The number and proportion of older Americans are rising rapidly and are expected to increase into the middle of the 21^st century. These changing demographics will have a tremendous impact on the delivery of health care. Almost 80% of Americans today will live past the age of 65 with life expectancy extending another 19 years for women and 15 years for men. Currently, 6.4 million individuals aged 65 or older need long-term care; one in two over the age of 85 require care and assistance with activities of daily living (ADLs) such as bathing, feeding, eating, dressing and toileting (MetLife, 2002). As the Baby Boomers (those born between 1946 and 1964) age, more individuals will survive into late old age due to medical advances and sophisticated technology. The longer individuals live, the greater the likelihood that chronic illnesses will develop resulting in an increased need for assistance with ADLs. The reality inherent in this picture is that of an increasing need for long-term care (Yeaworth, 2002).

In addition to the impact of aging on the health care system, the impact on other care giving structures, social institutions, and family structures is likely to be great. Currently, most older adults remain at home cared for by an unpaid family caregiver. The changing face of the American family will challenge this situation. Family members live at extended distances from one another. Care for an aging parent may coincide with paying college tuition, thus placing an additional strain on family resources (Shelton, 2001).

Traditionally, Medicare has been the health insurance for the elderly.

Medicare was never intended to pay for long-term care and custodial services.

The major health care focus at the time of Medicare’s inception was to meet acute care needs. Chronic disease, including diseases such as diabetes, congestive heart failure, hypertension, arthritis, chronic obstructive pulmonary disease and cancer, is the major health care cost in the 21^st century (Yeaworth, 2002). These conditions are often characterized by a prolonged course of illness and disability and result in extended pain, suffering, and decreased quality of life. Medicare was never intended to pay for long-term care and custodial services. The limited scope of Medicare coverage is a problem now and will be a greater problem in the future.

This article discusses the origins of the current system of health insurance, current and projected costs of long-term care, the current role of the government and private sector in financing long-term care, and the role of the nurse as educator, advocate, resource, coordinator of services, and activist for the health care of the elderly now and in the future.

Origins of Traditional Health Care Insurance

The passage of the Social Security Act in 1965 created the Medicare (Title XVIII) and Medicaid (Title XIX) programs. Prior to the passage of this Act, most older adults paid out of pocket for health care services or purchased private insurance plans. Operated at the federal level by the Centers for Medicare and Medicaid (CMS), Medicare is comprised of Part A (hospital insurance) and Part B (supplemental insurance). Part A covers payment of inpatient hospital care, exclusive of physician fees; skilled nursing facility care; hospice care; home health services and other health services; and supplies. Payments are subject to certain restrictions, such as deductible requirements. Eligible individuals include those 65 years of age or older, the disabled, and more recently, individuals with end-stage renal disease. The American worker finances Part A through individual payroll deductions that are matched by the employer. This money is placed by the federal government in an interest bearing trust fund intended to be used solely for this purpose.

Part B, on the other hand, is designed as supplemental insurance. Eligibility is the same as for Part A. It is a voluntary program and individuals pay a monthly fee that covers physician services, non-physician services such as clinical laboratory tests, medications that cannot be self-administered, flu vaccinations, medical supplies, durable medical equipment, ambulance service, and some therapeutic services such as rehabilitative outpatient therapy. Approximately 90% of individuals who enroll in Part A choose to enroll in Part B because it provides additional coverage at a low cost (Vladeck, 2001). Approximately 25% of the cost of financing Part B comes from individual monthly premiums while the remaining 75% is funded primarily by the federal "generated fund" from income tax revenue (Vladeck).

The Medicaid program is financed jointly by state and federal governments from general tax revenues. It is a welfare program for the medically indigent. Approximately 15% of persons aged 65 and over who receive Medicare benefits also receive Medicaid benefits. Criteria for reimbursement of services under Medicaid is largely determined by each state and is a function of state revenues.

The Department of Veteran’s Affairs provides financial coverage and direct services to those older individuals who have served in the armed forces and have either a low income or a service-connected disability. In addition, approximately 60% of older adults purchase supplemental insurance to cover hospital and physician costs. This supplemental insurance is referred to as Medigap. Policies, however, are expensive and the cost continues to rise.

Conventional insurance (private), Medicare, and Medicare supplemental insurance only pay for skilled care. Shelton (2001) noted that skilled care does not refer to how sick one is. Skilled care by definition is care that assists the individual to get well. Care is no longer skilled when progress or improvement stops but becomes chronic or maintenance care. The majority of nursing home care is not skilled care but custodial care assisting individuals with their activities of daily living (e.g., bathing, feeding, dressing). Medicaid is the only government program that pays for custodial care if you are medically indigent or have "spent down" your assets to qualify. Herein lies the dilemma as to why the current payment systems don’t "fit" the picture. This dilemma will be discussed again below.

Current and Projected Costs of Long-Term Care

Based on a market survey prepared yearly by LifeCare, Inc. for the MetLife Mature Market Institute (2002), the average rate for a private room in a nursing home in 2002 was $168 per day or $61,320 per year. The average rate for a semi-private room was $143 per day or $52,195 per year.

The Health Insurance Association of America (HIAA) notes that assisted living facilities charge an average daily fee of $63 or approximately $23,000 per year with some residents paying significantly more based on their care needs (HIAA, 2002). The average hourly rate for home care in 2002 was $37 for a Licensed Practical Nurse and $18 for a Home Health Aide. Thus, an individual receiving services 24-hours per day from Home Health Aides could expect to spend on average $432 per day or $157,680 per year (MetLife, 2002).

A nursing home that costs $168 per day (or $61,320 per year) will cost $336 per day (or $122,640 per year) in 15 years if inflation is 5% per year. According to the National Association of Insurance Commissioners (www.naic.org)(NAIC, 1999), the cost of nursing home care has been rising at an annual rate of 8% for the past several years. By the year 2030, the number of individuals over 65 years of age needing long-term care services will double to approximately 12 million (Wright, 1997) and the current costs will likely triple.

People have many misconceptions about how to pay for long-term care services.

People have many misconceptions about how to pay for long-term care services.

Some think they can just pay for what they need using their personal savings. However, the expenses can be overwhelming and may mean using up years of savings or selling assets – perhaps even a home—to pay bills. Others think that it is an entitlement provided by the government. They believe that years of paying into social security qualifies them for long-term care services.

In actuality, both the government and private funding sources play a role in long-term care financing. According to the Health Care Financing Administration, the 2002 Projected Expenditures (MetLife, 2002) for home care include the following:

• Medicare 26.7%
• Medicaid 15.3%
• Other Public Funds 4.7%
• Out of Pocket 30.2%
• Private Health Insurance 17.9%
• Other Private Funds 5.2%

Comparable data from this report for nursing home care expenditures include the following:

• Medicare 11.5%
• Medicaid 43.9%
• Other Public Funds 3.1%
• Out of Pocket 27.2%
• Private Health Insurance 9.3%
• Other Private Funds 5.0%

It is clear from this data that payment for home care is fairly equally distributed between government and private funding sources, whereas for nursing home care, the government bears a larger percentage of cost coverage.

The dilemma of the current payment system, as will be shown, is that the government is the primary source for financing long-term care, and private funding, which covers custodial care, represents a smaller percentage. The real question then is "Can the government continue to finance long-term care given the projected costs and changing demographics of older Americans?"

Current Financing of Long-Term Care

The government and the private sector both have a role in financing long-term care. The role of both will be discussed in turn.

Role of Government

Medicare (www.medicare.gov) pays only for skilled care and most of nursing home care is not skilled. In fact, the average number of days that patients collect from Medicare for nursing home care is only about 23 days. Medicare does not cover services for those who need only personal assistance or homemaker services to help them remain independent. To qualify for home health benefits, a person must require skilled nursing care or the services of a physical, occupational or speech therapist. Medicare supplemental policies help to fill many of the gaps in Medicare, but only pay when Medicare pays.

Veterans need for long-term care is great because many are elderly or disabled. Yet the likelihood of obtaining help from the Department of Veterans Affairs (VA) is small. The VA offers long-term care primarily to Veterans whose disability is related to their military service, and few Veterans obtain needed care outside an institution.

In most states, being on Medicaid typically means being in a nursing home. In addition, those covered under Medicaid usually don’t have a choice of where they get their long-term care services. It may mean going to a facility at a distance from home or family that may not provide the preferred quality of service.

The option of home care coverage is virtually eliminated except under Title III of the Older Americans Act and the Social Services Block Grant program, which primarily serves older people in financial need. States may choose to provide assistance under Home and Community-based Waiver programs, but Federal regulations strictly limit the number of people who may be served under waiver programs and waiting lists are common (Stucki & Mulvey, 2000).

In 2003, two-thirds of the States say they are cutting Medicaid benefits, increasing co-payments, restricting eligibility or removing poor people from the rolls because of soaring costs and plunging revenues (Pear, 2003). Such restricted public programs leave most middle-income families unprotected and unprepared for the potentially high cost of services.

Role of Private Sector

Almost 7 million Americans have turned to private long-term care insurance plans as a way to avoid dependence on the U.S. Government and to plan ahead for choice and independence when long-term care may be needed.

A comprehensive ("nursing home avoidance") policy will pay for services that reduce the risk of institutionalization, allowing Americans the choice of living in their home and community as long as possible.

Many buyers are in their 40s and 50s, as insurance carriers target these age groups with lower premiums and discounts. More and more employers are seeing the value of offering this key benefit to workers. In fact, more than 1 million policies have been sold through 3,500 employers, according to the Health Insurance Association of America (2002). While early long-term care insurance plans paid only for care in a facility, current plans are comprehensive and focus heavily on home care services. Current plans can typically include care coordination services, benefits for adult day care, respite care, and payment for the full range of custodial services such as personal care, homemaking, and chore services. While benefits are provided for care in a nursing home or in an assisted living facility, a comprehensive ("nursing home avoidance") policy will pay for services that reduce the risk of institutionalization, allowing Americans the choice of living in their home and community as long as possible.

Other ways people can consider financing long-term care privately are through an accelerated death benefit rider on life insurance policies, viatical or life settlements, and annuity/long-term care products. It is safe to say that companies will see marketing opportunities resulting in continued product innovation and variety as our country struggles with the problems of long-term care financing (Shelton, 2001). In the same way that Americans are being encouraged to plan for retirement and not depend solely on Social Security, the U.S. Government is encouraging personal responsibility and planning for long-term care. Legislation was passed in August 1996 (The Health Insurance Portability and Accountability Act) to provide tax incentives for long-term care insurance and to standardize the benefits as a way to offer the best value for the consumer.

As a result of this legislation, long-term care insurance is now treated like a health insurance premium, which is deductible for a business owner or a self-employed individual. Individuals can deduct their premium if they have itemized medical expenses that exceed 7.5% of adjusted gross income. Benefits received from a "tax-qualified" long-term care insurance plan also are considered to be non-taxable.

The message from this important piece of legislation was clear—namely, that there isn’t enough money for any type of public program, or expansion of existing programs, to pay for long-term care for everyone; and that long-term care is a personal responsibility that requires planning ahead (Shelton, 2001). The message was further substantiated in September 2000 when President Clinton signed the Long-Term Care Security Act establishing the Federal Long-Term Care Insurance Program. During the latter half of 2002 the federal government offered a voluntary long-term care insurance program to their employees, retirees, and their family members, some 20 million Americans. The program was a result of a three-year study including discussions with federal employees and retirees, and a wide range of insurance experts. By establishing the program, the federal government recognized the pressing need for this type of benefit, and it is expected to be a model for employers across the country (Health Insurance Association of America, 2002).

Additional legislation designed to encourage Americans to take personal responsibility for long-term care has been introduced at the state level. Twenty-four states now offer a tax credit for their residents who own a long-term care insurance policy, and many other states have introduced or are considering the same legislation.

In 1988, the Federal Government, based on input from the AARP (www.aarp.org), started a "demonstration project" designed to help older Americans on fixed incomes. Since the majority of older Americans own their homes and have paid off their mortgages, many people find themselves "cash poor" and "house rich". A Reverse Mortgage is a unique loan available to senior homeowners (62 years of age and older) that enables them to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. The monies available to the homeowner are tax-free and there are no restrictions on how the money is used. In general, the greater the appraised value of the home, the more money that is available for use. However, the value is subject to limits that vary by county. In many cases the proceeds from a reverse mortgage have been used for home repairs, to make homes more accessible for the handicapped, and even to fund long-term care insurance. The loan is due when the older person leaves the home to enter a nursing care facility or deceases. According to the National Reverse Mortgage Lenders Association (www.reversemortgage.org), the reverse mortgage industry experienced 66% growth in 2002 and is poised to grow substantially as the Baby Boomers move into their retirement years (Hicks, 2003).

Nursing Solutions: Individual and Community Initiatives

Complex as the challenge is, nurses offer strategic solutions to meeting present and future needs. Nurses as educators, advocates, coordinators of resources, and activists are integral parts of communities and have opportunities to influence civic, religious, business and legislative leaders. Nurses work directly with the elderly and their families and are informed regarding their needs and the gaps in services or lack of coordinated services that exist.

Nurses play a key role in educating patients and families about the current reimbursement system for long-term care (Yeaworth, 2002). Numerous misconceptions exist as to who pays and what services are covered. It is important to convey that Medicare and Medicare supplemental insurance are very limited in scope and only cover a relatively intense period of skilled or rehabilitative care in the home or nursing home following a hospital admission (Vladeck, 2001; Yeaworth, 2002).

Education of the public, who are future elders, should include the individual’s responsibility for his or her health. This responsibility includes a healthy lifestyle as well as financial planning for the possibility of long-term care needs. Rowe & Kahn (1998) document health habits that enable people to age successfully and demonstrate that even in advanced age, improved health habits can make a difference. Support of healthy life styles is essential to any plan to successfully deal with care of the elderly. In some communities, community centers provide venues for offering education for the elderly and their family members, as well as providing positive physical and social outlets for the elderly individual (Sorenson, Pinquart, & Duberstein, 2002). These group interactions offer the older individual opportunities to stay connected and avoid isolation, which can be a problem in this stage of life. Community centers as the location for coordination of services for the elderly and their families have not yet been maximized, but definitely offer promise, especially as a site for coordination of information, education, and services.

One can assume that the ideal situation would be to keep the elderly individual at home for as long as possible.

Concerned professionals will need to become more creative in seeking out community resources to assist the elderly to remain in their home settings.

Not only is this situation likely to be more satisfying to the individual and the family, but also the financial and human costs to society are much less. Home care has proven successful in keeping the elderly in the home, and, in many cases, prevented hospitalization or admission to a nursing home (Dellasaga & Zerbe, 2002). Eligibility criteria for home care are restrictive, however, and negate the flexibility to provide some services that might be instrumental in keeping the elderly individual in the home. Many of the needed services do not fall into the category of skilled care and are therefore not reimbursable. Patients and families need to assume responsibility for long-term care coverage through alternative options. Concerned professionals will need to become more creative in seeking out community resources to assist the elderly to remain in their home settings.

Parish nursing provides such a resource in many communities, and is a service that is growing. This service can provide education, counseling, health maintenance, and support services to the elderly, which enables them and their families to prolong the length of time in which they can function at home. The parish nurse is a health educator, counselor, and coordinator of care and services. It is an advantage that these programs are free of charge to the participants, since they are usually funded through church budgets, utilize volunteers, and /or seek grant funds for operation. The down side is that many in the unchurched population may not have access to a parish nurse. Patients’ spiritual needs also are addressed through this ministry, a component of care that is critically important to many individuals.

Day care and respite care programs also are great assets to families who are trying to avoid institutionalization of an aged family member. These programs may be offered by health care organizations, churches, or civic organizations. Typically, a fee is charged which covers the cost of food and supplies for activities. However, most programs have funds to support those who cannot pay. Many of the programs are operated by volunteers, perhaps with a paid director. The programs offer physical exercises, cognitive exercises, crafts, social opportunities, and a healthy meal and snacks. These programs also benefit caregivers, since they offer a time of respite with the security of knowing that the elderly person is in a safe, caring environment, engaging in beneficial physical, cognitive, and psychosocial activities. Grant funds are often available to support start up of these programs.

More community organizations should be stimulated to develop volunteer pools to assist the home living elderly with housework, home repairs, yard work,

Baby Boomers' growing desire for choice, coupled with their individualism, is changing some of the long-held notions of aging and dependence.

grocery shopping and other activities which are necessary to remaining at home when one is not ill. Yeaworth (2002), recommends that community-based services should include senior centers, nutrition sites, adult day care centers, board and care homes, assisted living facilities, congregate housing, and continuing care retirement communities. Stucki & Mulvey (2000) concur with Yeaworth and note that the Baby Boomers’ growing desire for choice, coupled with their individualism, is changing some of the long-held notions of aging and dependence. One new approach called "Aging in Place" promotes the idea of independent living and can include services such as personal attendants, homemakers, home health aides, adult day care, and assisted living facilities (Stucki & Mulvey). Nurses can have positive influence in structuring and operating these programs.

Models for providing services that produce the desired outcomes must be developed and tested. An agency of the U.S. Department of Health and Human Services, the Substance Abuse and Mental Health Services Administration (www.samhsa.gov) provides information addressing the development of aging network partnerships and coalitions in communities and citing examples of successful endeavors. Although this initiative was developed to address mental health, drug, and alcohol problems, the strategies and models might be successfully used to deal with other health discrepancies in the elderly population.

As can be seen, many services exist that can support the elderly in independent or supported community living. The nurse is critically needed in the role of coordinator of resources. Highest and best use of these services dictates that they are utilized based on the goal of meeting an identified need and that ongoing evaluation of effectiveness is conducted. This process will promote control of costs through assuring that services are not expended in ineffective ways.

Nurses must play a role in facilitating the ability of the elderly to remain in the home. It is the responsibility of the nurse, and all who are concerned regarding future care of the elderly, to be knowledgeable about the need for services in the elderly population and to identify available community services. Where discrepancies exist, the nurse must become the activist to mobilize community action to acquire the appropriate resources. A study by Dellasaga and Zerbe (2002), demonstrated the effectiveness of nurse intervention at a low cost in keeping the elderly at home. In this study, nurses provided transition from acute care to home. This study, as well as a study by Rosswurm, Larrabee, and Zhang (2002), demonstrated that carefully designed interventions, support, and telephone contacts were effective in assisting family to keep the elderly individual at home, and to deal with families personal challenges regarding that process.

Technologies such as the telephone, internet, and telemedicine units in the home for physiologic monitoring and therapy adjustment are being used with some success (Rosswurm et al., 2002). These technologies show promise when used with psychosocial and educational interventions and in health maintenance. More research regarding the use of technologies is needed to demonstrate their long-term efficacy and to determine the amount of direct contact that needs to be incorporated to attain an optimal effect. Additional studies regarding costs of these interventions versus traditional ones would be beneficial.

Many families prefer and are struggling to keep their elderly members in the home. It has been reported that families provide unpaid care to 63% of home residing adults (Citizens for Long-Term Care, 2002). Although this issue is one that should be considered for political action, it seems unlikely that financial support will be given to these families to assist with the obligation that they have assumed. If direct reimbursement were not deemed feasible, perhaps a system of tax reduction credits would assist in offsetting the costs of caregiving for these families. It seems feasible for communities to have available to them some services to support family caregiving efforts and to afford caregivers some measure of respite from time to time.

Although nurses will play a strategic role in planning and providing for health care of the elderly, at least two problems must be addressed, the shortage of nurses and their lack of education in gerontology. Many more individuals must be recruited into careers in nursing. As the aging population continues to grow, more nurses are needed in acute and critical care settings and in home care and the community. The need also exists to prepare gerontological nurse practitioners and clinical nurse specialists to manage the care of older adults and influence health care settings to provide geriatric-specific care. Development of additional community-based centers where a multiplicity of services are housed will also require nurses who are knowledgeable of the services and know when and how to appropriately refer clients to other disciplines. Nurses also need to be knowledgeable of differing cultures and cultural values in their communities, as well as have at least basic linguistic skills to communicate with non-English speaking families.

Basic nursing curricula must prepare every graduate in the knowledge, skills, and abilities needed to care for the elderly. In the current environment, nurses are not being prepared to understand and respond to the special needs of this population, even though in most settings, the old and the oldest old may be the primary clientele (Kovner, Mezey, & Harrington, 2002). All states should follow the examples of Arkansas, California, Delaware, Florida, Indiana, and South Dakota that specifically mandate geriatric content and clinical experiences in nursing education (Kovner, et al.). The curriculum should particularly address financial issues faced by the elderly and the need for and options in long-term care planning. These are important areas in which nurses have not been knowledgeable, but need to be in order to offer counsel, or refer appropriately for assistance. This is especially important because of the proliferation in recent years of insurance products associated with long-term care planning and the fact that consumers can access these products from many distribution channels. In addition, the products themselves are complex; and the insurance carrier’s track record and financial standing must be carefully evaluated. Nurses need to be well informed and should also seek out specialists in these areas as part of their referral network. The current and future environment in health care, with its increasing numbers of elderly and decreasing financial resources, demands that we prepare graduates who are knowledgeable and comfortable in the care of the elderly and who can function as advocates, activitists and coordinators of resources on behalf of these individuals and their families.

Summary

While the national scene regarding long-term care for the

More nursing graduates at both undergraduate and advanced practice levels need to be educated in gerontology and specifically long-term care options and their financial ramifications.

older adult remains in a state of change, it seems clear that more responsibility will be placed on the individual citizen to plan for his or her long-term care. Nurses can influence the quality of life and long-term care that the older adult experiences. More nursing graduates at both undergraduate and advanced practice levels need to be educated in gerontology and specifically long-term care options and their financial ramifications. Nurses can create a more supportive environment in elder care through individual, family and community advocacy, through education, and through coordination of resources, which support older adults. Through the use of technology, such as the telephone and the internet, and through the creation of community centers, better support can be created for seniors and their caregivers so that they can remain in their homes for longer period of time.

The future of long-term care for baby boomers is indeed uncertain, but positive changes are occurring. Changes are being made by the insurance industry, federal government, and employers, which will provide individuals with opportunities to plan for their future care. Nurses need to be very knowledgeable of these changes in order to bring effective nursing initiatives into the equation.

Authors

Barbara J. Edlund, RN, PhD, ANP-C
e-mail: edlund@musc.edu

Dr. Barbara Edlund is an Associate Professor in the College of Nursing at the Medical University of South Carolina. Dr. Edlund is the Track Coordinator of the Graduate Program, Advanced Practice in Gerontologic/Complementary Care funded by a Division of Nursing Program Grant #5 D09 HP 00061-02. Dr. Edlund’s clinical expertise is in primary care of the older adult.

Sylvia R. Lufkin, RN, EdD, CNAA
e-mail: slufkin@fmarion.edu

Dr. Sylvia Lufkin is an Associate Professor in the College of Nursing at the Medical University of South Carolina (MUSC) and Director of the satellite program at Francis Marion University in Florence, South Carolina. Dr. Lufkin has extensive experience in nursing administration and is currently pursuing a Post Master's Certificate in the Gerontological Nurse Practitioner Program at MUSC.

Barbara Franklin, BA
e-mail: barbaraf@quik.com

Barbara Franklin is the owner of Franklin & Associates, Inc., a Charleston-based firm specializing in long-term care planning and financing. Ms. Franklin serves on the Board of Directors of the American Association for Long-Term Care Insurance, and in April 2002 was one of fifteen Long-Term Care Specialists honored with the Platinum Award at the National Long-Term Care Forum. In addition to speaking actively to civic, community and professional groups, Ms. Franklin assists attorneys, financial planners, business owners, families, couples and individuals with long-term care planning.

Pear, R. (2003, January 14). Most states cutting back on Medicaid, survey finds. The New York Times on the Web. [Electronic version]. Retrieved on May 13, 2003, from http://query.nytimes.com/gst/abstract.html?
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