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Introduction and Themes of the Workshop1

The financing of long-term services and supports has become a major issue in the United States. These are the services and supports that individuals with disabilities, chronic conditions, and functional impairments need in order to live independently, such as assistance with eating, bathing, and dressing.2 Long-term services and supports do not include the medical or nursing services required to manage health conditions that may be responsible for a disabling condition.

At least 11 million adults ages 18 and over receive long-term services and supports (Kaye et al., 2010). Only a little more than half of them—57 percent—are ages 65 or older. The services that these adults need vary greatly. Some need just supportive services to remain in their homes, while others require much more intensive medical care. For this latter group, paying for long-term services and supports can be a great burden. One study found that about 6 percent of people turning 65 in 2005 could expect to

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1 The planning committee’s role was limited to planning the workshop, and the workshop summary has been prepared by the workshop rapporteurs as a factual summary of what occurred at the workshop. Statements, recommendations, and opinions expressed are those of individual presenters and participants, and are not necessarily endorsed or verified by the Institute of Medicine or the National Research Council, and they should not be construed as reflecting any group consensus.

2 “Long-term services and supports” are also referred to as “long-term care,” but the former term is now preferred as a more accurate and comprehensive description of the kinds of assistance needed by people with disabilities. This workshop summary generally uses the term long-term services and supports, but it refers to long-term care in contexts where the term has become standard, as in long-term care insurance.



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1 Introduction and Themes of the Workshop1 T he financing of long-term services and supports has become a major issue in the United States. These are the services and supports that individuals with disabilities, chronic conditions, and functional im- pairments need in order to live independently, such as assistance with eat- ing, bathing, and dressing.2 Long-term services and supports do not include the medical or nursing services required to manage health conditions that may be responsible for a disabling condition. At least 11 million adults ages 18 and over receive long-term services and supports (Kaye et al., 2010). Only a little more than half of them—57 percent—are ages 65 or older. The services that these adults need vary greatly. Some need just supportive services to remain in their homes, while others require much more intensive medical care. For this latter group, pay- ing for long-term services and supports can be a great burden. One study found that about 6 percent of people turning 65 in 2005 could expect to 1 The planning committee’s role was limited to planning the workshop, and the workshop summary has been prepared by the workshop rapporteurs as a factual summary of what occurred at the workshop. Statements, recommendations, and opinions expressed are those of individual presenters and participants, and are not necessarily endorsed or verified by the Institute of Medicine or the National Research Council, and they should not be construed as reflecting any group consensus. 2 “Long-term services and supports” are also referred to as “long-term care,” but the former term is now preferred as a more accurate and comprehensive description of the kinds of as- sistance needed by people with disabilities. This workshop summary generally uses the term long-term services and supports, but it refers to long-term care in contexts where the term has become standard, as in long-term care insurance. 1

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2 FINANCING LONG-TERM SERVICES AND SUPPORTS have expenses of more than $100,000 for long-term services and supports (Kemper et al., 2005–2006). In 2011, according to one study, $210.9 billion was spent on long-term services and supports, which accounted for about 9.3 percent of personal health care spending (O’Shaughnessy, 2013). About 62 percent of that spending came from Medicaid ($131.4 billion), nearly 22 percent came from out-of-pocket spending by individuals and their families ($45.5 bil- lion), and nearly 12 percent ($24.4 billion) came from other private sources, including private long-term care insurance. With the projected aging of the U.S. population, these numbers are expected to increase substantially. Most of the services and supports received by people with disabilities is provided by families and friends without compensation. Various studies have estimated the value of these services at hundreds of billions of dol- lars, yet this is usually not counted when thinking about the financing of long-term services and supports. Other important issues in this area include inadequate planning and personal savings for long-term care needs by in- dividuals, intergenerational transfers, the role of income support programs such as Social Security Disability Insurance and Supplemental Security Income, and the role of private long-term care insurance. Given the magnitude of the challenge posed by the financing of long- term services and supports, the Forum on Aging, Disability, and Inde- pendence of the Institute of Medicine (IOM) and the National Research Council (NRC) held a workshop on the topic on June 12, 2013, in Wash- ington, DC. The workshop covered both older adults who acquire dis- abilities and younger adults with disabilities who may acquire additional impairments as they age, the target population of the Forum’s work. The challenges associated with financing long-term services and supports for people with disabilities impacts all age groups. While there are important differences between the characteristics of programs developed for different age groups, and specific populations may have different needs, this work- shop addressed the financing sources for long-term services and supports in general, noting specific differences as appropriate. Box 1-1 provides the workshop statement of task. Appendix A contains the workshop agenda and Appendix B contains biographical sketches of the speakers. The workshop was undertaken as part of the forum’s mission to foster dialogue and confront issues of mutual interest and concern within the long-term services and supports system. ORGANIzATION OF THE REPORT After this introductory chapter, Chapter 2 provides an overview of the challenge posed by the financing of long-term services and supports,

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INTRODUCTION AND THEMES OF THE WORKSHOP 3 BOX 1-1 Statement of Task An ad hoc planning committee will plan a 1-day public workshop to examine the financing of long-term services and supports for working-age individuals with disabilities and among individuals who are developing disabilities as they age. The workshop will feature invited presentations and discussions that will • rovide an overview of the scope and trends of current sources of financ- P ing for long-term services and supports for working-age individuals with disabilities and older adults aging into disability, including income sup- ports and personal savings. • onsider the role of families, business, and government in financing long- C term services and supports. • iscuss implications of and opportunities for current and innovative D approaches. including workforce needs, the use of technology, and personal preferences for care. Chapter 3 considers the role of individuals and families, both as caregivers and as purchasers of long-term services and supports. Chapter 4 looks at the role of government in paying for long-term services and sup- ports, while Chapter 5 examines the role of the private sector in provid- ing long-term care insurance and helping employees save for retirement. Chapter 6 concludes this summary of the workshop by offering reflections on several of the most prominent topics that arose during the day’s presen- tations and discussions. THEMES OF THE WORKSHOP Chapters 2 through 6 each begin with a box that lists the important points made by the presenters whose remarks are summarized in that chap- ter. The following points are drawn from those boxes as an introduction to the themes of the workshop, with the names of the presenter indicated. The Challenge • Most of the 11 million people who need long-term services and supports are living at home and in the community and rely solely on informal or family caregiving for all their care (Feder).

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4 FINANCING LONG-TERM SERVICES AND SUPPORTS • The costs of long-term care services exceed most families’ ability to pay (Feder). • A “care gap” is emerging as the population ages, and the work- force for long-term services and supports continues to have serious capacity problems (Stone). • The need for extensive and expensive long-term care is a highly variable and unpredictable event that is well suited for insurance (Feder). The Role of Individuals and Families • About 30 percent of households in the United States provide un- paid care to family members with disabilities (Hunt). • The costs to families and businesses incurred by the provision of long-term services and supports range into the trillions of dollars (Hunt). • A relatively small portion of the population ages 65 and older spends down to become eligible for Medicaid, and those who do tend to have relatively little income or wealth (Johnson). The Role of Government • Medicaid is the primary payer for long-term services and supports, with elderly beneficiaries and nonelderly beneficiaries with disabili- ties accounting for the majority of enrollment and expenditures for these supports and services (Musumeci and Reaves). • The United States lacks a universally available insurance-based approach that would spread the financial risk of aging and living with a chronic illness or disability (Goldberg). • A social insurance program could gain political support if it was self-financed, reduced Medicaid spending, and complemented pri- vate insurance (Goldberg). • Bold innovations might slow the growth of expenditures while also improving the economic status of people with disabilities, but the evidence base to support such innovations is often inadequate (Stapleton). The Role of the Private Sector • Relatively few people have purchased long-term care insurance, and many of the companies that have offered coverage are leaving the market (O’Leary).

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INTRODUCTION AND THEMES OF THE WORKSHOP 5 • Automatic enrollment in 401(k) plans by employers can substan- tially increase participation rates, and automatic escalation of con- tributions would substantially increase savings (VanDerhei). • Public subsidies for long-term care insurance currently benefiting the upper end of the income spectrum could be redirected to the middle of the spectrum to make long-term care insurance less costly (Frank).

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