A National Long-term Care Program for the United States; A Caring Vision
Each LTC provider (including home care agencies) would be required to meet uniform national quality standards in order to be paid by the NHP. These standards would include structural measures (eg, staffing levels, educational requirements), process measures (eg, individualized planning and provision of care), and outcome measures (eg, changes in functional or mental status, incontinence, mortality, and hospital admission rates). Earmarked funds from the federal LTC budget would support urgently needed research to validate and improve these standards and to develop new approaches to quality assurance.
Each LTC organization and agency would be required to establish a quality assurance program meeting national standards and a quality assurance committee with representatives of each category of service provider (eg, social workers, homemakers, nurses, physicians, and so forth), clients and their family members or other care givers, and community representatives. The committee would meet regularly to review quality of care and to resolve problems and disputes, with unresolved issues reported to the public regulatory system discussed below.
All regulatory activities of the current licensing and certification agencies, peer review organizations, Medicare inspection of care, and other agencies that monitor LTC would be combined into a single program. This unified monitoring system would enforce regulations and have the power to sanction and decertify providers. This program would be administered at the federal and state levels, with input from the local LTC agencies and provider quality assurance committees. Consumer complaint systems and telephone hotlines for quality concerns would be mandated. The regulatory agency would be required to employ sufficient staff to conduct periodic surveys of each provider and to investigate complaints in a timely fashion. Providers would be required to disclose financial data and other management information such as staff turnover rates, incident rates, and patient outcome data.
Improving the training, wages, and morale of LTC workers is also crucial to improving the quality of care. Long-term care workers currently earn 15% to 45% less than comparable hospital employees (US Department of Health and Human Services, Division of Nursing, unpublished data, 1988), and 20% of nursing home workers have no health insurance.47 Nursing homes are not currently required to provide around-the-clock registered nursing care, few have specialized staff such as geriatric nurse practitioners, and aides are often inadequately trained. Many home care agencies have no professional staff or consultants. Wages in LTC organizations receiving payment from the NHP would be regulated to achieve parity with the acute care sector, with funding for this increase phased in over 5 years.
Funding would also be allocated for training and inservice education of LTC professionals, paraprofessionals, and informal caregivers. Formal providers would be required to meet minimum training and competency standards. Augmented training is particularly important for nurses and physicians, who often lack experience in working with the frail elderly, the disabled, and the mentally impaired and in working with multidisciplinary teams to develop community services. The development of a cadre of physicians and nurses with special training in gerontology and geriatrics is essential. These professionals would play key clinical and managerial roles in integrating LTC for the elderly with acute care, as in Great Britain and other countries.48
Consumer choice would be explicitly fostered by the national LTC program. Each individual eligible for LTC services would choose among the certified providers in her or his area. Individuals would select a primary provider organization and/or individual care provider, including a primary care physician, and could switch providers if they desired. An independent ombudsman would resolve consumer grievances over provider choice. Consumers and/or their delegated representatives would be encouraged to assume control over decisions regarding their care and would be given assurance that durable power of attorney and living will provisions would be honored.
COSTS AND FINANCING
Estimates of current expenditures for LTC are imprecise because of the diversity of payment sources. In 1990 an estimated $54.5 billion was spent for nursing homes, $14.1 billion for equipment and appliances, and $10.6 billion for home health services.49 In addition, about 10% ($25 billion) of total hospital costs were spent on psychiatric, rehabilitative, and chronic care services.49 Thus, the total LTC expenditures were at least $104 billion in 1990 (16% of total health spending), excluding informal LTC services. Public programs, primarily Medicaid, currently finance about half of formal LTC. Medicaid pays for 48% of nursing home care, Medicare for 2%, and other public payers for 3%.50 Private insurance covers less than 2% of nursing home costs, while consumers pay 45% directly out-of-pocket.50-53 Consumers pay out-of-pocket for 40% of home services in the United States.54
Our program would replace almost all of the $52 billion (all figures in 1990 dollars) currently spent each year on private LTC insurance and out-of-pocket costs with public expenditures. Additional funding would be needed, particularly in the first few years, to pay for the increased utilization of LTC for previously unmet needs. The expected utilization increases of 20% for nursing homes and 50% to 100% for home health care9,24 would cost between $16 billion and $21.5 billion annually.
Further funding would be needed to improve quality through increased training, wages, and staffing levels. However, some of these costs would be offset by reduced administrative costs and improved program efficiency. Additional savings may result from reductions in disability and inappropriate hospitalizations. Precise estimates of these costs and savings are impossible. For our estimates, we assume that the net increase needed for the quality improvement measures (after subtracting potential administrative and other savings) amounts to $2 billion per year.
Overall, a total of $70 to $75.5 billion in new tax revenues ($380 to $410 per adult) would be needed to finance our program. Of this total, $52 billion represents money that is currently spent privately that would be shifted onto the public ledger. In effect, a broad-based tax would replace payments by the chronically ill. Because LTC has been seriously underfunded, $18 to $23.5 billion in truly new spending ($100 to $130 per adult) would be needed to expand care and improve its quality. Since almost every family will use such services at some point, this seems a reasonable price for financial protection and improved services for the disabled and aged.
These revenues could be raised from several sources, including the Social Security system, general taxes, and estate taxes. Expanding Social Security payroll taxes that currently fund Medicare would build upon the existing tax system and ensure a broad tax base. For example, a 1% increase in payroll taxes for both employers and employees would raise about $50 billion.10 Increasing the earned income tax credit for lower-income workers to lower their payroll tax and removing the current ceiling on Social Security taxes would generate about $49 billion in additional revenue, while making such taxes less regressive.10,28 Federal estate taxes are another logical source of funds for LTC and would have little negative impact on low-income groups. A 10% surcharge on gifts and estates above $200,000 would raise $2 to $4 billion,9,10 and taxing capital gains at death would raise about $5.5 billion.10
Our proposed LTC program would be integrated with the NHP, creating a single comprehensive and universal public program for acute care and LTC .The program would be federally mandated and funded but administered at the state and local levels. A single state board would contract directly with providers through a network of local public agencies responsible for LTC eligibility determination and for case management and/or care coordination. All payment would be channeled through the single payment agency in each state.
Single-source payment is key to controlling costs, streamlining administration, and minimizing inequalities in care.31,55 Private insurance duplicating the public program would be eliminated in order to decrease administrative costs, prevent insurers from electing to cover only the healthiest (hence leaving only the most difficult and expensive tasks for the public sector), and guard against the emergence of two-class care.30,56
Prospective global budgeting for nursing homes and community-based services would simplify administration and virtually eliminate billing and eligibility determination. Prohibiting the use of operating funds for capital purchases or profit would minimize financial incentives both for skimping on care (as under the current per-diem nursing home payment system) and for excessive intervention (as under the fee-for-service payments received by many home care providers). The separate appropriation of capital funds would facilitate rational health planning.
Current capital spending largely determines future operating costs, as well as the distribution of facilities and programs. Combining operating and capital payments, as under the existing reimbursement system, allows prosperous providers to expand and modernize, whereas impoverished ones cannot, regardless of their quality or the needs of the population they serve. The NHP would replace this implicit mechanism for distributing capital with an explicit one. Capital funds would be allocated on the basis of a comprehensive planning process, with the involvement of health planners, community members, and providers. Priority would be given to underserved regions and populations and to the development of home- and community-based services, to correct the current bias toward institutional care. While funds for sheltered and supportive housing are more appropriately part of a housing rather than a medical care program, coordination in planning of housing and LTC is essential.
Issues of profit-making are particularly problematic in LTC, where 75% of the nursing homes and a growing proportion of home care agencies are pro- prietary.17 There is ample documentation of LTC providers' skimping on basic services and staffing in order to maximize profits.46,57 As previously proposed,31 the NHP would pay owners of for-profit providers a reasonable fixed rate of return on existing equity. Since virtually all new capital investment would be funded by the NHP, it would not be included in calculating return on equity. The proprietary sector would gradually shrink because new for-profit investment would be proscribed.
We advocate fully public financing of LTC for four reasons: (1) single-source public funding facilitates cost containment through administrative streamlining and the ability to set and enforce an overall budget; (2) financial risk is spread across the entire population (who are all ultimately at risk for needing services) rather than falling only on the disabled and elderly; (3) few people today are covered by private LTC insurance, and there is little reason to believe that widespread private coverage is practicable; and (4) there is a need for clear public accountability.