The Cost of Long-term Care: Who will Care?

Ultimately, we must ask ourselves the question: “Who will take care of me when I need care?”

“Don’t you dare put me in a nursing home!”

Nancy could hear her mother’s words clearly in her mind. She felt guilty going against her wishes but when her mom fell and fractured her hip, Nancy couldn’t think of any other option.

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We met Nancy and her mom, Mary, on a visit to a nursing home as part of a research study on intergenerational communication at UCLA. As researchers, we had opportunities to talk with Nancy over several weeks and learn about her grievances with her mom’s nursing home experience.

Shortly after Nancy made the difficult decision to place her mom in nursing care, she was repeatedly confronted with the nursing home’s judgment to hospitalize her mom. On one occasion, Mary was awakened at 3:00 am and spirited away in an ambulance. Mary believed that she was dreaming as she sat in the packed emergency room among crying children and a gunshot victim, awaiting medical attention. But as she sat shivering on a cold hospital bed and observing the overworked nurses frantically moving from patient to patient, she realized that her nightmare was indeed reality.

The next day, Nancy was furious when she received an unconcerned phone call from the nursing home to inform her that her mother was hospitalized. When Nancy questioned the reasons for hospitalization, she only heard vague explanations.

As the months moved on, Nancy’s mom was repeatedly hospitalized in a similar fashion. Nancy grew suspicious. What especially troubled her was seeing her mom’s health declining after each hospitalization.

Nancy’s story had a significant impact on us. We sought to understand why Mary was repeatedly hospitalized despite showing no physical distress.

As we researched, we found that Nancy’s experience is not uncommon. We suggest that a flawed insurance reimbursement model has diminished quality of care and driven up costs.

Growing Demand for Long-term Care

The Health Department estimates that over the next 30 years, 70% of people over 65 will require long-term care. The cost of care, however, can be exorbitant. Most older adults live on less than $24,000 a year, yet out-of-pocket costs for nursing care can exceed $80,000! Even less expensive options, such as assisted living and professional in-home care can be financially exhaustive. Thus, many seniors, like Mary, rely on Medicare and/or Medicaid to cover the high cost of care.

Struggling to Supply Care

Although the skilled nursing business is frequently held as a financially lucrative industry, 75% of nursing homes struggle to maintain viable profit margins. This is largely due to disparities in Medicare/Medicaid insurance reimbursements. Medicare reimburses higher rates than Medicaid but is limited to 100-days; Medicaid covers long-term care indefinitely for seniors who lack the financial wherewithal to pay for care privately, but its low reimbursements often fail to cover operational costs for nursing facilities.

Constricting insurance reimbursement policies puts long-term care facilities in a financial crunch. It is therefore not inconceivable to consider that some nursing home administrators may need to “game” the system to survive financially.

To be clear, it is not our intention to reprimand long-term care facilities. Rather, we seek to examine and disseminate the problems with the Medicare/Medicaid reimbursement model that have negatively impacted long-term care for all stakeholders.

Improving the Long-term Care System

We suggest that effective implementation of policy and technological innovation can revamp the long-term care system in terms of affordability and quality.

In terms of policy, California’s In-Home Supportive Services Program is an example that encourages low-income older adults to age-in-community. The program subsidizes family caregivers for providing personal care services such as meal preparation and transportation to medical appointments. Subsequently, financial burdens are reduced and seniors have greater autonomy in choosing familiar caregivers and maintaining independence.

Along with policy reforms, technology can significantly improve care administration. For example, Aging 2.0 is calling for innovators and stakeholders to collaborate and tackle challenges and opportunities in areas such as financial security, family caregiving, and care operations. To illustrate, technology can replace hand-written records with cloud-based medical records that can be seamlessly updated with sensors. Subsequently, nursing home staff can react quicker and provide increased personalized care at a reduced cost.

Bottom Line

Let’s face it. The real crisis is just around the corner. With changing demographics and an aging population, long-term care requires greater public attention. Moreover, if the Trump administration succeeds at cutting Medicaid, as proposed, the outcome will narrow access of care for seniors with middle and lower socioeconomic status. Additionally, it will hurt nursing homes that rely on Medicaid reimbursements.

Sadly, when younger cohorts grow older and require long-term care, they will face greater challenges accessing and affording long-term care than today’s seniors due to income polarization and the depletion of Social Security income. Ultimately, we must ask ourselves the question: “Who will take care of me when I need care?”

Authors

Jai Kyeong Kim

jai@magnuscare.co

Bryan McDermott

bryan@magnuscare.co