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OVERVIEW Long-term care in the United States is widely perceived to be inadequate as to access, choice of setting, quality, and cost e These inadequacies permeate the entire service structure and affect all populations dependent upon long-term care: the frail and ill elderly, ill, the physically disabled, and the the chronically mentally developmentally disabled. Unprecedented numbers The resulting changes in . . . Of Americans are living to a very old age. the size and structure of the elderly population wall create a substantial increase in the need for long-term care. By the year 2000 15 million Americans are expected to need extensive long-term care services in institutions or home settings; about 40 percent will be under the age of 65. By 2020 the aging of the baby boom cohort will swell the numbers of those needing long-term care to more than 23 million. Can long-term care services be restructured and improved before the projected demand creates even more intractable problems of access, quality, and cost? Can the supportive services and health care that millions of Americans will need in the years to come be provided without bankrupting the nation or impoverishing the disabled and their families? The Institute of Medicine is proposing to undertake a major study to evaluate public policy options and private initiatives that . . ~ ~ t . ~ . ~ ~ together might form the basis of a national strategy for responding to the nation's growth needs for long-term care. The long-term care problem for the elderly is similar to other problems that have been dealt with effectively by risk-pooling schemes, that is, insurance. Almost every American family is at risk of having an elderly member require substantial long-term care services. For the relatively few that actually require extensive services, the costs are huge. Some of these unfortunate families are forced to make poignant choices: daughters abandon their promising careers and sacrifice their independence; spouses divorce their lifelong partners to protect their meager incomes; some individuals are totally impoverished. Insurance has not been developed in any comprehensive way for long-term care, notwithstanding a growing number of the very old and a 1

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growing probability that a greater proportion of families will be faced with catastrophic costs. Why is this the case? What barriers exist to establishing the appropriate insurance scheme? What should be done in its absence? The potential of a pooled-risk approach to financing long-tenm care justifies a full exploration. The study proposed here by the Institute of Medicine would explore how various public and private financing strategies could be employed to facilitate the development of appropriate, accessible, and affordable long-term care. In this country, where little central planning of health care occurs, the structure of health care financing has an inordinate influence on the shape, content, and quality of the ultimate product. Although the framework of the proposed study is options in financing, pooled-risk approaches in particular, the study's ultimate intent is to contribute to the development of an improved system of long-term care services. We propose to use the goals and objectives of an effective and desirable system of long-term care to determine the design of the financing system. The Institute of Medicine is well qualified to lead such a project. Its membership represents the nation's leaders in two areas that must be brought together to address the nation's future long-term care needs: clinical experts from many disciplines to evaluate the elements of the proposed long-term care system and the tradeoffs required by fiscal realities; and financial experts to evaluate alternative risk-pooling strategies that can promote the development of a better system of long-term care. It is our hope that the Institute's national reputation as an objective, scientific, and policy relevant institution will confer on the conclusions of the study the credibility necessary to influence national policy. As an example of this role, the TOM recently completed a study that sets out a comprehensive blueprint for reform of the regulation of nursing homes. That report has received widespread attention and endorsement by both consumer and health provider groups, and its recommendations are being incorporated in legislation. The study will focus on the elderly, but will do so within an overall perspective that also recognizes the long-term care needs of those under the age of 65. The likelihood that at least 40 percent of the nation's long-term care population in the year 2000 will be under 65 makes it imperative that public policies for the chronically mentally ill, the developmentally disabled, and the nonelderly physically disabled be formulated and evaluated as soon as possible. A product of the proposed study will be an examination of the possible positive and negative impacts on the disabled nonelderly of policy choices to improve long-term care for the elderly. The options to be considered will range from incremental to comprehensive. Attention will be given to strategies to ensure an orderly and equitable transition between current and proposed policies. The overall goal of the study is the development of broad policy recommendations and choices that could lead to practical and effective responses to the nation's growing needs for a wide range of long-term care services.