Yesterday we discussed a new report which provides helpful summary information about long-term care payments and the role of public support programs like Medicaid. As noted, the majority of nursing home residents are on Medicaid and the majority of all long-term care services (both at home and in facilities) is covered by Medicare and Medicaid jointly. One of the main reasons that these insurance options are so critical is because the actual cost of long-term care is prohibitive for many lower and middle income families.
Nationwide, nursing home care averages over $83,000 per year. For a senior resident without the ability to work, it does not take much imagination to realize that the cost is likely impossible to pay out of pocket for most. Even assisted living facilities–which usually have no professional medical staff or skilled care– cost nearly $40,000 annually. Unfortunately, the majority of seniors do not have retirement nest eggs that can cover those costs for very long (or at all). Private long-term care insurance exists, but only a few ever purchase the insurance and it is usually incredibly expensive. The same financial challenges that prevent seniors from paying for care out of pocket make it not feasible to purchase long-term care insurance out of pocket.
It is important to appreciate that Medicaid is a joint state and federal program. That means that there are significant differences in costs and available services between states. In other words, an individual who is using Medicaid in New Mexico may have vastly different options that one who lives in New York. State public officials are the ones who make most decisions about how to operate their programs and what to provide to residents.
There are certain federal requirements or “bare minimums” that states must provide. For example, skilled nursing home care and basic at-home support must generally be covered under a state’s Medicaid program according to federal rules. But there is still significant leeway for states to make other decisions about how the program operates.
The Kaiser report notes that many states are now seeking to limit Medicaid costs by expanding “home care based services” (HCBS). The idea is to provide more robust help to seniors living in their home (nurse’s visits, meals on wheel, travel assistance, etc.) so that seniors can actually avoid the need to move into a nursing home. This usually has two benefits. First, studies consistently show that most people prefer to age in pace and are happier when they do not need to move into a nursing home. Second, the cost of HCBS are far lower than the costs of traditional nursing home stays. By delaying the time before a senior needs to enter a nursing home (or preventing it altogether) the state can see considerable cost savings.
However, one challenge is coming up with the immediate funds to pay for HCBS in the short-term. Public officials are still obligated to provide traditional nursing home care to those residents who need it. And so pumping more money in HCBS in the short term is proving a challenge. It may save money in the end, but tight budgets today make it difficult to come up with any immediate infusion of funds to see the idea through.
See Other Blog Posts: