Long-term Care: Current Issues and Future Directions (Letter Report,
04/13/95, GAO/HEHS-95-109).

Pursuant to a congressional request, GAO provided information on
long-term care, focusing on: (1) the conditions that give rise to
long-term care; (2) which groups require long-term care; (3) long-term
care costs and strategies to contain them; and (4) its future demand.

GAO found that: (1) long-term care is designed to help people with
chronic conditions compensate for limitations in their ability to
function independently; (2) the need for long-term care is not
determined on the basis of a diagnosis or illness alone; (3) of the over
12 million Americans requiring long-term care, 60 percent were elderly;
(4) people in need of long-term care primarily require nonmedical
assistance with daily living activities; (5) 70 percent of the $108
billion that was spent on long-term care in 1993 paid for institutional
care; (6) Medicaid and Medicare are the two largest government payers of
long-term care; (7) families pay over one-third of long-term care costs
and can purchase private long-term care insurance to help with the
financial burden, but they also suffer nonmonetary burdens in caring for
relatives; (8) states and other countries have been working on new ways
to control long-term care costs, including service delivery models that
emphasize home and community-based care, capping budget and provider
fees, consolidating program administration, and using case management
more often; and (9) the number of people needing long-term care is
expected to increase, although the extent of future long-term care needs
is uncertain.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-95-109
     TITLE:  Long-term Care: Current Issues and Future Directions
      DATE:  04/13/95
   SUBJECT:  Long-term care
             Elderly persons
             Handicapped persons
             Health insurance
             Home health care services
             Health care cost control
             Nursing homes
             Community health services
IDENTIFIER:  Medicaid Program
             Medicare Program
             Social Services Block Grant
             United Kingdom
             Canada
             Sweden
             Germany
             
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Cover
================================================================ COVER


Report to the Chairman, Special Committee on Aging, U.S.  Senate

April 1995

LONG-TERM CARE - CURRENT ISSUES
AND FUTURE DIRECTIONS

GAO/HEHS-95-109

Long-Term Care Issues


Abbreviations
=============================================================== ABBREV

  ADL - activities of daily living
  ASPE - Assistant Secretary for Planning and Evaluation
  HCFA - Health Care Financing Administration
  HHS - Department of Health and Human Services
  IADL - instrumental activities of daily living
  NAIC - National Association of Insurance Commissioners

Letter
=============================================================== LETTER


B-260713

April 13, 1995

The Honorable William S.  Cohen
Chairman, Special Committee on Aging
United States Senate

Dear Senator Cohen: 

Today, an increasing number of Americans need long-term care. 
Unprecedented growth in the elderly population is projected for the
21st century, and the population age 85 and older--those most in need
of long-term care services--is expected to outpace the rate of growth
for the entire elderly population.  In addition to the dramatic
increase in the elderly population, a substantial portion of the
long-term care population consists of younger people with
disabilities. 

For all ages, most people who need long-term care receive their care
at home or in a community setting, rather than in an institution. 
Yet, most public and private spending for long-term care still pays
for institutional care, primarily for the elderly.  Because
expenditures for long-term care are substantial and growing,
long-term care issues have been highlighted at both the state and
national levels of government, with policymakers deliberating how
best to respond given budget constraints. 

In addition to long-term care purchased with public and private
funds, a significant burden falls on family members who provide
unpaid long-term care to spouses, children, parents, and other
relatives.  Congressional deliberations on health care reform last
year and, more recently, the "Contract with America" underscored the
importance of long-term care through proposing assistance such as tax
deductions for long-term care insurance and tax credits for family
caregiving. 

You asked us to provide information on long term-care.  As requested,
this report addresses

  what is meant by "long-term care," the conditions that give rise to
     long-term care need, and how such need is measured;

  which groups, young and old, need long-term care;

  what long-term care costs are for the federal and state governments
     as well as for families;

  what strategies some states and other countries are pursuing to
     contain public long-term care costs; and

  what experts predict about the future demand for long-term care. 

To develop this information, we drew upon our existing body of work
on long-term care, updated the information on private long-term care
insurance, and developed long-term care cost information using data
from the Health Care Financing Administration (HCFA) and the
Assistant Secretary for Planning and Evaluation (ASPE), both of the
Department of Health and Human Services (HHS).  A list of selected
GAO products issued over the past 2 years appears in appendix I. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Long-term care consists of many different services aimed at helping
people with chronic conditions compensate for limitations in their
ability to function independently.  Many different physical and
mental conditions can give rise to a need for long-term care. 
However, this need cannot easily be determined on the basis of a
diagnosis or illness alone.  Thus, other measures of a person's
ability to function independently, such as activities of daily living
(ADLS), have been developed. 

More than 12 million Americans--young and old--report some long-term
care need, and more than 5 million are estimated to be severely
disabled.  While most of the 12 million are elderly, 40 percent are
not, and, regardless of age, most of the care that they need is
nonmedical assistance with the routines of daily living. 

Expenditures for long-term care, particularly institutional care, are
high.  In 1993, of nearly $108 billion spent, about 70 percent paid
for institutional care.  Government--both federal and
states--provides most of the money for long-term care through dozens
of categorical funding streams.  Medicaid is the largest government
payer for long-term care services--with the federal government
spending $24.7 billion and states spending $19.0 billion in
1993--predominately for nursing home care.  Home health services
reimbursed by Medicare have experienced rapid growth over recent
years--from $2.3 billion in 1989 to $9.5 billion in 1993. 

The financial burden on families, who pay over a third of the
long-term care bill out of pocket, is also high.  To guard against
financial loss, a small but growing number of individuals are
purchasing private long-term care insurance policies.  Families also
bear a considerable nonmonetary burden by caring for relatives. 
Recognizing this, some employers have begun to offer more flexible
schedules and other assistance to help employees balance work and
caregiving. 

Faced with rising expenditures for long-term care, some states and
other countries are experimenting with new ways to control costs,
including service delivery models that increasingly emphasize home
and community-based care rather than institutional care.  Other
strategies involve capping budgets and provider fees, consolidating
program administration, and using case management more often. 
Whether these approaches will contain costs remains to be seen. 

The number of people needing long-term care is expected to increase. 
However, the extent of the nation's future long-term care needs is
clouded by uncertainty about medical and technological advances.  For
example, breakthroughs could result in longer, healthier lives for
baby boomers as well as an increase in the number of younger disabled
people who survive low birth weight or accidents.  Further
developments in the private long-term care insurance market and the
availability of unpaid caregivers are also likely to affect future
demand for publicly funded long-term care.  Continued experimentation
in public program administration and continued evolution of long-term
care service delivery models will be important in determining if more
flexible, cost-effective responses to providing public and private
assistance may be achieved both now and in the future. 


   LONG-TERM CARE HELPS PEOPLE
   WITH CHRONIC CONDITIONS
   FUNCTION AS INDEPENDENTLY AS
   POSSIBLE
------------------------------------------------------------ Letter :2

Long-term care essentially involves many diverse services for people
with chronic conditions.  These conditions include both physical and
mental disabilities requiring different types of care.  Various
measures are used to identify an individual's need for long-term
care. 


      MOST LONG-TERM CARE IS
      ASSISTANCE WITH THE ROUTINES
      OF DAILY LIVING
---------------------------------------------------------- Letter :2.1

Long-term care is not one service but many different services aimed
at helping people with chronic conditions compensate for limitations
in their ability to function independently.  People needing long-term
care have many different types of physical and mental disabilities
that require different kinds of care.  Typically, long-term care does
not involve high-tech medical care but basic assistance from others. 
For example, people with physical disabilities are likely to need
hands-on assistance, and those with mental disabilities need
supervision, protection, or verbal reminders to accomplish everyday
activities.  A person with a physical condition like quadriplegia
might need hands-on help to get in and out of bed.  In contrast,
someone with a mental condition, such as Alzheimer's disease, might
need constant supervision for his or her own safety.  Types of
long-term care services therefore vary widely--from helping a frail
elderly person dress, eat, and use the bathroom to skills training
and medication management for a mentally ill person to technology and
nursing care for a ventilator-dependent child. 

The largest proportion of elderly persons with severe disabilities
need nonmedical services, according to a recent survey that we
conducted of directors of state agencies on aging and Medicaid.\1 The
directors most often cited (1) personal care; (2) housekeeping, meal
preparation, and other home chore services; and (3) case/care
management as the services needed by the largest proportion of
elderly persons with severe disabilities.  (See table 1.)



                           Table 1
           
             Examples of Home and Community-Based
                           Services

Service       Description
------------  ----------------------------------------------
Case          Assists beneficiaries in getting medical,
management    social, educational, and other services.

Personal      Includes bathing, dressing, ambulation,
care          feeding, grooming, and some household services
              such as meal preparation and shopping.

Adult day     Includes personal care and supervision and may
care          include physical, occupational, and speech
              therapies. Also provides socialization and
              recreational activities adapted to compensate
              for any physical or mental impairments.

Respite care  Provides relief to the primary caregiver of a
              chronically ill or disabled beneficiary. By
              providing services in the beneficiary's or
              provider's home or in other settings, respite
              care allows the primary caregiver to be absent
              for a time.

Homemaker     Assists beneficiaries with general household
              activities and may include cleaning, laundry,
              meal planning, grocery shopping, meal
              preparation, transportation to medical
              services, and bill paying.
------------------------------------------------------------

--------------------
\1 We received responses to our survey from all 51 state agencies on
aging and from 50 of 51 state Medicaid agencies.  For additional
information, see Long-Term Care Reform:  States' Views on Key
Elements of Well-Designed Programs for the Elderly (GAO/HEHS-94-227,
Sept.  6, 1994). 


      BOTH PHYSICAL AND MENTAL
      CONDITIONS CAN CAUSE
      LONG-TERM CARE NEED
---------------------------------------------------------- Letter :2.2

Many different types of physical and mental conditions can give rise
to a need for long-term care.  Physical conditions include
paraplegia, heart disease, asthma, arthritis, and many others. 
Mental conditions include severe and persistent mental illness,
dementia, traumatic brain injuries, and mental retardation and other
developmental disabilities.  Among the elderly, arthritis and heart
disease are the two most common causes of long-term care for
individuals.  For nonelderly adults, the most common causes of
long-term care need are arthritis, heart disease, and mental
retardation.  In children, the most common chronic conditions
limiting activity are respiratory disorders, such as asthma; mental
retardation; and other mental or nervous system conditions, such as
cerebral palsy. 


      LONG-TERM CARE NEED IS
      DIFFICULT TO MEASURE
---------------------------------------------------------- Letter :2.3

The need for long-term care cannot easily be determined on the basis
of a diagnosis or illness alone.  For example, a person who has
arthritis or mental retardation does not necessarily need long-term
care.  Furthermore, not all those with the same impairment need the
same type and level of assistance, and a single individual's needs
can vary over time. 

Because a person's long-term care needs cannot be simply determined
from his or her medical diagnosis, other ways to measure a person's
ability to function independently have been developed.  One set of
measures gauges a person's ability to perform basic self-care tasks
such as eating, bathing, dressing, getting to and using the bathroom,
and getting in or out of a bed or chair.  These measures are known as
activities of daily living or ADLs.  (See fig.  1.) ADLs, however, do
not describe all types of functional limitations.  Many people with
Alzheimer's disease and other mental impairments, for example, may
not have serious ADL limitations. 

   Figure 1:  Definitions for ADL
   and IADL

   (See figure in printed
   edition.)

Another measure of impairment examines other functional abilities
that involve performing household chores and social tasks.  These are
known as instrumental activities of daily living or IADLs.  They
include the ability to keep track of money, prepare meals, do light
housework, take medicine, and go outside the home.  In addition,
other criteria--such as the ability to attend school or to behave in
an age-appropriate manner--are sometimes used for children or adults
with mental illness whose age or condition means that ADLs and IADLs
may not be adequate to assess need. 

Directors of state agencies on aging and Medicaid agencies reported
to us that an elderly person's ability to perform ADLs was the best
indicator to determine need for publicly funded home and
community-based services.\2 They did not, however, have a uniform
definition of ADLs.  And most of the state agencies' assessment
instruments used ADLs in combination with other indicators to
determine need. 


--------------------
\2 Long-Term Care Reform:  States' Views on Key Elements of
Well-Designed Programs for the Elderly. 


   LONG-TERM CARE IS NOT JUST FOR
   THE ELDERLY OR THE
   INSTITUTIONALIZED
------------------------------------------------------------ Letter :3

While the phrase "long-term care" may evoke images of the elderly in
nursing homes, many Americans today who say they need long-term care
services are not elderly.  Moreover, across all ages, most people
with long-term care needs live in the community, not an institution. 


      MORE THAN 12 MILLION PEOPLE
      REPORT SOME LONG-TERM CARE
      NEED
---------------------------------------------------------- Letter :3.1

More than 12 million Americans say they need assistance with everyday
activities.  Of these, about 60 percent are elderly; however, about 5
million are working-age adults, and approximately 400,000 are
children under age 18.  (See fig.  2.)

   Figure 2:  Both Young and Old
   Report Long-Term Care Need

   (See figure in printed
   edition.)

Note:  Includes people needing long-term care in institutions or in
the community.  Children are those under 18 years old, working-age
adults are those 18 to 64 years old, and the elderly are those 65
years old and older. 

Source:  Based on our analysis of information from HHS and the
Institute for Health Policy Studies at the University of California,
San Francisco. 

We estimate that about 5.1 million people of the more than 12 million
needing long-term care are severely disabled due to a mental or
physical impairment.  That is, about 5.1 million people need
substantial assistance from others in basic self-care activities or
significant supervision for their own protection. 

While most of those needing long-term care are elderly, 40 percent
are not, and the number of nonelderly disabled has grown consistently
in recent years.  Possible explanations for the growth in the
nonelderly disabled population include better medical technology and
improved access to acute care, both of which may enable people to
survive previously fatal conditions while sustaining permanent
disabilities. 


      MOST PEOPLE REPORTING
      LONG-TERM CARE NEED ARE NOT
      INSTITUTIONALIZED
---------------------------------------------------------- Letter :3.2

In contrast to the traditional notions of long-term care, the vast
majority of all those who say they need long-term care services do
not live in nursing homes or other institutions.  About 2.4 million
people live in institutions, and most of these individuals are over
65 years old.  The remaining 10.4 million individuals live at home or
in small community residential settings, such as group homes or
supervised apartments.\3 (See table 2.)



                           Table 2
           
             Most Needing Long-Term Care Are Not
                      Institutionalized

                    (Numbers in thousands)

                                                  At
                                                home
                                               or in
                                              commun
                                          In     ity   Total
                                      instit  settin  popula
Age group                             utions      gs    tion
------------------------------------  ------  ------  ------
Children                                  90     330     420
Working-age adults                       710   4,380   5,090
Elderly                                1,640   5,690   7,330
Total                                  2,440  10,400  12,840
------------------------------------------------------------
Sources:  Based on our analysis of information from HHS and the
Institute for Health Policy Studies at the University of California,
San Francisco. 


--------------------
\3 These statistics are explained in more detail in Long-Term Care: 
Diverse, Growing Population Includes Millions of Americans of All
Ages (GAO/HEHS-95-26, Nov.  7, 1994). 


   GOVERNMENT IS THE PRIMARY PAYER
   OF LONG-TERM CARE
------------------------------------------------------------ Letter :4

Long term-care is expensive.  Nationwide, an estimated $107.8 billion
was spent on long-term care in 1993.\4 The bulk of these costs--$69.1
billion--were paid for with public dollars, $43.1 billion from the
federal government and $26 billion from state governments.  Private
sources paid the rest--about $38.5 billion--mostly as out-of-pocket
spending by individuals and families.  Private long-term care
insurance contributed $200 million to this total.  (See fig.  3.) In
addition, family and friends, mostly women, provide the overwhelming
majority of care for disabled persons on an unpaid basis. 

   Figure 3:  Government Pays the
   Largest Share of Long-Term Care
   Costs, 1993

   (See figure in printed
   edition.)

Source:  Office of the Assistant Secretary for Planning and
Evaluation, HHS. 


--------------------
\4 The HHS Assistant Secretary for Planning and Evaluation (ASPE)
estimate for 1993 spending on long-term care.  This estimate includes
most long-term care spending by Medicare, Medicaid, the Older
Americans Act, and the Department of Veterans Affairs.  However, it
does not include long-term care spending from such programs as the
Social Services Block Grant, the Rehabilitation Act, state vocational
rehabilitation, or the Maternal and Child Health Block Grant. 


      DOZENS OF GOVERNMENT
      PROGRAMS PROVIDE MOST OF THE
      LONG-TERM CARE DOLLARS
---------------------------------------------------------- Letter :4.1

Literally dozens of categorical funding streams provide long-term
care to specific populations such as chronically ill children,
persons with developmental disabilities, and the frail elderly.  The
National Academy for State Health Policy estimates that more than 100
federal programs--including Medicaid and Medicare--specifically
target people with disabilities of all ages.\5 Other federal programs
that provide significant support for long-term care include the
Social Services Block Grant, the Older Americans Act, and the
Rehabilitation Act.  (See table 3.) Each program has its own unique
rules governing eligibility and what services it will provide. 
Nearly three-fourths of state long-term care spending consists of the
state share of Medicaid.  The rest of state spending is for the state
share of other federal matching programs or programs funded solely by
state dollars. 



                                     Table 3
                     
                     Major Federal Programs Supporting Long-
                      Term Care Services for the Elderly and
                            Persons With Disabilities

                                Fiscal year
                                1993 federal
                                spending                        Long-term care
Program         Objectives      (billions)\a    Administration  services
--------------  --------------  --------------  --------------  ----------------
Medicaid/       To pay for      Total: $77.4    Federal: HCFA/  Nursing home
Title XIX of    medical                         HHS             care, home and
the Social      assistance for  Long-term                       community-based
Security Act    certain low-    care: $24.7     State: State    health and
                income persons  (estimated)     Medicaid        social services,
                                                Agency          facilities for
                                                                persons with
                                                                mental
                                                                retardation,
                                                                chronic care
                                                                hospitals

Medicare/       To pay for      Total: $138.8   Federal: HCFA/  Home health
Title XVIII of  acute medical                   HHS             visits, limited
the Social      care for the    Long-term                       skilled nursing
Security Act    aged and        care: $15.8     State: none     facility care
                selected        (estimated)
                disabled

Older           To foster       Total: $1.4     Federal:        Nutrition
Americans Act   development of                  Administration  services, home
                a               Long-term       on Aging/       and community-
                comprehensive   care: $.8       Office of       based social
                and                             Human           services,
                coordinated                     Development,    protective
                service system                  HHS             services,
                to serve the                                    and long-term
                elderly                         State: State    care ombudsman
                                                Agency on
                                                Aging

Rehabilitation  To promote and  Total: $2.2     Federal:        Rehabilitation
Act             support                         Office of       services,
                vocational      Long-term       Special         attendant and
                rehabilitation  care: $.1       Education and   personal care,
                and                             Rehabilitative  centers for
                independent                     Services/       independent
                living                          Department of   living
                services for                    Education
                the disabled
                                                State: State
                                                Vocational
                                                Rehabilitation
                                                Agencies

Social          To assist       Total: $2.8     Federal:        Services
Services Block  families and                    Office of       provided at the
Grant/Title XX  individuals in  Long-term       Human           states'
of the          maintaining     care:           Development     discretion, may
Social          self-           (not            Services, HHS   include long-
Security Act    sufficiency     available)                      term care
                and                             State: State
                independence                    Social
                                                Services or
                                                Human
                                                Resources
                                                Agency; other
                                                state agencies
                                                may administer
                                                part of Title
                                                XX funds for
                                                certain
                                                groups; for
                                                example, State
                                                Agency on
                                                Aging
--------------------------------------------------------------------------------
\a Data represent total fiscal year 1993 obligations as reported in
the Budget of the United States Government, Appendix, Fiscal Year
1995, except for estimates of Medicare and Medicaid long-term care
spending.  These figures are estimates for 1993 from the Assistant
Secretary for Planning and Evaluation, HHS.  Under the Medicaid
program, states contributed an estimated $19.0 billion in support of
long-term care in addition to the federal share of $24.7 billion. 

Medicaid, a federal-state health program for people with certain low
income and limited assets, is the largest government payer for
long-term care services.  In 1993, federal and state Medicaid
spending accounted for a total of $43.7 billion in long-term care
expenditures with $36.3 billion for institutional care and $7.4
billion for home and community-based services.\6

Medicare, a federal health insurance program for those age 65 and
older and certain persons with disabilities, is the second largest
government payer of long-term care costs.\7

In 1993, Medicare accounted for an estimated $15.8 billion in
long-term care expenditures, with $5.7 billion for institutional care
and $10.1 billion for home health services.\8


--------------------
\5 A Guide to Federal Programs for People With Disabilities, National
Academy for State Health Policy (Portland, Me.:  Dec.  1994). 

\6 Estimates from the Office of the Assistant Secretary for Planning
and Evaluation, Office of Disability, Aging, and Long-Term Care
Policy, March 1994. 

\7 Medicare Part A Home Health Services include post-hospital
services and long-term care services for persons with qualifying
chronic conditions.  Medicare Part A Skilled Nursing Facility
Services are post-hospital services but have often been counted as
long-term care because they are provided primarily by nursing homes,
traditional long-term care providers. 

\8 Estimates from the Office of the Assistant Secretary for Planning
and Evaluation, Office of Disability, Aging, and Long-Term Care
Policy, March 1994. 


      PRIVATE LONG-TERM CARE
      BURDEN IS ALSO SUBSTANTIAL
---------------------------------------------------------- Letter :4.2

The remainder of long-term care costs--both dollars spent and in-kind
services--is borne privately, mostly by families and individuals. 
Despite the high cost of long-term care, most long-term care services
are provided on an unpaid basis.  In 1993, an estimated $38.7
billion, or nearly 36 percent of all long-term care expenditures, was
paid privately, mostly as out-of-pocket expenditures by families and
individuals for nursing home and home care.  Much of the nonfinancial
burden of long-term caregiving falls on families and individuals as
well, often on women and--increasingly--on family members who are
employed.  Currently, about 2 million working Americans provide
significant levels of unpaid care to elderly relatives living in the
community who need assistance with everyday activities. 

In response to the needs of employees who care for elderly relatives,
some private companies and public-sector employers provide
assistance--known as "elder care"--to help resolve conflicts between
work and caregiving.  Among other things, this assistance may include
providing information about long-term care services and aging or
allowing flexible work schedules to accommodate employees' family
responsibilities.  In a recent survey of private companies, we found
that at least 23 million Americans work for medium and large
companies that offer at least one flexible schedule option.\9 In
another recent study, we found that the federal government, state
governments, and city governments with the largest work forces offer
flexible schedule options and elder care information.\10


--------------------
\9 Long-Term Care:  Private Sector Elder Care Could Yield Multiple
Benefits (GAO/HEHS-94-60, Jan.  31, 1994). 

\10 Long-Term Care:  Support for Elder Care Could Benefit the
Government Workplace and the Elderly (GAO/HEHS-94-64, Mar.  4, 1994). 


      PRIVATE INSURANCE FOR FUTURE
      LONG-TERM CARE COSTS HOLDS
      POTENTIAL
---------------------------------------------------------- Letter :4.3

Only a small share of long-term care costs--0.2 percent--is currently
paid for by private long-term care insurance.  (See fig.  3.)
However, long-term care insurance may play a larger role in the
future.  In response to a 1994 GAO survey, directors of state
Medicaid agencies and state agencies on aging most often cited
long-term care insurance as one private-sector approach whose
increased use they believed could be effective in reducing government
spending.\11 The insurance industry has approached this market with
caution, though, concerned that only those more likely to need care
would purchase insurance.  Insurance companies must compete in this
complex and evolving market with limited experience in estimating the
number of policyholders who will claim benefits. 

Long-term care insurance can help people defray the considerable
costs of long-term care.  Further, the general quality of policies
and the standards that govern them have improved significantly since
the first generation of policies sold in the 1980s.  Yet, some
problems remain that consumers should be aware of to help ensure that
they purchase policies that meet their needs.  In particular, states
and insurance companies have adopted to varying degrees minimum
standards for long-term care insurance suggested by the National
Association of Insurance Commissioners (NAIC).\12 These standards
include such key consumer protection features as inflation protection
against the increasing costs of long-term care and disclosure
standards that protect consumers from unfair or deceptive marketing
practices.  Analysts of long-term care policies continue to emphasize
that potential purchasers of long-term care insurance should
carefully examine and compare policies, considering the differences
among policies in premium costs, benefits, definitions, and
eligibility requirements.\13

The continued upward spiral of public and private long-term care
costs has renewed interest in private long-term care insurance.  Some
people purchase such insurance to protect their assets against
possible future long-term care expenses.  Other people purchase it
because they are uncertain about the quality and availability of
long-term care funded by Medicaid.  However, whether long-term care
insurance will play a greater role in financing long-term care costs
depends greatly on the extent to which people consider such insurance
a viable and attractive option relative to their needs. 


--------------------
\11 Long-Term Care Reform:  States' Views on Key Elements of
Well-Designed Programs for the Elderly. 

\12 Legislation introduced in the 104th Congress, including the
Private Long-Term Care Family Protection Act of 1995, promotes
national standards for long-term care insurance based on standards
developed by NAIC. 

\13 GAO's 1991 review of long-term care policies found that they
often did not meet existing NAIC standards and contained inconsistent
and vague policy terms, definitions, and eligibility requirements. 
We also found that policies that offered similar benefits could
differ substantially in price.  Long-Term Care Insurance:  Risks to
Consumers Should Be Reduced (GAO/HRD-92-14, Dec.  26, 1991). 


      INSTITUTIONAL BIAS STILL
      DRIVES LONG-TERM CARE
      SPENDING, BUT MEDICARE HOME
      HEALTH NOW INCREASING
      RAPIDLY
---------------------------------------------------------- Letter :4.4

Despite people's preference for home and community-based services,
long-term care dollars are overwhelmingly spent on institutional
care.  In 1993, total public and private expenditures were an
estimated $75.2 billion for institutional care and $32.6 billion for
home and community-based care.  Overall, about 70 percent of all
public and private long-term care dollars are currently spent for
institutional care. 

In recent years, long-term care spending in both the Medicaid and
Medicare programs has grown dramatically.  Long-term care spending
under Medicaid grew at an average rate of 13.2 percent per year from
fiscal years 1989 to 1993, with expenditures for home and
community-based services growing faster than expenditures for persons
in institutions.\14 And Medicare long-term care spending has been
growing at a rate of 33.8 percent per year during the same period,
although it represents a smaller share of total public long-term care
spending than Medicaid.\15 (See fig.  4.)

   Figure 4:  Medicaid and
   Medicare Long-Term Care
   Expenditures, Fiscal Years
   1989-1993

   (See figure in printed
   edition.)

Note:  Medicare Part A Home Health Services include post-hospital
services and long-term care services for persons with qualifying
chronic conditions.  Medicare Part A Skilled Nursing Facility
Services are post-hospital services but have often been counted as
long-term care because they are provided primarily by nursing homes,
traditional long-term care providers. 

Sources:  Medicare Expenditure Data from 1994 Green Book, Overview of
Entitlement Programs.  Medicaid Expenditure Data from Systemetrics
(MEDSTAT, using data from HCFA-64). 

Medicaid long-term care spending, while growing less rapidly than
Medicare's, is still increasing at about twice the rate of inflation. 
Interest in controlling this growth and aligning services more with
citizens' preferences has led states to experiment more with
innovative approaches to long-term care delivery.  Certain states are
increasingly emphasizing home and community-based services and
constraining costly institutional care as they seek more efficient or
cost-effective ways to organize and prioritize services. 

Growing especially quickly are Medicare home health care
expenditures, which have grown from $2.3 billion in 1989 to $9.5
billion in 1993 and are estimated to increase to $15.1 billion in
1995.\16 Part of this growth is attributed to a 1989 revision of the
Medicare home health coverage guidelines in response to
litigation.\17 The development of complex medical technologies that
can be provided in the home, the implementation of Medicare hospital
prospective payment in 1984, and the aging of the population have
also contributed to this growth. 


--------------------
\14 Systemetrics (MEDSTAT, using data from HCFA-64). 

\15 1994 Green Book, Overview of Entitlement Programs, Committee on
Ways and Means, U.S.  House of Representatives (Washington, D.C.,
July 15, 1994). 

\16 1994 Green Book, Overview of Entitlement Programs. 

\17 Interim Analysis of Payment Reform for Home Health Services,
Prospective Payment Assessment Commission, Congressional Report
C-94-02 (Mar.  1, 1994). 


   STATES AND OTHER COUNTRIES ARE
   EXPERIMENTING WITH COST-CONTROL
   STRATEGIES, BUT IMPACT YET TO
   BE DETERMINED
------------------------------------------------------------ Letter :5

In the United States and some other countries, concerns about costs
are a key factor driving changes in long-term care financing and
service delivery.  The attempted substitution of home and
community-based services for institutional care is the most visible
response to cost concerns.  Other cost-control strategies include
limits on nursing home beds, "capping" budgets, controls on provider
fees, and case management.  States are taking the lead in this shift,
hoping to contain costs while responding to the desire of disabled
people to avoid institutionalization.  Other countries faced with
high and rising public demand and costs for long-term care are
pursuing similar strategies.  Whether increased reliance on home and
community-based services and limitations on institutional care will
reduce the rate of spending growth, however, is not yet clear. 
Experimentation in controlling costs and using different long-term
care service delivery models will likely continue. 


      STATES ARE TRYING BUDGET
      CAPS AND MORE RELIANCE ON
      HOME AND COMMUNITY-BASED
      SERVICES BUT COST IMPACT OF
      CHANGES UNCLEAR
---------------------------------------------------------- Letter :5.1

The emerging models of long-term care service delivery now being
developed emphasize (1) greater reliance on home and community-based
services, (2) consolidation and decentralization of administrative
responsibility for long-term care, and (3) stronger limits on the
supply of institutional care.  Together, these changes constitute a
paradigm shift that emphasizes different models of home care, rather
than care provided in an institution.  Many of these models aim to
incorporate individualized planning to provide services that consider
a person's specific needs, preferences, and availability of community
supports, including informal, unpaid caregiving rather than a
standard package of services.  In so doing, the models reflect the
desire of many disabled people to be as independent as possible in
their homes and communities. 

While the bulk of public long-term care funding is from federal
sources, state governments have taken the lead in developing and
administering public long-term care programs.  Some of the state
innovations were pioneered under the Medicaid waiver program.\18
Since 1981, states have had the option of applying for Medicaid
waivers to fund home and community-based services for people who meet
Medicaid eligibility requirements and would otherwise require
expensive institutional care.  All states now provide some home and
community-based services in their Medicaid programs, primarily to
elderly persons and persons with physical disabilities. 

In 1994, we reported on the experience of three states with
long-standing Medicaid waiver programs--Oregon, Washington, and
Wisconsin.\19 Although these states used various strategies to
control program growth, all three placed additional restrictions
beyond federal limits on program size, prompted in part by state
budget limitations.  These restrictions involve financial eligibility
criteria; functional eligibility criteria; and a variety of program
management techniques.  These techniques include (1) controls on
provider fees, (2) capped individual service budgets, (3) case
management, and (4) limits on new nursing home beds.  Some states
also set up a consolidated administrative authority within the state
over both institutional and community-based services to help shift
individuals from institutional care and to home and community-based
care.  State officials singled out case management as especially
useful in controlling costs by authorizing and monitoring services
and by ensuring that beneficiaries receive the support services that
they need to stay out of institutions.  State Medicaid directors as
well as directors of state agencies on aging surveyed by us also
cited case management as an important technique for cost control. 

As a result of the shift from institutional care to home and
community-based care, the states we studied--Oregon, Washington, and
Wisconsin--have been able to provide services to more people with
available funds.  (See fig.  5.) In addition, the states have
accommodated all or most of the growth in their long-term care
programs in home and community-based care.  Some state officials
believe that their ability to provide home and community-based care
through state-funded and Medicaid waiver programs has allowed their
states to successfully contain growth in overall state long-term care
spending.  In these states, the combined number of nursing facility
beds declined 1.3 percent between 1982 and 1992 while the total
number of nursing facility beds operated in the United States in the
same period increased by 20.5 percent.  Controls on program growth,
however, have at times resulted in waiting lists for some programs,
particularly the state-funded ones. 

   Figure 5:  Aged and Physically
   Disabled Users of Nursing
   Facility and Home and
   Community-Based Care in Oregon
   and Washington, 1983 and 1993

   (See figure in printed
   edition.)

Note:  Wisconsin is not included in the figure because comparable
data were not available. 

Sources:  Senior and Disabled Services Division, Oregon Department of
Human Resources; and Aging and Adult Services Administration,
Washington Department of Social and Health Services. 

Accordingly, the success of the new service delivery models in
containing costs nationwide is not yet clear.  The passage of
Medicaid waivers was based in part on the theory that providing
certain nonmedical services (such as housekeeping, personal care, and
adult day care) in the home or community could delay or eliminate
institutionalization.  Research has shown that while home and
community-based programs were less costly on a per person basis, they
generally raised total long-term care costs.  Limited reductions in
institutional use were more than offset by increased demand for home
and community-based care--often referred to as "the woodwork effect."
However, states are no longer relying on the availability of home and
community-based services to reduce demand for nursing home care. 
Rather, savings are expected to result from restricting the numbers
of nursing home beds, thereby preventing additional nursing home use. 


--------------------
\18 The changes made by the Omnibus Budget Reconciliation Act of 1981
(P.L.  97-35) authorize the Secretary of HHS through HCFA, the
federal agency in charge of Medicaid, to approve exceptions or
waivers to Medicaid program rules.  These waivers allow the states to
offer packages of services, including nonmedical services, that may
not be covered by the states' regular Medicaid programs.  Moreover,
the states may choose to provide specific services only to defined
groups, instead of to all eligible beneficiaries, as would be
required under Medicaid absent a waiver. 

\19 Medicaid Long-Term Care:  Successful State Efforts to Expand Home
Services While Limiting Costs (GAO/HEHS-94-167, Aug.  11, 1994). 


      OTHER COUNTRIES ALSO
      IMPLEMENTING LONG-TERM CARE
      COST-CONTROL STRATEGIES, BUT
      IMPACT NOT YET KNOWN
---------------------------------------------------------- Letter :5.2

In 1994, we reported that some other countries--Germany, Sweden, the
United Kingdom, and several Canadian provinces --are establishing
similar initiatives to contain long-term care costs, though it is too
early to tell what effect the changes will have.\20 (See table 4.)
While their health care systems differ significantly from ours, they
face similar pressures associated with aging populations and rising
government spending for long-term care.  To contain spending growth,
these countries are applying global or capped budgets to long-term
care expenditures and have strengthened other controls, such as cost
sharing, fee negotiation and rate setting, and management of nursing
home bed supply.  For example, Germany is in the process of
developing a budget expressly for long-term care spending, while
certain Canadian provinces, the United Kingdom, and Sweden have
recently given local governments fixed budgets to fund nursing home
care or home and community-based services. 



                           Table 4
           
            Key Long-Term Care Reform, by Country

Country       Reform
------------  ----------------------------------------------
Canada        1978 to present: Most provinces, using
              incremental reforms, have developed long-term
              care as a universal benefit program.

Germany       1995-96: Reforms will make long-term care
              services standard benefits to be provided
              through national health insurance.

Sweden        1992 Adel Reform: The legislation shifts
              resources and taxing authority to
              municipalities, making them fully responsible
              for administering long-term care services.

United        1990 Community Care Act: Implemented in 1993,
Kingdom       the act grants local authorities strict global
              budgets for long-term care services.
------------------------------------------------------------
The United Kingdom, Sweden, and certain Canadian provinces' reforms
have sought to simplify access to care and target public resources
more efficiently by consolidating the administration of services into
single agencies and locating these agencies within local governments. 
As a result, an individual can obtain initial access to services at a
single local public agency.  Agencies in other countries are also
increasingly relying on case management to assess needs, coordinate
health and social services' components of care, and allocate
resources.  Last, to encourage informal caregiving, several countries
are providing various financial incentives, such as cash payments and
credits toward public pensions for caregivers. 


--------------------
\20 Long-Term Care:  Other Countries Tighten Budgets While Seeking
Better Access (GAO/HEHS-94-154, Aug.  30, 1994). 


   DEMAND FOR LONG-TERM CARE
   EXPECTED TO INCREASE
------------------------------------------------------------ Letter :6

The number of Americans needing long-term care will continue to grow,
but predicting the magnitude and composition of that growth is
complicated by several factors.  Experts agree that population aging
will increase the number of disabled elderly needing long-term care
in the next several decades, but no consensus exists on the size of
that increase.  In addition, estimates of future long-term care need
among the nonelderly disabled are difficult to project.  Several
factors, such as medical advances or changes in death rates, could
increase or decrease need among elderly and nonelderly persons alike. 
Finally, the availability of informal, unpaid caregivers and
workplace policies will also affect future demand for public
long-term care services. 


      NUMBER OF PEOPLE NEEDING
      LONG-TERM CARE WILL
      INCREASE, BUT EXTENT OF SIZE
      IS UNCERTAIN
---------------------------------------------------------- Letter :6.1

Because long-term care need increases with age, especially after age
85, we can expect significant demand for long-term care well into the
next century as the baby boom generation ages.  (See fig.  6.)
Current predictions of the numbers of disabled elderly vary widely,
with predictions at the upper end of the range estimating that the
number of elderly needing long-term care may as much as double in the
next 25 years.  Some researchers argue that medical advances that
yield longer life expectancies may actually increase long-term care
need as more people live longer and develop age-related disabilities,
such as Alzheimer's disease, or live longer with disabilities they
already have.  Other researchers maintain that better treatments for
common problems among the elderly, such as strokes and heart disease,
or the prevention of disabilities could mitigate long-term care need. 

   Figure 6:  Population Aging
   Will Increase Long-Term Care
   Need

   (See figure in printed
   edition.)

Source:  These projections are from K.  Manton, "Epidemiological,
Demographic, and Social Correlates of Disability among the Elderly,"
The Milbank Quarterly, Vol.  67 (1989), tables 1, 3,
and 4. 

Even more controversial are estimates of the future numbers of
nonelderly disabled people who will need long-term care.  Less
information is available on which to base predictions about
disability among the nonelderly, and small changes in how frequently
certain disabling conditions, such as cerebral palsy, occur among the
nonelderly can significantly affect the numbers needing long-term
care.  But most researchers believe that the increase in recent years
in the nonelderly disabled population is likely to continue. 


      DEMAND FOR PUBLICLY FUNDED
      LONG-TERM CARE SUBJECT TO
      SEVERAL FACTORS
---------------------------------------------------------- Letter :6.2

While limitations in the ability to function independently affect a
person's need for long-term care, the demand for publicly funded
long-term care services is influenced by several other factors.  For
example, some people with severe disabilities may not want assistance
from others.  Among those who want assistance, many people receive
most of their care for free from family or friends and may prefer
this kind of care to a public program.  Some people may be able to
afford private long-term care insurance or services.  Also, community
resources, such as public transportation, can make it easier for a
person with a disability to function without help from others. 

The availability of informal, unpaid caregivers will also affect
future demand for public long-term care services.  Greater geographic
dispersion of families, smaller family sizes, and the large
percentage of women who work outside the home may continue to strain
the capacity of informal caregiving.  In the short term, large
numbers of potential caregivers in the baby boom generation may ease
the strain.  But as baby boomers grow old, they may have fewer family
members to care for them. 

The capacity of families to provide care in the future may also be
influenced by workplace policies.  Workplace support for informal
caregiving, for example, through elder care policies, could help
employed caregivers in providing unpaid care.  However, growth in
elder care options among private companies is unclear.  Many
companies have concerns about the perceived costs of offering elder
care assistance as well as about maintaining equitable benefits for
employees who do not have elder care responsibilities.  In the public
sector, the federal government, as well as some state and city
governments, plan to make additional support available to their
employees or to expand availability of existing elder care programs. 
Many of these employers, however, are uncertain of their future
plans. 


---------------------------------------------------------- Letter :6.3

Because our work was a summary of previous GAO reports, we did not
obtain agency comments. 

As arranged with your office, unless you publicly announce the
contents of this report earlier, we plan no further distribution
until 30 days after its issue date.  At that time, we will send
copies of this report to other congressional committees and members
with an interest in this matter; the Secretary of Health and Human
Services; the Assistant Secretary for Aging; the Administrator,
Health Care Financing Administration; the Assistant Secretary for
Planning and Evaluation; and others upon request. 

This work was done under the direction of Cynthia A.  Bascetta,
Assistant Director.  If you or your staff have any questions about
this report, please call me on (202) 512-7215 or Cynthia Bascetta on
(202) 512-7207.  Other major contributors are listed in appendix II. 

Sincerely yours,

Jane L.  Ross
Director, Income Security Issues


SELECTED GAO PRODUCTS ON LONG-TERM
CARE
=========================================================== Appendix I

Aging Issues:  Related GAO Reports and Activities in Fiscal Year 1994
(GAO/HEHS-95-44, Dec.  29, 1994).  This report compiles GAO's fiscal
year 1994 products and ongoing work on older Americans and their
families.  Because the elderly are one of the fastest growing
segments of today's society, the Congress faces a host of
issues--ranging from demographic changes in the structure and role of
the family to financing and providing health care, Social Security,
and pensions--in which the federal government will play an important
role.  This report summarizes 30 issued reports on policies and
programs directed mainly at older Americans.  Included are reviews of
health, income security, social services, and other topics.  We also
summarize 59 reports in which older Americans were one of several
groups targeted by federal policies.  For example, Medicaid finances
nursing homes and other types of long-term care, along with medical
care for poor persons of all ages.  In addition, this report
describes testimonies delivered in fiscal year 1994 on subjects
affecting older Americans and lists 55 ongoing GAO jobs on older
Americans. 

Long-Term Care:  Diverse, Growing Population Includes Millions of
Americans of All Ages (GAO/HEHS-95-26, Nov.  7, 1994).  Contrary to
popular perception, not all Americans needing long-term care are
elderly or institutionalized.  Of the 12 million Americans requiring
such care, 5 million are working-age adults and about half a million
are children; the vast majority--10 million--live at home or in
community residential facilities.  The long-term care needs of this
population vary considerably, from around-the-clock nursing care to
occasional assistance with household chores, such as cooking and
housecleaning.  The aging of the baby boom generation means that
long-term care needs will increase well into the next century, as
much as doubling among the elderly population in the next 25 years. 
Meaningful projections of the nation's future long-term care needs,
however, are clouded by uncertainty about whether baby boomers will
live longer, healthier lives than preceding generations and by a lack
of reliable estimates on the future size of the nonelderly disabled
population.  Further, researchers believe that the number of younger
disabled has grown in recent decades and will continue to do so, in
part as a result of changing medical technology and other factors
that may allow more low birth weight infants to reach childhood, for
example, or more young adults to survive disabling accidents.  The
diverse ages, needs, and conditions of the long-term care population
mean that greater flexibility is needed in the design and
administration of programs to match the range of individual needs. 

Long-Term Care Reform:  States' Views on Key Elements of
Well-Designed Programs for the Elderly (GAO/HEHS-94-227, Sept.  6,
1994).  The state agencies agree widely on the key components of
well-designed programs for the elderly.  State agencies believe that
an elderly person's ability to perform activities of daily living is
the best way to identify persons with the greatest need for services,
although states do not uniformly define such activities.  To
determine service needs, state agencies generally agree that
case/care management, a standard assessment instrument, and
involvement of the elderly person in the process are most useful. 
State agencies report that the largest number of severely disabled
elderly persons need nonmedical services, such as personal care. 
State agencies agree that a variety of cost control methods are
effective, although less consensus exists about which specific
methods work best.  Regarding the private-sector role in long-term
care, state agencies believe that the private-sector role could
probably reduce government costs, and government interventions might
spur private-sector activity. 

Long-Term Care:  Other Countries Tighten Budgets While Seeking Better
Access (GAO/HEHS-94-154, Aug.  30, 1994).  In the United States, the
number of people age 65 and older will exceed 20 percent of the total
population by the year 2030, up from 12.5 percent in 1990.  Public
and private spending for long-term care has risen dramatically during
the past decade--
exceeding $100 billion in fiscal year 1993--and is projected to
continue this upward trend.  At the same time, considerable consumer
dissatisfaction exists with the cost of and access to this care.  To
varying degrees, other countries also face aging populations, cost
pressures, and service delivery problems.  This report reviews the
provision of long-term care in Canada, Germany, Sweden, and the
United Kingdom.  It examines (1) the financing and cost-containment
measures these countries use to control public spending for long-term
care and (2) administrative and delivery approaches the countries use
to expand the range of and access to services. 

Medicaid Long-Term Care:  Successful State Efforts to Expand Home
Services While Limiting Costs (GAO/HEHS-94-167, Aug.  11, 1994). 
Because nearly one-third of the nation's Medicaid expenditures are
now spent on long-term care ($42 billion in 1993), we were asked to
review the experience of states in expanding government-funded home
and community-based services.  Our review focused on Oregon,
Washington, and Wisconsin.  These three states have expanded home and
community-based long-term care in part as a strategy to help control
rapidly increasing Medicaid expenditures for institutional care.  As
they expanded home and community-based care, the three states
restricted how large most of the programs could grow.  Some
restrictions were mandated by the federal government, which approves
capacity limits on programs operated under Medicaid waivers.  Other
restrictions result from constrained state budgets.  Despite these
deliberate limits on program size, one impact of the shift to home
and community-based care is that the three states have been able to
provide services to more people with the dollars available, primarily
because home and community-based care is less expensive per person
than institutional care. 

Long-Term Care:  The Need for Geriatric Assessment in Publicly Funded
Home and Community-Based Programs (GAO/T-PEMD-94-20, Apr.  14, 1994). 
Because of advances in medicine and public health, Americans are
living longer than ever before.  Nearly 1 in every 8 Americans was 65
years of age or older in 1990; by 2020, this ratio is expected to
rise to 1 in 5.  To maintain their independence, many elderly people
need daily help with routine activities, such as bathing, dressing,
shopping, and meal preparation.  Home and community-based long-term
care for the elderly is today financed and run through a host of
federal and state programs.  This fragmentation can result in elderly
persons being reevaluated every time they apply for a new program or
pass a particular milestone, such as being discharged from a
hospital.  Despite this potential for redundancy, geriatric
assessment is a potentially useful part of any program with frail
elderly clients seeking home and community-based long-term care. 
This testimony discusses (1) what geriatric evaluation is and how it
is used, (2) the extent to which it is available in public programs,
(3) the professional requirements for persons who administer it, and
(4) the pros and cons of standardizing the evaluation process. 

Long-Term Care Reform:  Program Eligibility, States' Service
Capacity, and Federal Role in Reform Need More Consideration
(GAO/T-HEHS-94-144, Apr.  14, 1994).  Passage of any long-term care
reform legislation is merely the first step in a long journey toward
meeting the nation's long-term care needs.  Knowledge about
determining long-term care needs and services, derived largely from
the experience of innovative states, suggests that state flexibility
is the best way to meet the diverse needs of individuals and
communities.  This flexibility requires a new, different federal
role, largely one of partnership with the states in the design and
management of programs.  The administration's proposal would give
states $38 billion in federal funding each year for a new
federal-state program of home and community-based services to be
phased in from 1996 to 2003.  States will be given wide latitude to
design and run programs to serve persons of all income ranges.  The
proposal would also liberalize Medicaid nursing home eligibility,
provide tax credits to defray the costs of personal assistance for
working persons with disabilities, and encourage and regulate private
long-term care insurance.  If the administration's proposal is to be
the blueprint for long-term care reform, the new federal role should
be defined more clearly.  More thought should also be given to
developing state guidance on determining eligibility and to helping
states with less capacity to use program funds wisely. 

Long-Term Care:  Demography, Dollars, and Dissatisfaction Drive
Reform (GAO/T-HEHS, 94-140, Apr.  12, 1994).  The long-term care
system has evolved in a patchwork fashion and today comprises
multiple programs that individuals find hard to access.  Despite
millions of dollars in outlays, the system often fails to meet the
diverse needs of the disabled, and many believe that access to
services could be improved with the same level of funding.  This
testimony focuses on three trends underlying the quest for reform. 
First, demographic changes make rising demand for long-term care
inevitable across all ages, not just for the elderly.  Second,
spending will escalate sharply across all ages, not just for the
elderly.  Third, despite high costs, disabled persons are
increasingly unhappy with available services and their ability to
obtain them. 

Long-Term Care:  Support for Elder Care Could Benefit the Government
Workplace and the Elderly (GAO/HEHS-94-64, Mar.  4, 1994).  Today,
about six million older Americans living at home need help with
day-to-day activities, such as eating, bathing, shopping, and
housecleaning.  Most disabled elderly get all their care informally,
from family members and friends, mainly women.  Greater geographic
dispersion of families, small families, and more women working
outside the home are straining the ability of informal caregiving. 
Some private- and public-sector employers are now providing
assistance known as "elder care" to alleviate work and caregiving
conflicts.  This assistance may include leave policies, alternative
work schedules, and referral services to help employees care for
their elderly relatives.  Little is known nationwide about the extent
and content of elder care generally--and even less is known about
elder care in government, which employs 18 million people or 15
percent of the workforce.  This report evaluates (1) the extent and
nature of government practices facilitating elder care; (2) planned
changes in these practices; and (3) their potential to further
support informal caregivers. 

Long-Term Care:  Private Sector Elder Care Could Yield Multiple
Benefits (GAO/HEHS-94-60, Jan.  31, 1994).  Today, about 6 million
older Americans need help living at home because of their
disabilities.  The demand for this kind of assistance is expected to
increase significantly in the future, with upwards of 10 million
persons needing help by 2020.  Most disabled elderly receive this
care from family members and friends, primarily women.  Yet greater
geographic dispersion of families, smaller family size, and the large
number of women who work outside the home are straining the ability
of caregivers.  Some companies are responding to the needs of their
workers with policies and programs, known as "elder care," to help
ease work and caregiving conflicts.  This report evaluates (1) the
extent and nature of company practices now offered to help employees
who look after the elderly, (2) planned changes in these practices,
and (3) the potential of company practices to further support
informal caregivers. 

Health Care Reform:  Supplemental and Long-Term Care Insurance
(GAO/T-HRD-94-58, Nov.  9, 1993).  Provisions of the Clinton
administration's Health Security Act that deal with private long-term
care insurance and supplemental health insurance address many of the
problems that we have pointed out in the past.  The act has detailed
sections governing the content and marketing of such insurance,
including disclosure standards that protect consumers from deceptive
marketing practices, grievance procedures that allow policyholders to
contest insurance company decisions, and sales commission standards
that discourage questionable sales practices.  In general, we believe
that the administration's proposal contains the kinds of consumer
protections that we have long advocated.  Some problems, however, are
not addressed.  Specifically, the act will not protect consumers from
the sale of duplicate policies or high-pressure sales techniques.  It
also does not address other kinds of supplemental insurance that
cover specific diseases or conditions requiring hospitalization. 
Because of their limited, narrow coverage, such insurance may be
unnecessary for many consumers. 

Long-Term Care Insurance:  High Percentage of Policyholders Drop
Policies (GAO/HRD-93-129, Aug.  25, 1993).  From 1988 until the early
1990s, sales of long-term care insurance grew at about 32 percent
annually.  Although greater consumer protections are built into the
long-term care policies being sold today, many Members of Congress
are concerned about continuing abuses in this area and the need for
more protections.  This report provides information on (1) the
percentage of policyholders that are expected to allow their policies
to lapse and (2) the percentage of policyholders' premiums that are
paid as sales commissions.  It also discusses the adoption of
consumer protection standards, such as benefits that provide a return
of a portion of premiums paid on long-term care insurance policies
that are terminated. 

Medicaid Estate Planning (GAO/HRD-93-29R, July 20, 1993).  Pursuant
to congressional requests, we determined the (1) prevalence of
Medicaid estate planning for becoming Medicaid-eligible, (2) value of
assets sheltered through Medicaid estate planning, and (3) extent to
which states are enforcing Medicaid requirements concerning Medicaid
estate planning.  We found that (1) half of the Medicaid applicants
converted assets from one form to another or transferred assets to
another party, (2) asset conversions averaged $5,600 and typically
involved setting aside money for burial arrangements, (3) other types
of conversions included home repairs and automobile purchases, (4)
asset transfers were far less frequent but involved larger amounts of
money, and (5) half of the applicants that transferred assets were
denied eligibility. 

Long-Term Care Forum:  Rethinking Service Delivery, Accountability,
and Cost Control (GAO/HRD-93-1SP, July 13, 1993).  Public
dissatisfaction with the long-term care system is mounting. 
Long-term care is seen widely as both expensive and failing to meet
the needs of the disabled of all ages.  In particular, many people
take issue with long-term care's bias in favor of institutional
rather than home- and community-based services.  This discussion
paper was prepared for a GAO forum on long-term care issues.  The
views presented, although not necessarily the official position of
GAO, are an attempt to pull together a wide variety of evidence and
expert opinion on the key issues in long-term care reform.  The paper
touches on the key elements of innovative long-term care programs in
the United States and abroad that have developed a wider range of
home- and community-based services for the elderly as well as younger
disabled persons.  These key elements include (1) service flexibility
to meet the unique needs of individuals, (2) high standards of
organizational accountability to taxpayers for money spent and the
quality of services delivered, and (3) effective cost controls to
stay within the budgets decided upon by elected officials. 

Long-Term Care Case Management:  State Experiences and Implications
for Federal Policy (GAO/HRD-93-52, Apr.  6, 1993).  The number of
Americans age 65 and older is rising steadily and could exceed 52
million by 2020.  Older people require more health and social
services but are often confused about how to obtain them.  Case
management helps people define their service needs, locates and
arranges for services, and coordinates the services of multiple
providers.  The Congress has recently considered several bills
dealing with long-term care; some of this legislation has proposed
establishing a network of case managers to integrate long-term care
services and ensure that beneficiaries receive necessary care and
support.  This report discusses (1) what, in practice, constitutes
case management; what roles case managers play; and what barriers
they face in doing their jobs and (2) whether standards for case
managers would best be defined in terms of professional
qualifications, the functions of case management, or performance
measures based on the experience of state officials and outstanding
case managers. 

Long-Term Care:  Projected Needs of the Aging Baby Boom Generation
(GAO/HRD-91-86, June 14, 1991).  By virtue of its numbers, the baby
boom generation--about 76 million people born between 1946 and
1964--has already had a profound impact on the American education
system and, in more recent years, the workforce.  As the baby boom
generation ages, rapid growth in the number of elderly people who
need nursing home care or care at home will increase long-term care
resource requirements.  This report provides information on
projections of (1) the disabled elderly population and its use of
long-term care services, (2) the number of home health aides
required, (3) the costs of future long-term care services, and (4)
the base of taxpayers or employed workforce available to pay for the
elderly needing care. 


GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
========================================================== Appendix II

GAO CONTACTS

Cynthia Bascetta, Assistant Director, (202) 512-7207
Linda Baker
Connie Peebles

ACKNOWLEDGMENTS

The following staff also contributed to this report:  Eric Anderson,
George Bogart, Patricia Davis, Joel Hamilton, Richard Jensen, James
Musselwhite, and William Scanlon. 

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