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Thursday, April 11, 2013

Long-Term Services and Supports: Overview and Financing

Kirsten J. Colello
Specialist in Health and Aging Policy

Janemarie Mulvey
Specialist in Health Care Financing

Scott R. Talaga
Analyst in Health Care Financing

Long-term services and supports (LTSS) refer to a broad range of health and health-related services and supports that are needed by individuals over an extended period of time. The need for LTSS affects persons of all ages and is generally measured by limitations in an individual’s ability to perform daily personal care activities (e.g., eating, bathing, dressing, walking) or activities that allow individuals to live independently in the community (e.g., shopping, housework, meal preparation). Most individuals prefer to be cared for in their own homes with the assistance of informal providers such as family members or friends, if available. The most recent published data estimating the number of Americans in need of LTSS indicate that about 10.9 million individuals living in the community need LTSS, or 4.1% of the community-resident population. It was estimated another 1.8 million individuals needing LTSS live in an institutional setting, such as a nursing home.

LTSS include a variety of services and supports to assist an individual in maintaining an optimal level of functioning and/or improving his or her quality of life. Examples include a home health aide administering medication, a contractor building a wheelchair ramp onto a home, or a nursing facility where a person resides. LTSS also vary in cost and intensity, depending on the individual’s underlying conditions, the severity of his or her disabilities, the setting in which services are provided, and the caregiving arrangement (i.e., informal care versus formal care).

Formal, or paid, LTSS are a significant component of personal health care spending in the United States. In 2011, of the $2.3 trillion spent on all U.S. personal health care services, $317.1 billion (13.9%) was spent on LTSS. Spending for LTSS includes payments for services in nursing facilities and residential mental health and substance abuse facilities. Spending also includes LTSS provided in an individual’s own home, such as home health services as well as a wide range of home and community-based services (HCBS), including personal care, homemaker or chore services (e.g., housework or meal preparation), and adult day health services. A substantial amount of LTSS is also provided by informal caregivers––family and friends––who provide care without compensation. As a result, spending on LTSS may be underestimated, as spending data do not include uncompensated care provided by informal caregivers.

LTSS are paid by a variety of public and private sources. Public sources accounted for the majority (72.8%) of spending on LTSS in 2011 and include Medicaid, Medicare, and other public programs such as the Veterans Health Administration (VHA) and the State Children’s Health Insurance Program (CHIP). The remainder (27.2%) was paid by private sources, which include out-of-pocket spending, private insurance, and other charitable contributions. For 2011, Medicaid (combined federal and state spending) was the single largest payer of LTSS.

Given that the majority of LTSS are publicly funded with federal dollars, LTSS financing may be an important issue for Congress. On January 2, 2013, the President signed H.R. 8, the American Taxpayer Relief Act of 2012 (ATRA, P.L. 112-240). Among other things, ATRA established a Congressional Long-Term Care Commission, which is required to develop a plan for the establishment, implementation, and financing of an LTSS system. A vote on the developed plan and any legislative proposals is required six months after its establishment.

This report provides an overview of LTSS, including who needs LTSS, how need for LTSS is determined, and how much LTSS costs. The report also provides information on who the primary LTSS payers are, how much they spend, and what types of services are purchased.

Date of Report: April 4, 2013
Number of Pages: 28
Order Number: R42345
Price: $29.95

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