cost.
These financial pressures, combined with similar pressures related to acute care, are fueling unprecedented changes in the health care marketplace. Long-term care providers are diversifying and combining forces to maintain and expand market share as the influence of managed care spills into the long-term care market. Pressures to reduce costs have pushed sicker and more disabled persons into lower levels of care. These market and delivery system changes, in turn, are underscoring questions about the appropriateness, cost, and quality of services delivered in each of these settings and are prompting increased interest and concern on the part of consumers, providers, and Federal and State Governments charged with regulating and paying for these services. In recent years, for example, Congress has considered prospective payment systems for nursing home and home health agency payments under the Medicare program, as well as proposals to diminish the Federal role in the Medicaid program. Many States are exploring managed care options for the elderly and disabled under Medicaid.
As they consider how to respond to these cost pressures and market changes, purchasers, providers, consumers, and policymakers will need answers to fundamental questions in six broad areas:
Use, cost, and financing.
Access and quality of care.
Organization and delivery of care.
Consumer and care giver behavior.
Data development and methodology.
The following sections highlight selected findings.
Use, Cost, and Financing
The growing cost of long-term care has stimulated policymakers to develop new approaches to control public expenditures and also has altered market strategies for providing that care. Accurate estimates of use and cost and identification of factors that influence care decisions provide the basis for designing new public policies and new market strategies to meet demand with fewer resources(Costa-Font 2005).
AHCPR's research has documented the high use of care by, and expenditures for, elderly and long-term care populations in general and the significant ...