10 Issues About Lengthy-Time period Companies and Helps (LTSS)

In 2020, an estimated 5.8 million people used paid long-term services and supports (LTSS) delivered in home and community settings and 1.9 million used LTSS delivered in institutional settings, according to CBO estimates. Most people ages 65 and older and many people under age 65 with disabilities have Medicare, but Medicare does not cover most LTSS and instead, Medicaid is the primary payer for LTSS. To qualify for coverage of LTSS under Medicaid, people must meet state-specific eligibility requirements regarding their levels of income, wealth, and functional limitations. An unknown, but probably even larger number of people, used unpaid LTSS that is provided by family, friends, or neighbors. LTSS encompass the broad range of paid and unpaid medical and personal care services that assist with activities of daily living (such as eating, bathing, and dressing) and instrumental activities of daily living (such as preparing meals, managing medication, and housekeeping). They are provided to people who need such services because of aging, chronic illness, or disability, and include nursing facility care, adult daycare programs, home health aide services, personal care services, transportation, and supported employment. These services may be provided over a period of several weeks, months, or years, depending on an individual’s health care coverage and level of need.

There have been longstanding challenges finding enough workers to provide LTSS for all people who need such services, and the COVID-19 pandemic exacerbated those issues considerably. In response to the pandemic, the government promulgated new initiatives to help improve safety and quality in nursing facilities, and created the first-ever set of quality measures for home and community-based services (HCBS), but those steps are unlikely to address long-standing challenges in financing and providing LTSS. The federal government also provided states with temporary authorities and funding to provide new or additional LTSS during the pandemic, but those authorities and funding are time-limited. As the population ages and as advances in medicine and technology enable people with serious disabilities to live longer, the number of people in need of LTSS is expected to grow. Looking forward, there will likely be continued interest among policymakers in expanding the availability of LTSS and improving their quality, though identifying the resources to do so will be challenging.

1. With over one-fifth of all U.S. COVID-19 deaths happening in long-term care facilities, the pandemic highlighted ongoing issues with LTSS.

Over 209,000 COVID-19 deaths, or just over every one in five COVID-19 deaths, has been in a long-term care facility (including nursing homes, assisted living facilities, ICF/IIDs, and other settings) (Figure 1). Those deaths highlighted many ongoing challenges for such facilities including rapidly growing demand for LTSS that outpaced available resources, worker shortages, improper infection control measures, and isolation among people living in institutions. In early 2022, the Biden Administration announced new initiatives focused on improving nursing facility care quality, oversight, data transparency, career pathways, and pandemic and emergency preparedness. Key policy proposals include establishing minimum staffing levels for Medicare and Medicaid-certified nursing facilities, strengthening oversight of poor-performing nursing facilities, supporting state efforts to tie Medicaid reimbursement rates to increases in staff compensation, and launching a national nursing career pathways campaign to recruit, train, and retain long-term care staff, among others. In August 2022, the administration also launched a new study to inform minimum staffing requirements for nursing homes. Several states also enacted vaccine mandates for nursing home workers. Early evidence suggests that those mandates resulted in higher rates of vaccination among staff without any increase in the frequency of reported staffing shortages.

2. LTSS are extremely expensive and not covered by Medicare.

In 2021, the median annual costs of care in the U.S. were $108,405 for a private room in a nursing home, $54,000 for an assisted living facility, and $61,776 for a home health aide costs (Figure 2). Those costs represent what people might be expected to pay if they did not qualify for Medicaid. (A small number of people have private long-term care insurance, which helps defray those costs.) Nursing facility costs were higher than the costs of other services but many people living outside of nursing facilities use multiple services simultaneously. Almost all LTSS costs exceeded the median income for Medicare beneficiaries in 2019. The costs of one year of nursing facility care exceeded the median savings for Medicare beneficiaries in 2019 ($73,800), meaning over half of people on Medicare do not have sufficient savings to pay for one year of nursing facility care.

Medicare provides home health and skilled nursing facility care under specific circumstances, but the Medicare benefit is considered “post-acute” care and generally not available for people needing services on an ongoing basis. There are 8.0 million Medicare beneficiaries who meet the income, wealth, and health requirements for Medicaid and are enrolled both programs (sometimes referred to as “dual eligibles”). (An additional 3.3 million Medicare beneficiaries are enrolled in Medicaid but only receive coverage of Medicare premiums and in some cases, cost sharing.) For Medicaid-Medicare enrollees with full Medicaid benefits, Medicare is the primary payer for acute and post-acute care services and Medicaid covers ongoing LTSS. Medicaid plays a key role in affordability and access to LTSS for people who qualify because LTSS costs may be difficult for people to afford when paying out-of-pocket. In some cases, people only qualify for Medicaid after exhausting their savings on the costs of LTSS. The percentage of Medicare beneficiaries who are enrolled in Medicaid varies widely by state. Such variation reflects differences in state policy, and in the income and wealth distribution of Medicare beneficiaries across the states.

3. The U.S. spent over $400 billion on LTSS in 2020, nearly 10% of all National Health Care Expenditures.

In 2020, Medicaid paid 54% of the over $400 billion spent on LTSS in the U.S., people paid an additional 13% out-of-pocket, private insurance paid 8%, and other public and private payers paid the remaining 26%. Home and community-based services (HCBS) include residential care facilities, Medicaid home health services, and Medicaid HCBS waiver services. Spending on those services was $245 billion and the remaining $157 billion was spent on institutional LTSS such as nursing facility care (Figure 3). These totals exclude $86 billion in Medicare spending on post-acute care, and spending on home health that was paid out-of-pocket ($13 billion), by private health insurers ($16 billion), and by other public and private payers ($14 billion). These estimates exclude spending on home health by payers other than Medicaid because most services in that category are acute care such as durable medical equipment provided at home or care following a major surgery or hospitalization. Medicaid home health spending includes both acute care and LTSS, but it is likely that most home health is provided on an ongoing basis in the Medicaid program. The institutional spending numbers exclude the room and board costs associated with assisted living facilities, which are considered home-based settings. The services delivered in assisted living facilities, such as home health and personal care, would be considered HCBS and covered under Medicaid as home health and personal care benefits.

4. More than half of LTSS spending pays for home and community-based services, but there is tremendous variation across states.

LTSS may be provided in various settings that are broadly categorized as institutional or non-institutional. Institutional settings include nursing facilities and intermediate care facilities for people with intellectual disabilities. Services provided in non-institutional settings are known as home and community-based services (HCBS), and these settings may include a person’s home, adult day care centers, assisted living settings, and group homes. Federal Medicaid statutes require states to cover institutional LTSS and home health, but the remainder of HCBS are optional. Even without a mandate to cover HCBS, Medicaid LTSS spending has shifted from institutional to non-institutional settings over time. That shift reflects beneficiary preferences for receiving care in non-institutional settings and requirements for states to provide services in the least restrictive setting possible stemming from the Olmstead decision In most states, at least half—and often substantially more than half—of LTSS spending was on HCBS in Fiscal Year 2019. However, there is substantial state variation in the share of Medicaid LTSS expenditures that are spent on HCBS, ranging from 33% in Mississippi to 83% in Oregon. Four states (Oregon, Minnesota, Arizona, and New Mexico) spent over 75% of their total Medicaid LTSS spending on HCBS, while 18 states spent under 50% (Figure 4).

5. Most Medicaid LTSS spending is for people who are ages 65 and over or who are under age 65 with disabilities.

The vast majority of Medicaid LTSS spending is among those who are 65 or older or under age 65 and eligible for Medicaid on the basis of disability (Figure 5). In CY 2019, such enrollees comprised nearly 95% of fee-for-service (FFS) LTSS spending but less than 25% of enrollment. Those totals include spending on institutional and non-institutional care, but exclude spending paid for by managed care plans. Although the majority of LTSS is still paid for directly by states, the use of managed care to provide LTSS has increased over time. Under managed LTSS, states pay premiums to managed care plans and those plans pay for the health care and LTSS that enrollees use. Medicaid administrative data show how much states are spending on the premiums, but do not generally show how much the managed care plans are spending on health care and LTSS. As a result, it is difficult to apportion the costs of premiums across health care and LTSS.

6. Enrollees ages 65 and older or under age 65 with disabilities have higher overall Medicaid costs.

Medicaid’s per person spending for people who are 65 or older or under age 65 with disabilities is substantially higher than it is for other enrollees (Figure 6). In CY 2019, per enrollee spending for nonelderly adults who were eligible for Medicaid on the basis of disability was over five times higher ($19,520) than that of children and nonelderly adults who were eligible on a non-disability basis ($3,247). Higher spending was attributable to increased spending on FFS LTSS and higher premiums for managed care.

For most Medicaid enrollees 65 or older and many enrollees with disabilities, Medicare also provides health insurance. For those Medicare-Medicaid enrollees, Medicare is the primary payer for many medical services including hospitalizations, physician visits, prescription drugs, preventive services, skilled nursing care, home health care, and hospice care. Medicaid provides coverage of Medicare premiums, cost sharing, and benefits that are not included in the Medicare program. High Medicaid spending among Medicare-Medicaid enrollees—who have another form of health insurance—often reflects substantial LTSS spending among this population.

7. States must provide institutional care and home health, but most home- and community-based services are optional.

Medicaid LTSS spending is shifting toward HCBS settings, but most major HCBS are optional for states to cover under Medicaid. The required HCBS are home health services (defined as part-time or intermittent nursing services); home health aide services; and medical supplies, equipment, and appliances suitable for use in the home. In 2020, about 734,500 people received mandatory home health services and these services accounted for about 4.4% of Medicaid HCBS spending. Nearly 2 million people used other optional state plan services and nearly three million people used services through optional waiver programs (Figure 7). The number of HCBS users shown in Figure 7 is lower than the number of users reported by the Centers for Medicare & Medicaid Services (CMS), which found that around 8 million Medicaid beneficiaries used HCBS in 2019, including 2.3 million people who used home health. The reason CMS data show higher numbers of users is that those data define anyone with one or more claims for a given service as an HCBS user, whereas the data in Figure 7 capture the population who use HCBS on an ongoing basis.

Optional Medicaid HCBS include personal care to help with bathing or preparing meals, therapies to help people regain or acquire self-care and independent living skills, and assistive technology. They may be provided through state plan benefit packages but are more commonly provided through HCBS waivers. HCBS waivers allow states to expand financial eligibility for HCBS and offer HCBS benefits targeted to specific populations, such as people with intellectual or developmental disabilities (I/DD) or people with physical disabilities. Unlike state plan benefits, HCBS waivers allow states to limit the number of people served and to waive other rules governing the provision of institutional care and other types of health care. Many states use waivers to restrict the number of people using HCBS and use waitlists when the number of people seeking services exceeds the number of waiver slots available.

8. Within the largest category of Medicaid HCBS spending, people with intellectual and developmental disabilities accounted for over two-thirds of spending.

Nearly all states offer section 1915(c) waivers, which allow states to provide LTSS in community settings instead of facilities. In FY 2020, such waivers accounted for 51% of all Medicaid HCBS spending or about $59 billion out of about $116 billion. Across 47 states, 1.9 million people were enrolled in 255 Medicaid 1915(c) HCBS waivers. Most of those waivers provide services to a specific population, such as people over age 65, people with physical disabilities, people with mental disabilities, or people with intellectual and developmental disabilities (I/DD). People with I/DD accounted for less than half of overall Section 1915 (c) waiver enrollment but more than two-thirds of waiver spending on account of higher per-person spending among people in such waivers (Figure 8). The range in per-person spending across waivers is quite significant. In 2020, among the six primary populations targeted through 1915(c) waivers, the person costs ranged from:

  • $7,554 for people with HIV/AIDs (4 thousand enrollees),
  • $11,677 for people with mental health conditions (24 thousand enrollees),
  • $15,211 for people 65+ or under 65 with disabilities (853 thousand enrollees),
  • $23,092 for medically fragile or technology-depending children (16 thousand enrollees),
  • $32,425 for people with traumatic brain or spinal cord injuries (23 thousand enrollees), to
  • $47,392 for people with I/DD (740 thousand enrollees).

9. Workforce shortages among LTSS providers have been exacerbated by the COVID-19 pandemic.

The pandemic greatly exacerbated shortages of LTSS workers. Employment levels in all health care jobs dropped sharply at the start of the pandemic, but for most health care sectors, employment started to rebound as early as spring 2020. However, employment in the LTSS sectors continued to fall well into 2021 and for nursing facilities, into the beginning of 2022. Recent analysis on the Peterson-KFF Health System Tracker shows that the number of workers dropped by 14% in nursing care facilities and by 9% in community elder care facilities between February 2020 and June 2022 (Figure 9). As of mid-July 2022, over one in 4 certified nursing facilities in the U.S. reported a shortage of nurses and/or aides and in 2021, a survey of home care agencies reported challenges in from staffing shortages and difficulty recruiting new staff. Additionally, a 50-state survey of Medicaid HCBS programs found that Medicaid HCBS provider infrastructure declined during the pandemic, with two-thirds of responding states reporting a permanent closure of at least one provider. In the same survey, states reported that workforce shortages were the pandemic’s primary impact. This is not surprising because HCBS providers generally report low pay and very poor working conditions. KFF conducted focus groups with HCBS workers during July and August 2021 and workers reported that the mental demands associated with caregiving were “overwhelming” while the wages were low, the hours long, and the working conditions often quite demanding.

10. Looking forward, policymakers will continue to face the challenge of providing LTSS and the need for LTSS will grow as the population ages.

Nearly one in five Americans is projected to be 65 or older by 2060 (Figure 10). Advances in assistive and medical technology that allow people with disabilities to be more independent and to live longer, together with the aging of the baby boomers, will likely result in increased need for LTSS over the coming decades. An HHS report found that after age 65, 57% of people would need help with at least two activities of daily living, 56% would use paid LTSS, and 39% would use some nursing home care. Expected rates of LTSS need and use are highest among people with lifetime earnings in the bottom income quintile, who have the fewest resources to pay for such care.

Although the many deaths from COVID-19 illuminated serious challenges for institutional LTSS, the same challenges also affect HCBS; indeed, the growing demand for care and workforce shortages may be more serious for home and community settings than for institutions moving forward. There is a tremendous dearth of data on people using HCBS and a significant lack of support for paid and unpaid caregivers. The American Rescue Plan included a provision to increase the federal matching rate (FMAP) for spending on Medicaid HCBS by 10 percentage points to fund a variety of activities to expand access to HCBS and support direct care providers. Although states’ current HCBS expenditures are no longer eligible for the higher FMAP, the federal government recently gave states until March 31, 2025 to spend the extra federal funds they had already received. Other policies that have garnered recent consideration include permanently increasing the FMAP for HCBS, making HCBS a mandatory benefit, and expanding Medicare coverage for seniors who choose to go home after a hospital stay rather than to a skilled nursing facility. It will be important to watch whether and how lessons from the pandemic are integrated into new policies to improve access to and quality of LTSS in the U.S.

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