[Senate Prints 107-74]
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                    [COMMITTEE PRINT] deg.
107th Congress 
 2nd Session                COMMITTEE PRINT                     S. Prt.
                                                                 107-74



                         LONG-TERM CARE REPORT

         Findings from Committee hearings of the 107th Congress

                               __________

                            presented by the

                       SPECIAL COMMITTEE ON AGING

                          UNITED STATES SENATE

                    ONE HUNDRED AND SEVENTH CONGRESS

                               June 2002

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                       SPECIAL COMMITTEE ON AGING

                  JOHN B. BREAUX, Louisiana, Chairman
HARRY REID, Nevada                   LARRY CRAIG, Idaho, Ranking Member
HERB KOHL, Wisconsin                 CONRAD BURNS, Montana
JAMES M. JEFFORDS, Vermont           RICHARD SHELBY, Alabama
RUSSELL D. FEINGOLD, Wisconsin       RICK SANTORUM, Pennsylvania
RON WYDEN, Oregon                    SUSAN COLLINS, Maine
BLANCHE L. LINCOLN, Arkansas         MIKE ENZI, Wyoming
EVAN BAYH, Indiana                   TIM HUTCHINSON, Arkansas
THOMAS R. CARPER, Dalaware           JOHN ENSIGN, Nevada
DEBBIE STABENOW, Michigan            CHUCK HAGEL, Nebraska
JEAN CARNAHAN, Missouri              GORDON SMITH, Oregon
                    Michelle Easton, Staff Director
               Lupe Wissel, Ranking Member Staff Director

                              Prepared By:
                     Elaine Dalpiaz, Majority Staff
                  Janet Heald Forlini, Majority Staff
                      Lisa Kidder, Minority Staff

                                  (ii)







                            C O N T E N T S

                              ----------                              
                                                                   Page
Foreword.........................................................     1
Jurisdiction.....................................................     2
Committee Background.............................................     3
Purpose of Hearings..............................................     4
List of Hearings Held by the Committee...........................     5
Executive Summary................................................     6
Preface..........................................................     6
Setting the Stage: A Need for Reform.............................     7
Long-term Care Defined...........................................     8
Current Financing Unsustainable..................................     8
Home and Community-Based Services................................     9
Medicaid Waivers.................................................    10
State Initiatives to Expand Home and Community Based Services....    11
Disability and Aging.............................................    12
Olmstead.........................................................    12
Caregiving.......................................................    13
Assisted Living..................................................    14
Adult Day Services...............................................    15
Long-Term Care Insurance.........................................    16
Workforce Shortage...............................................    16
Guiding Principles...............................................    17
Conclusion.......................................................    18

                                Appendix

Figure 1.........................................................    19
Figure 2.........................................................    20
Figure 3.........................................................    21
Figure 4.........................................................    22
Figure 5.........................................................    23
Figure 6.........................................................    24
Reports Presented to Committee...................................    25
                                FOREWORD

                              ----------                              

    During the 107th Congress the Senate Special Committee on 
Aging examined the current status of long-term care in the 
United States  and  also  considered  proposals  for  potential 
 reform. This report summarizes findings from a thirteen part 
series of hearings on long-term care. These findings were 
created to assist Members of Congress, their staffs, and the 
general public in understanding and responding to the growing 
needs of the elderly and disabled.

                                             John Breaux, Chairman.

                         COMMITTEE JURISDICTION

                              ----------                              

    It shall be the duty of the Special Committee on Aging to 
conduct a continuing study of any and all matters pertaining to 
problems and opportunities of older people, including, but not 
limited to, problems  and  opportunities  of maintaining  
health,  of  assuring adequate income, of finding employment, 
of engaging in productive and rewarding  activity,  of securing 
 proper  housing,  and, when necessary, of obtaining care or 
assistance.
    Source: The Congressional Standing Committee System, 
Congressional Research Service, Library of Congress. Report 92-
707 GOV. September 14, 1992.
    A Committee  is a panel  of members  elected  or appointed 
to perform some service or function for its parent body. The 
legislative subjects and other functions are assigned to a 
committee by rule, precedent, resolution, or statute. In 
general, committees conduct investigations, make studies, issue 
reports and make recommendations. Select or Special Committees 
are established by a resolution for a special purpose and, 
usually, for a limited time. Most select and special committees 
are assigned specific investigations or studies, but are not 
authorized to report measures to their chambers. Within 
assigned areas, these functional subunits gather information; 
compare and evaluate legislative alternatives; identify policy 
problems and propose solutions; select, determine, and report 
measures for full chamber consideration; monitor executive 
branch performance (oversight); and investigate allegations of 
wrongdoing. While special committees have no legislative 
authority, they can study  issues,  conduct  oversight  of 
programs, and investigate reports of fraud and waste.

                          COMMITTEE BACKGROUND

                              ----------                              

    The Senate Special Committee on Aging was first established 
in 1961 as a temporary committee. It was granted permanent 
status on February 1, 1977.
    Throughout its existence, the Special Committee on Aging 
has served as a focal point in the Senate for discussion and 
debate on matters relating to older Americans. Often, the 
Committee will submit its findings and recommendations for 
legislation to the Senate. In addition, the Committee publishes 
materials of assistance to those interested in public policies 
which relate to the elderly.
    The Committee has a long and influential history. It has 
called the Congress' and the nation's attention to many 
problems affecting older Americans. The Committee was exploring 
health insurance coverage of older Americans prior to the 
enactment of Medicare. After Medicare was enacted, the 
Committee reviewed its performance on an almost annual basis. 
The Committee has regularly reviewed pension coverage and 
employment opportunities for older Americans. It has conducted 
oversight of the administration of major programs like Social 
Security and Medicare. Finally, it has crusaded against frauds 
targeting the elderly and Federal programs on which the elderly 
depend.
    Chairmen of the Special Committee on Aging have established 
an impressive tradition. Senator Frank Moss brought to light 
unacceptable conditions in nursing homes. Senator John Heinz 
reviewed Medicare's Prospective Payment System to see whether 
it was true the system was forcing Medicare beneficiaries to be 
discharged ``quicker and sicker.'' When the statute of 
limitations for age discrimination in employment claims had 
lapsed, Senator Melcher restored the rights to 1200 
individuals. Senator Pryor investigated the pricing practices 
for prescription drugs and changed pricing behavior of 
pharmaceutical companies. Senator Cohen led the way to 
enactment of strong health care anti-fraud legislation. Senator 
Grassley worked tirelessly in a number of areas protecting 
senior citizens. In particular, he focused his efforts in the 
area of enhancing the quality of care in the nation's nursing 
homes and other long-term care facilities. Over the years, the 
Committee has been in the thick of the debate on issues of 
central concern to older Americans.

                       SENATE COMMITTEE HEARINGS

                              ----------                              

    Committee hearings afford Senators an opportunity to gather 
information on, and draw attention to, legislation and issues 
within a committee's purview, conduct oversight of programs or 
agencies, and investigate allegations of wrongdoing.
    Hearings are committee or subcommittee meetings to receive 
testimony for legislative, investigative, or oversight 
purposes. Witnesses often include government officials, 
spokespersons for interested groups, experts, officials of the 
General Accounting Office, and members of Congress. Committees 
may issue subpoenas to summon reluctant witnesses. Both houses 
require that the vast majority of hearings be open to the media 
and public and, if possible, publicly announced at least a week 
before they begin.
    Witnesses before Senate committees (except Appropriations) 
generally must provide a committee with a copy of their written 
testimony at least one day prior to their oral testimony [Rule 
XXVI, paragraph 4(b)]. It is common practice to request 
witnesses to limit their oral remarks to a brief summary of the 
written testimony. A question-and-answer period usually follows 
a witness's oral testimony. Following hearings, committees 
usually publish the transcripts of witness testimony and 
questions and answers.
    A Senate rule merely urges its committees ``to make every 
reasonable effort'' to make transcripts of hearings available 
before floor consideration. More and more often, committees are 
making statements of witnesses and, less often, full 
transcripts of hearings, available on their websites.
    Congressional committee hearings may be broadly classified 
into four types: legislative, oversight, investigative, and 
confirmation. Hearings may be held on Capitol Hill or 
elsewhere, perhaps a committee member's district or state or a 
site related to the subject of the hearing. All hearings have a 
similar formal purpose, to gather information for use by the 
committee in its activities.

                    AGING COMMITTEE LIST OF HEARINGS

                              ----------                              

    June 20, 2002--Long-Term Care Financing: Blueprints for 
Reform
    April 16, 2002--Assisted Living Reexamined: Developing 
Policy and Practices to Ensure Quality Care
    April 10, 2002--Offering Retirement Security to the Federal 
Family: A New Long-Term Care
    March 21, 2002--Broken and Unsustainable: The Cost Crisis 
of Long-Term Care for Baby Boomers
    March 14, 2002--The Economic Downturn & Its Impact on 
Seniors: Stretching Limited Dollars in Medicaid, Health and 
Senior Services
    February 27, 2002--Patients in Peril: Critical Shortages in 
Geriatric Care
    February 6, 2002--Women and Aging: Bearing the Burden of 
Long-Term Care
    September 24, 2001--Long-Term Care After Olmstead: Aging 
and Disability Groups Seek Common Ground
    July 18, 2001--Long-Term Care: States Grapple with 
Increasing Demands and Costs
    June 28, 2001--Long-Term Care: Who Will Care for the Aging 
Baby Boomers?
    May 17, 2001--Family Caregiving and the Older Americans 
Act: Caring for the Caregiver
    April 26, 2001--Assisted Living in the 21st Century: 
Examining its Role in the Continuum of Care
    March 29, 2001--Healthy Aging in Rural America
Executive Summary

    The first wave of our nation's 77 million baby boomers will 
soon reach the age of 65. This group is generally described as 
well educated, more financially secure than their parents and 
willing to demand a wide array of services to meet their needs. 
Thanks to advances in health care and medical technology, life 
expectancies have increased and many Americans can expect to 
live well into their seventies and beyond. However, with these 
longer lives often comes increased prevalence of age-related 
disabilities.
    During the 107th Congress, the Senate Special Committee on 
Aging devoted a series of hearings to long-term care reform. 
Expert testimony illustrated that the current financing 
mechanisms for long-term care will not be sustainable in 
decades to come. In fact, without significant reform, experts 
predict that the United States could be on the brink of a 
domestic financial crisis.
    The current long-term care system is funded primarily by 
state and federal programs. More specifically, Medicaid is the 
primary payor of long-term care in this country. Medicaid paid 
for 45 percent of the $137 billion this country spent on long-
term care in FY 2000. Yet, despite the amount of money that 
state and federal programs are allocating to long-term care, 
individuals and their families still pay out-of-pocket for 
nearly one-third of long-term care expenses.
    Though the elderly and disabled populations have indicated 
a preference for receiving long-term care in home and 
community-based settings, a federal institutional bias exists. 
However, new options for long-term care are emerging. Aging and 
disability advocates are working with the health care industry 
to create a ``continuum of care'' including such services as 
assisted living, adult day services and home care. Governors 
have creatively used the Medicaid waiver process to increase 
home and community-based services for the elderly and disabled.
    Although financing is the cornerstone of the long-term care 
issue, other issues are critical in building an adequate, 
seamless, and effective long-term care system to meet the 
increasing needs of aging baby boomers. These issues include: 
supporting family caregivers, addressing workforce shortages, 
improving the quality of long-term care services and improving 
access to transportation and housing.
    The Senate Special Committee on Aging's hearings are an 
effort to turn the nation's attention to a very important issue 
facing all of us--long-term care reform. Whether our personal 
experience with long-term care comes in the form of providing 
care for family members or friends or whether we are in need of 
care at some time in our lives, this issue will touch all of 
us. It is the Committee's hope that Congress and the nation 
will focus immediate attention on long-term care before the 
crisis occurs--and not before it is too late.
Preface
    Recognizing that the impending age wave of baby boomers 
will soon significantly increase the demand for long-term care 
in the coming decades, the Senate Special Committee on Aging 
has dedicated a series of hearings to long-term care financing 
and reform. Between March 2001 and June 2002, the Aging 
Committee held thirteen hearings on long-term care. This paper 
is intended to provide a summary of the Committee's findings as 
a result of this series of hearings.
Setting the Stage: A Need for Reform
    Just nine years from now, the first wave of this nation's 
estimated 77 million baby boomers will reach the age of 65. The 
boomers who will soon comprise this nation's senior population 
are generally described as informed and far more likely to 
demand services and options to meet their needs. Yet, as more 
of our senior population will come to expect more choices in 
every aspect of their lives, their options may become 
increasingly limited in the very near future. The confluence of 
the anticipated shift in demographics and limitations on state 
and federal resources has increased debate about the need for 
comprehensive long-term care reform. Experts warn that this 
nation's long-term care system is on the brink of a crisis 
situation.
    Over the course of the 20th century, life expectancies have 
increased by more than 30 years. Thanks to advances in health 
care and medical technology most Americans now live well into 
old age. But with increasing longevity often comes increasing 
age-related disability. As the baby boomers begin to move into 
their 60s and beyond, issues surrounding financing and delivery 
of services to meet increased needs will become more and more 
significant. By 2040, the number of individuals aged 65 and 
older will more than double current levels. In 2000, there were 
four million Americans over 85, a number projected to more than 
triple to 14 million by 2040, and the population of Americans 
aged 85 and older is the group most in need of assistance with 
activities of daily living. (See Fig. 1)
    As this new wave of seniors begins to experience age-
related disability, our current long-term care system--funded 
with state and federal dollars--will not be able to support 
this demographic shift. According to the General Accounting 
Office (GAO), entitlement programs such as Medicare, Medicaid 
and Social Security will nearly double as a share of the 
nation's economy by 2035 (See Fig. 2). Without fundamental 
changes, spending on these programs could crowd out the 
availability of federal and state resources for other programs. 
Unless entitlement reforms are made, other federal priorities 
such as defense and education will be pitted against long-term 
care services.
    Whereas at one time long-term care was generally only 
available in nursing homes and in private residences with the 
help of informal family caregivers, we now have an entire 
``continuum of care'' of options, including assisted living, 
adult day services and home health care. Setting and services 
depend on many factors, including the recipient's needs and 
preferences; availability of formal and informal support 
services; and whether the individual qualifies for public 
assistance, has long-term care insurance and other income-
related issues. Additionally, service availability can differ 
not only among the states, but also among local communities, as 
Committee hearing testimony has illustrated. The result is a 
``patchwork'' long-term care system that is in dire need of 
cohesive and comprehensive reform.
Long-term Care Defined
    The Congressional Research Service defines long-term care 
as: ``a wide range of supportive and health services for 
persons who have lost the capacity for self-care due to illness 
or frailty.'' One's need for long-term care is measured by how 
much assistance is needed with activities of daily living, 
often referred to as ``ADLs.'' Examples of ADLs include: 
eating, dressing, bathing, toileting and transferring from a 
bed to a chair.
    In considering any of the models of long-term care reform 
it is crucial to keep in mind that long-term care is a multi-
dimensional issue--involving not only health care, but also the 
difficult issues surrounding housing, nutrition, workforce, 
transportation and social supports available to maintain 
independence.
    Long-term care is not only an issue for older Americans but 
also for younger disabled individuals as well, and any long-
term care reform proposal must account for both populations.
Current Financing Unsustainable
    When Medicare and Medicaid were established in 1965, they 
were created to cover medical and health care costs for the 
elderly and the poor, respectively. At that point in time, 
there were not nearly as many people living for as many years 
with age-related disability--death as a result of an acute 
illness was far more common than the longer term chronic 
illnesses we see today in later life. Today, nearly four 
decades later, Medicaid has become the single largest public 
payor of long-term care services in this country.
    In 2000, national spending for long-term care was $137 
billion. Of that amount, Medicaid covered 45 percent and 
Medicare paid for 14 percent, with the remainder paid for out-
of-pocket or via insurance coverage. These dollars are spent 
not only on institutional care--such as nursing home care--but 
also on home and community-based  services.  Under  the  Home  
and  Community-Based Services (HCBS) waiver authority--
discussed later in greater detail--states are authorized to 
provide services not generally covered by the Medicaid program.
    Although the waiver program enables people to receive long-
term care services in their homes, data shows that there is a 
federal institutional bias when it comes to long-term care. In 
FY 2000, 58.5 percent of Medicaid spending went toward nursing 
home care, (See Fig. 3), yet nursing home residents account for 
only one quarter of all Medicaid recipients. Some argue that it 
would be more cost-efficient to shift more federal funding to 
home and community-based services and away from institutional 
care. The recent U.S. Supreme Court Olmstead v. L.C.\1\ 
decision underscores the national momentum and support for 
allowing aging and disabled populations to live in the least 
restrictive settings as long as possible.
---------------------------------------------------------------------------
    \1\ Olmstead v. L.C., 521 U.S. 581, 119 S. Ct. 2176.
---------------------------------------------------------------------------
    Government projections developed by the Lewin Group for the 
U.S. Department of Health and Human Services find that annual 
expenditures for long-term care will reach $207 billion in 2020 
and $346 billion in 2040, and could nearly quadruple in 
constant dollars to $379 billion by 2050. (See Fig. 4) GAO 
long-term budget simulations illustrate the increasing 
constraints on federal budgetary flexibility that will be 
driven by entitlement spending growth. Absent reform spending, 
Social Security, Medicare and Medicaid would consume nearly 
three-quarters of federal revenue by 2030. This will leave 
little room for other federal priorities such as defense and 
education. By 2050, total federal revenue would be insufficient 
to fund spending for Medicare, Medicaid, Social Security and 
interest payments. (See Fig. 5)
    Medicare generally covers acute care and short-term health 
needs of the elderly (primarily in the form of skilled nursing 
and home health) and--from a long-term care perspective--is not 
relied upon nearly to the same extent that the Medicaid program 
is. In fact, although Medicaid was not originally conceived of 
as a program for the elderly and disabled, it has in fact 
become the single largest payor funding long-term care 
services. (See Fig. 6) Medicaid costs account for 20 percent of 
state budgets, the second largest expenditure after education. 
In 2001, States experienced a 10.6 percent increase in Medicaid 
budgets, primarily due to health care inflation rates of 13-15 
percent and prescription drug inflation rates of 18 percent. 
Without fundamental reform, Medicaid can be expected to remain 
a considerable funding source of long-term care for the 
elderly, exacerbating the current budgetary strain. Though many 
Americans believe Medicaid only provides assistance to 
individuals with very low incomes, the reality is far 
different. Many individuals who are considered ``middle class'' 
are forced to ``spend down''--or--deplete their income and 
assets to qualify for Medicaid services and receive assistance 
with the high costs of long-term care.
    Despite the amount of money that federal and state programs 
are spending on long-term care, individuals and their families 
still pay out-of-pocket for nearly one-third of long-term care 
expenses. Average annual long-term care direct costs vary 
widely. The average cost of nursing home care reaches almost 
$50,000 a year. In addition to direct costs, families and other 
informal providers are the primary caregivers. Often, the 
burdens of caregiving require that a relative or friend reduce 
time spent at his or her workplace, which can lead to a reduced 
income. Reducing time or completely leaving the workplace can 
also affect benefits, such as health insurance coverage. Faced 
with such costs, it is unsurprising that older persons and 
their families often deplete their own resources and are forced 
to turn to public assistance.
    For those who have purchased long-term care insurance, 
discussed in greater detail later in this paper, the need for 
public assistance may be reduced to some extent, and may 
provide a good model for how public-private partnerships can 
help to reduce overall long-term care costs on society.
Home and Community-Based Services
    While many people equate the term ``long-term care'' with 
someone who lives in a nursing home or other institutional 
facility, almost 80 percent of the elderly and 41 percent of 
severely disabled individuals live at home or in community-
based settings. Many disabled persons and older persons with 
functional limitations or cognitive impairments choose to 
remain in their homes or live in supportive housing if they can 
receive assistance with activities of daily living such as 
eating, bathing and dressing. Studies show that generally 
people prefer to receive long-term care services in their homes 
or in other community-based settings.
    The heavy bias in Medicaid funding toward institutional 
care does not reflect this growing preference for home and 
community-based services. Ironically, while the disabled 
population and growing elderly population prefer to receive 
services at home or in the community, the federal government 
imposes a strong bias toward institutional care through 
existing Medicaid and Medicare laws. Of total Medicaid spending 
for long-term care in 2000, 72.5 percent was for institutional 
care and 27.5 percent for home and community-based services. 
Governors have expressed frustration over the fact that while 
it is an entitlement for seniors and the disabled to receive 
services in an institution, states must apply for waivers to 
keep people in their own homes or in their communities. Yet, 
experts disagree over whether or not home and community-based 
care is less expensive than institutional care. While the 
average cost of caring for a person in the home and community 
is much lower than in an institutional setting, the costs of 
transportation, housing, meals and the burden to family 
caregivers such as out of pocket costs and lost wages are often 
not taken into account in this analysis.
    Governors and other witnesses also argued that money could 
be saved if Medicare and Medicaid dollars could be blended to 
avoid duplication or delay of services, which are common in the 
``dual eligible'' (those eligible for both Medicaid and 
Medicare) populations. Other savings could result in using 
Medicaid and Medicare funding to pay for preventive care, with 
a goal of delaying institutionalization. To pay for expanded 
home and community-based services, states have taken deliberate 
and aggressive action to develop an array of funding sources 
including state and local general revenues. States also use 
Medicaid state plan services, Medicaid HCBS waivers and 1115 
Waivers, the Social Services Block Grant and the Older 
Americans Act.
Medicaid Waivers
    In the 1970's, policy makers observed that payments for 
nursing home care had begun consuming an increased proportion 
of Medicaid expenditures. At that time, the only comprehensive 
long-term care benefit offered by Medicaid for the disabled and 
elderly was institutional care. Federal task forces along with 
research and demonstration projects attempted to identify cost-
effective alternatives to institutional care. In 1981 the 
Medicaid Home and Community-Based Services (HCBS) waiver 
program was created by amending Section 1915(c) of the Social 
Security Act. It was intended to correct the ``institutional 
bias'' in Medicaid services.
    Within long-term care, HCBS expenditures make up a growing 
share of the Medicaid budget as many states use waivers. 
Medicaid HCBS waiver expenditures have grown from $1.2 billion 
in 1990 to $12.7 billion in 2000. All states except Arizona 
offer 1915(c) waivers for the elderly and disabled. HCBS 
waivers vary largely between states, and often the demand for 
services available under HCBS waivers exceeds what is 
available. HCBS waivers are capped so if waiver slots are 
filled, only nursing homes or other institutional settings are 
offered.
    One frequent criticism of the HCBS waiver program is that 
while supportive housing costs are covered under the general 
Medicaid program, similar costs cannot be paid for through the 
waiver. This drastically limits what states can do without 
losing federal financial support.
State Initiatives to Expand Home and Community Based Services
    The National Governors Association and two governors 
testified before the Committee and explained how the Medicaid 
program is often inflexible and does not provide all the 
necessary services to the elderly and disabled. Often, 
governors pool various state and local resources to provide 
preventive services to individuals who do not qualify for 
Medicaid. They believe that ``early intervention'' is critical 
to the elderly in helping them maintain independence for as 
long as possible either preventing or delaying 
institutionalization or hospitalization. Below are some issue 
areas and specific programs that Governors have launched to 
expand and increase long-term care services:

    Medicare/Medicaid Integration Program - These projects seek 
to integrate Medicaid's long-term care services with Medicare's 
acute services through managed care for the dually eligible. 
MMIP projects are currently underway in 13 states.
    Workforce Issues - Initiatives have been created to improve 
recruitment and retention in long-term care services, including 
grant funded programs.
    Cash and Counseling - Consumer-directed care and family 
caregiver support programs are related to home health and 
nursing home aide shortages. The program provides people with 
long-term disabilities greater choice in selecting their own 
personal assistance workers (which may include friends and 
relatives.) These programs support caregivers providing ongoing 
long-term care assistance to family members. Counseling is 
provided regarding bookkeeping and services management.
    State Funded Program Innovations - These are funded by 
state and/or local revenues. These programs offer a variety of 
long-term care services that enable individuals needing 
assistance to remain in their homes. Many of these programs 
emphasize early intervention or prevention. Many services are 
provided to individuals who would otherwise not qualify for 
means-tested services.
    State Pharmacy Assistance Programs - Almost half of the 
states have pharmaceutical assistance programs in operation, 
and many other states are developing programs. These programs 
include direct subsidy or discounts, bulk or cooperative 
purchasing programs, drug buying pools and experimentation with 
Medicaid waivers.
    Partnerships for Long-Term Care - Public-private alliances 
between state government and insurance companies to create 
long-term care insurance programs. These programs use two 
models: the ``Dollar for Dollar'' model and the ``Total 
Assets'' model. Federal law prohibits the expansion of these 
programs.
    Single Point of Entry Programs  - A number of states have 
instituted single point of entry or ``no wrong door'' programs 
designed to assist seniors in obtaining the services they need 
regardless of income levels or where they first go to obtain 
help.
    Increasing Assisted Living/Housing for Low and Moderate 
Income Seniors - Novel programs such as the ``Coming Home 
Program'' a grant-funded program designed to foster affordable 
assisted living for low-income seniors primarily in rural 
areas, are increasing access for people of all income levels.
Disability and Aging
    Almost 11 million Americans of all ages have a disability 
and require some form of assistance. Nearly 5 million are 
severely disabled (need assistance in at least 3 activities of 
daily living). More than 80 percent of the severely disabled 
are over age 65. Only 1.8 million of the 11 million persons 
with disabilities receive institutional care:

           Including 1.6 million people in nursing 
        facilities;
           106,000 in institutions for the mentally 
        retarded and developmentally disabled; and
           57,000 in state and county facilities for 
        the mentally ill.

    The probability of disability rises dramatically with age. 
Fifty-eight percent of people over the age of 80 have a severe 
disability. Demographic trends suggest that the number of 
disabled elderly people needing long-term care will increase 
between one-third and two times the current number by 2040.
    A major factor in determining whether or not someone can 
remain in the community or needs to be transferred to an 
institutional setting is the availability of family to help 
care for the individual. Sixty percent of the disabled elderly 
in the community rely exclusively on their families and other 
unpaid sources of care. Ninety percent of long-term care for 
elders is provided by family members.
Olmstead
    In 1999, the United States Supreme Court ruled in the 
Olmstead v. L.C.\2\ that The Americans with Disabilities Act 
(ADA) prohibits states from keeping people in institutions when 
they could be ``reasonably accommodated'' in less restrictive 
settings. The ADA requires public entities to provide services 
in the ``most integrated setting appropriate to the needs of 
qualified individuals with disabilities.'' The decision has led 
to discussion about the implications on long-term care services 
for the disabled and the growing numbers of baby boomers who 
will need services in the future. Over 200 lawsuits have been 
filed in the United States seeking to apply or clarify the 
ruling in Olmstead.
---------------------------------------------------------------------------
    \2\ Id.
---------------------------------------------------------------------------
    One of the most profound outcomes of the Olmstead decision 
is an emerging alliance between the aging and disability 
communities. One quarter of the nation's elderly are likely to 
experience multiple disabling conditions, rendering them 
dependent on others for long periods of time. This will only 
increase once the age wave of 77 million baby boomers reaches 
retirement age. There is a natural overlap between these 
communities because both groups require similar services. 
Furthermore, many experts in the field are now looking at long-
term care services from a ``lifespan'' approach rather than 
from an aging or disabled perspective. In January 2001, the 
Department of Health and Human Services announced the Real 
Choice Systems Change grant program to facilitate state 
compliance with the Olmstead decision. These grants have 
prompted most states to create new coalitions or working groups 
of aging and disability advocates.
    Implications of the Supreme Court's Olmstead decision are 
still unfolding. Discussions regarding how to provide current 
and future services inevitably lead to reviews of the Medicaid 
program. Within federal guidelines, states have flexibility to 
decide who will receive long-term care services, what services 
are available and for what length of time. Both populations 
know that gaining access to a broader array of services will 
require a careful review of limited Medicaid dollars--upon 
which both populations rely. Most state aging and disability 
coalitions have coordinated with governors' offices in 
preparing plans which provide goals and action plans for 
expanding home and community-based services.
    Aging and disability coalitions established in the wake of 
Olmstead view chronic disabling conditions as a social problem, 
a functional problem and a family problem. They tend to be 
advocates for ``consumer-directed care,'' an approach to long-
term care that seeks to maintain the independence of disabled 
and elderly persons by giving them more decision making 
authority in their care. Advocates believe that when consumers 
direct their own care they experience a better quality of life. 
The ``Cash and Counseling'' demonstration projects, sponsored 
by the Robert Wood Johnson Foundation are consumer-directed 
care projects which support this theory.
Caregiving
    Family caregivers are the cornerstone of our long-term care 
system in the U.S., providing 80 percent of all long-term care 
in this country. They are the ``quiet heroes'' who provide day-
to-day care, for weeks, months--and even years for family 
members and friends who have chronic illnesses. Today, one in 
three adult Americans--over 50 million--people care for a 
family member or friend. Forty percent of all informal 
caregivers for the elderly are baby boomers.
    Most older persons remain in their own homes or in the 
community with the support of family caregivers. Only 5 percent 
of older Americans who need long-term care rely exclusively on 
paid care, mostly in institutional settings. Sixty-five percent 
of seniors rely exclusively on friends and family, while 30 
percent use a combination of paid caregivers and friends and/or 
family.
    Women comprise a disproportionate share of caregiving, 
providing 75 percent of all caregiving for family members. The 
average American woman can expect to spend 17 years caring for 
a child and 18 years caring for an elderly parent for a total 
of 35 years as caregiver. Caregiving exacts heavy tolls from 
women as they often suffer depression, fatigue, poor health and 
loss of income due to their caregiving duties. One study found 
that on average, a worker who takes care of an older relative 
loses $659,139 in lost wages, pension benefits and Social 
Security income.
    Conversely, family caregivers provide a significant 
resource to the economy and long-term care system in this 
country. If the work of these unpaid family caregivers were 
replaced by paid home care providers, estimates show this could 
cost $196 billion. At a time when most states are experiencing 
budget deficits and the Medicaid system is overburdened, state 
and federal governments can not assume financial responsibility 
for all of the people currently receiving their primary care 
from family members and friends. Research shows that caregivers 
need a variety of services to support them in their caregiving 
role. One such service is respite care, which primarily offers 
hourly or daily temporary care enabling primary caregivers to 
take a break from the daily routine of caregiving and 
temporarily relieve the stress they may experience while 
providing care. If properly supported, caregivers can remain in 
the caregiving role for longer periods of time, often delaying 
or preventing the need for more costly institutional care. 
Therefore, any support offered to informal caregivers is 
essential to their ability to continue functioning as 
caregivers for long periods of time.
    Many witnesses before the Special Committee on Aging have 
expressed their sentiments that it is in the best interest of 
the government to support family caregivers. In 2000, Congress 
took its first step toward recognizing the significant 
contribution of family caregivers when it passed the National 
Family Caregiver Support Program, included in the 
reauthorization of the Older Americans Act Amendments of 2000. 
Grants given to states provide funding for respite care, 
counseling, information and training. Other House and Senate 
legislative initiatives include tax credits for caregivers who 
provide significant care to family members and tax deductions 
for individuals who purchase long-term care insurance.
Assisted Living
    Assisted living is a relatively new residential care option 
for individuals who need assistance with long-term care. 
Whereas at one time, nursing facilities were the only 
residential care option for individuals needing assistance with 
activities of daily living, assisted living is just one of the 
plethora of care options now available for this nation's 
seniors and disabled. There are currently about 33,000 assisted 
living facilities in the U.S. More than 90 percent of assisted 
living is privately funded. Though the majority of states do 
have Medicaid waivers available to pay for the health care 
portion of the costs of assisted living, fewer than 60,000 
Medicaid recipients currently reside in assisted living 
facilities. Unlike nursing facilities, which are closely 
regulated at the state and federal level, assisted living is 
regulated within the states.
    State assisted living regulations vary greatly. What is 
defined as a ``board and care'' home in one state may be called 
``assisted living'' in another. For the states that do use 
``assisted living'' as a category there is not a uniform 
definition for what that category is. Self-accreditation by 
individual assisted living facilities has been viewed by some 
as a possible quality improvement mechanism, however, to date 
so few facilities have undertaken the accrediting process that 
it cannot be viewed as a reliable self-policing tool.
    The Aging Committee has held several hearings and forums 
exploring quality of care issues in assisted living. Following 
the most recent hearing, Committee members called upon the 
assisted living industry, consumer advocates, providers and 
other interested parties to work together to make 
recommendations to the Committee about how best to ensure 
quality in assisted living facilities. As a result, over 30 
organizations are currently collaborating and will present 
consensus recommendations to the Committee in April 2003.
Adult Day Services
    Adult day centers are a viable, cost-effective, and 
community-based service option that helps keep individuals at 
home, in the community, with family and friends for as long as 
possible. Recently they have become a practical and appealing 
part of the solution to long-term care needs.
    A national study, by Partners in Caregiving: The Adult Day 
Services Program (a national program of The Robert Wood Johnson 
Foundation at the Wake Forest University School of Medicine), 
confirmed there are 3,493 adult day centers in the United 
States. These adult day centers serve individuals ranging in 
age from 18 to 109  with a  variety  of chronic conditions  
such as  dementia, mental retardation/developmental 
disabilities, mental illness, HIV/AIDS, brain injury, and those 
who are physically disabled but cognitively intact.
    Twenty-one percent of adult day centers are based on the 
medical model of care, 37 percent are based on social model of 
care (with no medical component), and 42 percent are a 
combination of the two which provide a vast array of services 
such as: therapeutic activities, social services, personal care 
services, meals, transportation, medication management, 
caregiver support groups, rehabilitation therapy, medical 
services, and emergency respite.
    Most people attending an adult day center live in the 
community with an adult child or a spouse. The average length 
of regular center participation is two years. The number one 
reason for discharge from the center is placement in a 
residential setting, such as an assisted living facility or 
nursing home.
    The majority of adult day centers are not-for-profit, 
operate under the umbrella of a large parent organization, and 
are open 5, 6, or 7 days a week for 8 or more hours a day. On 
average, adult day centers serve 25 people per day at an 
average cost of $56/day, with 38 percent of all revenue coming 
from third-party public reimbursements (e.g., Medicaid Home and 
Community-Based waiver dollars) and 35 percent of revenue is 
from private pay. Many centers rely on grants and donations in 
order to continue to provide services.
    Growth in this industry is evident. Twenty-six percent of 
all currently operating adult day centers opened only within 
the last five years. However, the need for this service is 
greater than the industry growth rate; only 1,141 out of 3141 
counties currently served. Currently only 39 percent of current 
need is being met, however 5,444 new adult day centers are 
needed nationwide (1,071 in rural areas and 4,373 in urban 
areas).
Long-Term Care Insurance
    As mentioned earlier in this report, 77 million baby 
boomers threaten to overwhelm our nation's long-term care 
system. Six out of every ten Americans who reach age 65 will 
need long-term care services.
    The average cost of one year in a nursing home is 
approximately $50,000 while one year of home and community-
based care averages $20,000. Since health care insurance does 
not cover long-term care expenses, people must either pay out 
of pocket for long-term care or spend down their assets to 
qualify for Medicaid. With the rapid rate of health care 
inflation, long-term care costs are estimated to be three or 
four times current costs by 2030. For example, according to the 
American Council of Life Insurance, by 2030 a year of nursing 
home care could cost $190,600 and a year of at-home care could 
cost $68,000. Either way, individuals and the government face 
enormous expenses.
    In the 1980's, long-term care insurance emerged in the 
insurance industry as a new product that consumers could buy to 
protect their assets and guarantee choice of long-term care 
options. Financial planners now often recommend long-term care 
insurance to their clients as a way to ensure financial 
security in retirement. While the number of policies sold in 
America has increased from 815,000 in 1987 to over 7 million in 
2000, the product is still relatively new and only covers about 
7 percent of all Americans.
    Coverage is more comprehensive today than it was just a few 
years ago. The proportion of dual-coverage policies, those 
covering both institutional care and home care, grew from 37 
percent in 1990 to 77 percent in 2000. Most purchasers want to 
ensure that a wide array of home and community-based services 
are available to them. Such options include: assisted living 
facilities, formal home care services such as nurses, home 
health aides, therapists, informal home care services such as 
non-licensed caregivers and family caregivers, adult day care, 
hospice care and respite care.
    People are more likely to purchase long-term care insurance 
if it is offered by their employer. In an effort to increase 
the number of individuals who have long-term care insurance 
coverage, Congress passed the Long-Term Care Security Act (P.L. 
106-265) of 2000 to provide coverage for federal employees. The 
federal government is the nation's largest employer. Twenty 
million federal employees and select family members are 
potentially eligible to participate in this pilot program and 
many hope that this program will be seen as a demonstration 
model for other employers. The federal government is also 
launching a national education campaign to inform employees 
about the need for long-term care. Several witnesses before the 
committee expressed hope that the public relations efforts for 
the federal employee program will result in an increased 
awareness of the general public about the need for long-term 
care insurance.
Workforce Shortage
    It is well-established that the number of older people in 
this country is continuing to grow with each passing year, 
while the number of individuals entering the workforce to care 
for this growing population is dropping. The number of health 
care professionals with specific geriatric training is not 
keeping pace with the changing demographics. All 125 of our 
nation's medical schools have a pediatrics department yet only 
three medical schools have a geriatrics department. Many 
experts have recommended a significant increase in the number 
of specialized physicians, nurses, and other health care 
professionals trained in geriatrics. However, we are currently 
a long way from having an established cadre of trained 
practitioners: at the current time, Medicare supports almost 
100,000 medical residency/fellowship positions but only about 
300 are in geriatric medicine.
    Similarly, recruitment and retention of paraprofessionals 
such as certified nurse aides is also a growing challenge. The 
Bureau of Labor Statistics estimates that in response to the 
rising demands of the growing number of individuals needing 
assistance with long-term care, that personal and home care 
assistance will be the fourth-fastest growing occupation by 
2006, with a dramatic 84.7 percent growth rate expected. The 
number of jobs available for home health aides has been 
projected to increase by almost 75 percent while that of 
nursing aides will increase by more than 25 percent. Yet, while 
these projections indicate that demand for direct care workers 
will increase, factors such as rates of economic growth; 
purchaser ability; and availability of individuals willing to 
become direct care staff may drastically affect the actual 
number of those employed in these positions.
    Furthermore, even if new positions are created they will 
likely be relatively low-paid, low-benefit positions. As 
recruitment efforts build, it will become increasingly 
important for providers to offer sufficient training and 
education to ensure that all staff are able to perform work in 
a manner respectful and appropriate for care recipients. The 
workforce challenge is being addressed at several levels, via 
legislative vehicles for grants to increase staffing levels and 
to improve quality of care in residential care facilities and 
home and community-based services.
Guiding Principles
    While many witnesses had differing suggestions for reforms 
to our long-term care system, there were a number of guiding 
principles that most witnesses did agree upon. They include the 
following:
    Long-term care encompasses more than health care. It 
comprises a variety of services that an aged and/or disabled 
person requires to maintain quality of life--including housing, 
transportation, nutrition, and social support to help maintain 
independent living;
    Especially in light of the Olmstead decision, alternatives 
to institutional care should continue to be expanded for all 
persons;
    Consumers and their families should be involved in care 
decisions about long-term care services;
    Home care services should support but not necessarily 
replace family caregiving;
    Increased access to respite services and training for 
family caregivers is needed to sustain their efforts and ensure 
that people receive care in the least restrictive setting 
possible;
    People of all income levels should have access to long-term 
care services;
    Just as no ``one size fits all'' type of care exists for 
individual long-term care needs, financing options must be 
similarly flexible;
    Any long-term care system should encompass a ``universal 
approach'' and support both disabled individuals under the age 
of 65 as well as older Americans who may or may not also have 
disabilities.
Conclusion
    The Committee's hearings have helped bring to light some 
extremely important issues surrounding the delivery and 
financing of long-term care services. Thanks to the expert 
testimony from our witnesses and multiple reports released as a 
result of the Committee's series of hearings, we have a solid 
base of information and awareness of the looming crisis in 
long-term care. Clearly, current financing mechanisms will 
become unsustainable in the near future and without significant 
reform, our nation's 77 million baby boomers will not be able 
to find the wide array of affordable and high-quality long-term 
care options we all expect and deserve. It is the 
recommendation of this Committee that Congress focus immediate 
action on this impending crisis in American domestic policy. 
Congress should begin debating various proposals to reform our 
long-term care system before and not after the crisis occurs.
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                   REPORTS PRESENTED TO THE COMMITTEE

                              ----------                              

    Medical Never-Never Land: 10 Reasons Why America Is Not 
Ready for the Coming Age Boom
        By the Alliance for Aging Research
    Caring for Older Americans: Recommendations for Building a 
National Program For Graduate Nursing Education In Gerontology 
(March 2001)
        By American Academy of Nursing, Patricia D. Franklin, 
        RN, MSN, CPNP
    Faces of Caregiving: Mother's Day Report (May 2001)
        By the Older Women's League

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