Long-Term Care Spending

In 1993, Medicaid spent $25.5 billion for long-term care services for elderly beneficiaries (Figure 5). This represents 58 percent of the $44 billion Medicaid spent on long-term care services for all population groups. The majority of spending was for care delivered in nursing facilities (84 percent) and ICFs-MR (2 percent). The remaining 14 percent of Medicaid long-term care spending went towards community-based care, including 3 percent for mental health services and 11 percent for home health and personal care services.

Medicaid plays a fundamental role for institutionalized people and provided nursing home payments on behalf of 1.4 million elderly people in 1993. Often in nursing homes due to severe physical or cognitive limitations, nursing home residents tend to be over 80, female, white, and without a spouse in the community. Most have few choices available to them, and the need for continuous care and monitoring makes remaining in the community unaffordable and impractical.

Medicaid is essentially the only public financing program for long-term care services and accounts for 52 percent of overall nursing home payments and the vast majority of all public spending for these services. In 1993, a total of $90 billion was spent on long-term care in the U.S. for people of all ages, with $70 billion spent on nursing home care and $21 billion on care in the community (Figure 6). Medicaid pays for 16 percent of home health and community-based long-term care. Private payments, primarily out-of-pocket spending by the elderly and their families, account for a major share of long-term care financing.

Less than 5 percent of elderly people have private long-term care insurance. The relatively low penetration of private long-term care policies among the elderly is attributable to two factors. First, premiums can be extremely costly for people who are already 65 and older living on fixed incomes, typically ranging from $650 to $4,200 per year depending on the age when purchased. Second, many elderly people are prohibited from purchasing private long-term care insurance because of a pre-existing condition or disability.

Medicare was not designed to be a long-term care program and provides only minimal long-term care services. In general, Medicare’s home health and nursing home benefits are limited to skilled, rehabilitation-oriented care, with the number of days in a Skilled Nursing Facility (SNF) limited explicitly to a maximum of 100 days. Medicare covers 9 percent of total nursing home expenditures and accounts for over one-third of total home health expenditures. Custodial or personal care services are generally not covered by Medicare, leaving Medicaid as the principal public program to provide these services.

Applying Beneficiaries’ Financial Resources to the Cost of Nursing Home Care

Nursing home care is expensive, with annual costs ranging from $30,000 to $50,000 or higher in some areas of the country. Regardless of whom it affects, nursing home care is a catastrophic expense that is likely to impoverish most middle- and lower-income persons. Medicaid is a means-tested program and, unlike insurance, provides assistance only when financial resources are exhausted. An elderly person must deplete almost all of their assets and apply all of their income, except for a small personal allowance, toward the cost of nursing home care before Medicaid will pay for services. Under the spousal impoverishment provision in the Medicare Catastrophic Coverage Act (MCCA) of 1988, a spouse of a nursing home resident is allowed to keep more income and assets than was previously permitted. Protected assets for spouses range across states from $14,964 up to a maximum of $74,820 and the minimum protected income is 150 percent of the poverty level.

Because the means-tested program is almost always the sole alternative to spending personal funds for nursing home care, some higher-income persons receive assistance by transferring their resources to establish eligibility. Although this situation has attracted attention, the magnitude of this phenomenon has never been well documented. The Omnibus Budget Reconciliation Act of 1993 (OBRA 93) tightened eligibility rules to ensure that nonpoor elderly persons apply their resources toward the cost of care before Medicaid pays for long-term care services. It requires states to delay Medicaid eligibility for institutionalized persons who dispose of assets for less than fair market value during the three years prior to institutionalization; counts trusts as available to cover the cost of care within five years of institutionalization; and mandates estate recovery to cover Medicaid’s long-term care costs. States also have the option to use these rules to delay eligibility for disabled persons in the community before Medicaid will provide assistance for home- and community-based services. These efforts have made it more difficult for elderly people to receive coverage for Medicaid long-term care services. In the absence of adequate private financing alternatives, setting appropriate limits on Medicaid’s ability to help individuals and families with long-term care will continue to be a source of tension in program policy and spending.

Medicaid Payments to Nursing Homes

Medicaid payments for nursing home care are a large component of Medicaid spending, accounting for 20 percent of total expenditures. Nursing home payment levels will become increasingly important as state Medicaid programs search for ways to constrain spending. The Boren Amendment, enacted under the Omnibus Budget Reconciliation Act of 1980 (OBRA 80), permitted states to move from cost-based reimbursement for nursing homes to set payment rates that are “reasonable and adequate” to meet the costs of “efficiently and economically” operated facilities, but did not specify methods or rates. State Certificate of Need (CON) programs, which enabled states to limit the number of nursing home beds, coupled with increased state flexibility in setting payment rates, helped states control the rate of nursing home spending during the 1980s. Recently, providers have used the Boren Amendment provisions to sue state Medicaid agencies, arguing that Medicaid payment rates are inadequate to meet the cost of operating nursing facilities and to accommodate the changes being implemented as part of nursing home reform.

Nursing Home Quality Reform

The Omnibus Budget Reconciliation Act of 1987 (OBRA 87) established protections for nursing home residents in response to Congressional concern about the quality of nursing home care and findings described in a 1986 Institute of Medicine report detailing an unsatisfactory level of care provided by nursing homes. Effective in October 1990, these reforms established requirements for providing care to Medicare and Medicaid beneficiaries related to scope of services, staffing levels and qualifications, residents’ rights, and the physical environment. Nursing facilities must comply with these requirements in order to receive reimbursement from Medicare and Medicaid.

Medicaid Coverage of Community-Based Long-Term Care

Medicaid has played an increasingly important role in covering community-based services for the elderly population with disabilities. Medicaid pays for skilled home health care in all states and 28 states and the District of Columbia have elected to cover the optional benefit of personal care in the home. Through home- and community-based waivers, states have been able to design programs to provide services, such as personal care, homemaker services, and adult day care to specific populations. Many states have implemented innovative programs to deliver coordinated community services to foster independence and provide an alternative to nursing home care, but most programs are small in scope and serve only a small number of frail elderly people. In 1993, Medicaid spent $2.8 billion on these innovative programs under home- and community-based waivers, through which 300,000 people were served.

Finding ways to stimulate the development of home- and community-based alternatives will continue to be a pressing challenge in Medicaid. Although the share devoted to home- and community-based services has been steadily increasing, Medicaid spending on long-term care continues to be directed primarily toward nursing home care. Of total Medicaid long-term care spending in 1993, $6.7 billion (15 percent) went toward community-based care (including skilled home health care, personal care, and home- and community-based waiver services), with most states spending between 5 and 25 percent (Figure 7).

Six states — New Hampshire, New York, Oregon, Vermont, West Virginia, and Wyoming

Medicaid and the Elderly

September 1995

Medicaid is a crucial health financing program for the elderly population, providing assistance to over 1 in 10 Americans age 65 or older. Nearly four million elderly people receive Medicaid assistance with medical and long-term care expenses. Medicaid’s coverage helps low-income elderly people gain access to health care services, eases financial burdens for medical expenses, and provides a safety net for long-term care coverage.

Medicaid plays three essential roles for elderly people. First, Medicaid makes Medicare affordable for low-income beneficiaries by paying the premiums, deductibles, and other cost-sharing requirements. Second, Medicaid provides coverage of medical benefits that Medicare does not cover, such as prescription drugs. Third, Medicaid stands alone as virtually the only public source of financial assistance for long-term care.

Initially designed to provide health benefits for welfare recipients, Medicaid’s role for vulnerable population groups has steadily expanded over the past three decades. Providing coverage for over 32 million Americans, Medicaid now serves as this nation’s primary health insurance program for low-income families and finances acute and long-term care for low-income elderly and disabled people. At a cost of $125 billion in 1993, Medicaid has become a major budgetary commitment for both the federal and state governments. Overall, the elderly account for 12 percent of Medicaid beneficiaries and 28 percent of program expenditures.

The Medicaid program is at a crucial point in its history as the Congress looks to Medicaid and Medicare to achieve significant reductions in federal spending. Over the next five years, federal Medicaid spending is projected by the Congressional Budget Office (CBO) to grow by between 10 and 11 percent per year. Concern over rising Medicaid costs, combined with efforts to reduce public spending, have fueled discussions of major restructuring of this program. The Budget Resolution agreed to by the House and Senate in June of this year calls for $182 billion in federal Medicaid savings from 1996 to 2002, about a 20 percent reduction in projected federal Medicaid spending. Proposals for reform have centered on transforming the program into a block grant that would establish strict limits on federal financial obligations and increase state flexibility in program design and operation. If enacted, these reforms would substantially alter the structure, operation, and financing of Medicaid with major implications for the elderly people Medicaid now serves.

Overview of Medicaid

Authorized under Title XIX of the Social Security Act in 1965 as companion legislation to Medicare, Medicaid is a means

The Use of Mainstream Media to Encourage Social Responsibility:

The International Experience

Executive Summary

The Henry J. Kaiser Family Foundation commissioned the Advocates for Youth Media Project to carry out a study titled The Use of Mainstream Media to Encourage Social Responsibility: The International Experience. The study examines the outcomes of programs using mass media entertainment to stimulate changes in health behaviors.

Entertainment-education is defined as the process of putting educational content in entertaining formats and messages in order to increase knowledge about an issue, create favorable attitudes, and change overt behavior concerning the educational issue or topic (Singhal, 1993, and Brown & Singhal, 1993). International public health programs, especially those dealing with reproductive health, have more experience using and evaluating this approach than their domestic counterparts. These international experiences using entertainment for public health education offer relevant lessons for the United States and can be used in the development of similar domestic programs.

This study’s findings are based on:

• Interviews with the agencies most active in international entertainment-education
• An examination of the evaluation results of 52 entertainment-education projects; and
• A literature review.

Ten important “lessons learned” relating to the advantages and limitations of using this approach for public health education and promotion purposes in the United States emerged from the study:

1. Entertainment-education can be used for promoting knowledge, attitude and behavior change, but it may not always be the most appropriate approach for meeting behavior change objectives. While many agree that entertainment-education is useful in creating awareness or interest in a topic, some dispute the claim that entertainment education can provoke behavior change. Behavioral objectives can be unrealistic unless the entertainment is associated with another project component involving interpersonal contact.

2. Knowledge of the audience should drive the project. It is essential to begin the project planning process by determining whom the project aims to help with what situation or problem. A thorough exploration of the target audience, including their needs, concerns, interests and preferences, should be the foundation to determine the appropriate strategy for reaching that audience. Only after conducting this research should an entertainment-education strategy be considered.

3. Entertainment-education projects should be developed according to a methodology that includes formative research, pretesting, monitoring of outputs and evaluation of impact All of the agencies interviewed utilize a similar methodology for developing entertainment-education projects and felt strongly that this process helped to ensure the quality of the outcomes.

4. Working with celebrities can be an asset to a project, but only under certain circumstances. Celebrity endorsement is only important if the formative research shows that the audience would find a celebrity both attractive and a credible source of information on the issue. The most popular celebrities aren’t always the best spokespeople for a cause.

5. Entertainment-education offers the advantage that, at least internationally, airtime often can be obtained for free. A well-crafted entertainment-education product should be so appealing that television and radio stations will want to broadcast it at no cost to draw viewers and listeners. However, to guarantee the best time slot for reaching the target audience, it is sometimes necessary to pay, even internationally.

6. Evaluation of entertainment-education projects may not be able to prove that behavior change has occurred as a result of the intervention. Tracking studies may help to identify whether behavior change has taken place, but it is difficult to measure and attribute change to a single initiative accurately.

7. Longer-term sustained efforts should be sought if entertainment-education is to be used most effectively. Long-term interventions that can be sustained over time enhance the probability of real impact, since audiences must be sufficiently exposed to the proposed behavior change and its benefits to develop understanding and positive attitudes toward the change. It takes time to build characters which represent the pro-social values and ideas, as well as to build the audience’s identification with those characters.

8. Entertainment-education may not be the best way to target small pockets of need. Unless behavior change is sought among a majority of viewers, listeners or readers of the selected entertainment media, entertainment-education may not be the best approach to meeting a project’s objectives.

9. Linkages with existing media and social agency infrastructures would be essential to the success of a U.S.-based project. Simply producing an attractive entertainment-education product is not an end in itself; it must be developed as a way to link audiences with something more, such as information or services.

10. Competition on the airways in the United States presents a challenge to domestic entertainment-education, but not necessarily an insurmountable one. It is easier for an entertainment-education project to reach its objectives in developing countries where there is less competition for audiences.

Further explanation of these lessons and a detailed inventory of 52 entertainment-education projects are contained in the full report (#1092), available by calling the Henry J. Kaiser Family Foundation’s publications request line at 1-800-656-4533.

Return to top

The Use of Mainstream Media to Encourage Social Responsibility:

This report reviews the major options available to states to achieve the savings in Medicaid required by the joint budget resolution passed by Congress in June 1995. The report analyzes ways to reduce spending growth for acute and long-term care services and considers stricter eligibility criteria. The authors conclude that reductions in spending growth are too great to be met without cutting eligibility as well as costs per beneficiary.

• Report:

This policy brief explains the Medicaid’s program’s relationship to the elderly and provides information on beneficiaries and expenditures. Also discussed is Medicaid coverage of long-term care and nursing home care for the elderly.

• Policy Brief
• Policy Brief

National Survey Of Obstetricians/Gynecologists On Contraception And Unplanned Pregnancy: Attitudes And Practices With Regard To Abortion

The survey findings show only one third of obstetricians/gynecologists practicing today perform abortions. Younger doctors, doctors in multi-specialty group practices, and doctors practicing in the South and Midwest are among those least likely to perform abortions. The survey also finds that many of the physicians who do not perform abortions say they would, however, offer Mifepristone, if approved by the Food and Drug Administration. A press release summarizing the findings and questionnaire topline data is available.

Block Grants In Health and The States: Concerns and Criteria

This report examines some issues raised surrounding block grants and suggests some criteria that might be used to examine proposals during the current debate.

• Report: Block Grants In Health and The States

This report provides an analysis of key issues in the design and implementation of medical savings accounts for the Medicare population. It focuses on benefit design, eligibility, enrollment, risk selection and adjustment, and the effects of managed care.

• Report:

A report summarizing the campaigns of proponents and opponents to the California Health Security Act (Proposition 186) of 1994. The report includes findings from research commissioned by the Kaiser Family Foundation on the potential financial and administrative impact of the Act on California, as well as an analysis of the paid media campaigns on the issue (see also #1026, Statewide Surveys of Californians on Public Attitudes Toward the Single Payer Ballot Initiatives (Proposition 186), #1027, Analysis ofthe California Health Security System (Proposition 186), and #1028, California Health Security Act: A Look at the Administrative Issues, National Academy of Social Insurance for more information on Proposition 186).

New Survey finds most Americans oppose slowing the growth of Medicare to balance the budget or cut taxes, but would support changes to avoid bankruptcy

Embargoed for release until: 9:30 AM EST Thursday, June 29, 1995

Contacts: Matt James Tina Hoff (415) 854-9400

–Public Favors Incremental Rather than Sweeping Reforms–

–Significant Generational Differences on Medicare Reform–

Washington, D.C. — A new survey has found that close to three out of four Americans (73%) support reducing the rate of growth in Medicare spending if the goal of the reductions is to avoid the bankruptcy of the Medicare program. However, less than half the public supports major reductions in Medicare spending growth if the goal is to balance the Federal budget (44%) or provide a tax cut (28%).

The Kaiser/Harvard/Harris Survey on Medicare also found that most Americans (70%) know that the Medicare program is in danger of going bankrupt, and many (48%) express a high level of concern over that possibility. Nearly half (49%) say they are aware that Medicare “has been going bankrupt” for a long time.

Redesigning Medicare

The survey also found that while most Americans support Medicare changes to ensure the fiscal solvency of the program, most are leery of a major redesign of the program. A plurality of the public, 45%, support Congress making changes in the Medicare program as long as the changes still “preserve Medicare basically as it is.” Two out of five adults (40%) support a complete redesign of the program, and a minority (14%) say Medicare should be left as it is. When given a choice between the current system, in which you get a Medicare policy directly from the government, and the option of receiving a voucher to purchase private insurance, the public supports the current system (65%) over a voucher (32%). The public is evenly split (49% favoring, 48% against) on the idea of enrolling “most” Medicare beneficiaries in Medicare managed care. But, 72% favor government incentives to enroll in managed care, and 55% favor raising premiums for those who stay in fee-for-service.

“Just as in health reform, the American people are leery of sweeping change, and generally opt for more modest incremental reforms. Medicare is no exception,” said Drew E. Altman, president of the Kaiser Family Foundation.

Support for specific program changes

Among policy changes the public most strongly supports to avoid Medicare bankruptcy:

• Having those over 65 whose incomes exceed $70,000 per year pay a higher Medicare premium than other seniors (78%);
• Having the government provide incentives to recipients to join less expensive managed care plans (72%);
• Reducing Medicare payments to physicians and hospitals by 15% (68%);
• Paying more in taxes or premiums (62%).

The policy options with the weakest public support to avoid Medicare bankruptcy:

• Reducing Medicare benefits (16%);
• Raising out-of-pocket payments of Medicare recipients (20%);
• Raising payroll taxes (32%).

The perceived purpose behind slowing the growth of Medicare spending makes a big difference in the public’s willingness to see Medicare recipients pay more. When the purpose is to keep Medicare from going bankrupt and avoid raising taxes, a majority (54%) of Americans are willing to have Medicare beneficiaries pay higher premiums and copayments. But when the purpose is to balance the Federal budget and avoid raising taxes, only 35% are willing to see beneficiaries pay more. The public is not willing, however, to support the government raising payroll taxes either to avoid bankruptcy (32% support), or to balance the budget (25% support).

“The public appears to be willing to support efforts to solve the bankruptcy problem, but they do not want Congress to use Medicare savings to balance the budget or cut taxes,” said Robert J. Blendon, professor of health policy at Harvard University and director of the Kaiser-Harvard Program on the Public and Health/Social Policy.

Looking toward the Future

When asked what the Medicare program should look like in the year 2000, a substantial majority (60%) prefer to leave Medicare as it is today, with a fixed set of benefits and the government providing individuals with a single insurance card, while only 35% see Medicare as we know it no longer existing and being replaced by a voucher program.

More Americans would like to see Medicare remain a program that is run by the Federal government (58%) than turned over to private insurance companies for them to run (35%).

The public is divided on the issue of how much coverage should be provided by Medicare in the future if higher taxes are required. Although a plurality (42%) of Americans would accept more limited coverage under Medicare rather than pay higher taxes, 24% would pay higher taxes to preserve the current level of coverage and 28% would pay even higher taxes to provide additional benefits. A plurality (42%) of Americans think Medicare benefits should go to all retirees, but higher income retirees should pay more; but fewer than one in four (23%) would means test the program and require all those with higher incomes to buy their own health insurance. One third (34%) believe that if people have paid Medicare taxes, they are entitled to benefits when they retire no matter how well off they are.

The Medicare Generation Gap

The survey found significant differences in how people of different generations view the Medicare program. For example, support for a complete redesign of the Medicare program is higher among those under 50 (44%) than among those over 65 (23%). Over one-third of those over 65 (35%) want Congress to leave Medicare alone, while few people under 50 (8%) hold this view. Those under 50 are almost twice as likely to support turning Medicare into a voucher system (40%) as are those over 65 (22%).

When it comes to managed care, a majority of those under 50 (60%) favor encouraging the greater use of low-cost managed care plans to avoid bankruptcy and increased taxes, a position favored by less than half of those 65 and over (42%). In addition, while a majority of those under 50 (57%) favor having most Medicare beneficiaries enrolled in private managed care plans rather than traditional Medicare fee-for-service (41%), seniors by an overwhelming margin (70% to 23%) prefer having most beneficiaries remain in fee-for-service.

Although most seniors (56%) recognize that the program is in danger of bankruptcy, many are cynical about the motives of Congress in the current Medicare debate. By a two-to-one margin, seniors think that members of Congress are trying to gain political advantage from the issue (63%), rather than genuinely trying to respond to a crisis in the program (31%). By contrast, a majority (52%) of adults under the age of 50 think members of Congress are genuinely trying to respond to a crisis.

The survey also shows that, as a group, seniors are politically more active on Medicare and Social Security issues than other adults.

Medicare Knowledge

Most Americans blame rising Medicare costs on:

• excessive charges by doctors, hospitals, and other health providers (80% say this is a very important cause for rising costs);
• poor management by the government (70%), and fraud and abuse by doctors;
• hospitals (68%).

Reasons often cited by Medicare experts for rising costs appear less important to the public, such as the increased number of retirees (50%)and new drugs, tests and treatments for the elderly (31%).

Most Americans (77%) are aware that Medicare is primarily a Federal government, rather than a state or private program; that the current Medicare program pays for doctor bills for individuals age 65 and older (75%); and, that Medicare is a program that principally serves the elderly (74%).

But the public is poorly informed about what Medicare covers. Fewer than half are aware that Medicare does not pay for long-term nursing home care (49%) or for prescription drugs (41%).

Public understanding of the current debate over the future of Medicare may be hampered by misconceptions about how large a share of the Federal budget is devoted to Medicare. Asked to choose among five items on a list (defense was excluded), the public ranked foreign aid and food stamps as the two largest items in the federal budget (picked by 63% and 42%, respectively). By contrast, the two items on the list that do actually constitute the largest areas of non-defense spending — Social Security and Medicare — were cited by 33% and 32% of respondents.

Methodology

The Kaiser/Harvard/Harris Survey was conducted by telephone with 1,383 adults nationwide between May 31 and June 5, 1995. The sample consisted of 1,076 adults selected randomly, plus an oversample of 307 people 65 years of age and older. Altogether 548 people 65 and older were interviewed, and their responses were weighted to the group’s proper proportion among the national adult population. The survey was designed by the Kaiser Family Foundation and the Harvard School of Public Health’s Department of Health Policy and Management and was conducted by Louis Harris and Associates, Inc. The margin of error in the national sample is plus or minus 3 percent. The survey is the latest conducted under the Kaiser-Harvard Program on the Public and Health/Social Policy, designed to monitor public knowledge, values, and beliefs on health and health-related issues.

The Kaiser Family Foundation, based in Menlo Park, California, is a non-profit, independent national health care philanthropy and is not associated with Kaiser Permanente or Kaiser Industries. The Foundation’s work is focused on four main areas: health policy, reproductive health, HIV, and health and development in South Africa.