Recommendations for Financing Long-Term Care
Paying for long-term care is a major problem for older people, their families, and society and will be an increasingly serious problem in the future. Because of greater longevity, many more people face a period of serious disability in old age. Most are cared for informally by relatives and friends, though often at great emotional and sometimes financial costs.
When the disabled elderly and their families seek paid home care or nursing home services, they find, often to their surprise and dismay, that medicare and private insurance do not cover long-term care to any significant extent. Those who need paid care must use their own resources or, once those are exhausted, turn to medicaid, a severely means-tested program for the poor.
The current heavy reliance on individual resources and medicaid creates a two-class system. Medicaid's low reimbursement rates and limited coverage of home care create a bias toward institutional care and sometimes lead to poor quality and an inadequate supply of services.
Over the next several decades this system will become increasingly strained as the number of older people rises. Medical advances that reduce disability in old age are highly desirable but unpredictable. The projections in this study indicate that both public and private spending for long-term care will have to increase substantially to meet expected demand. The question is not whether spending for long-term care will rise, but by whom these costs will be borne. Will they be borne largely by people unlucky enough to need expensive care, or will they be