The State of 21st Century LTSS: Financing and Systems Reform for Americans with Disabilities

By Carol Novak, Member

National Council on Disability
News Conference

December 15, 2005

Good morning. My name is Carol Novak. I am a Board Member of the National Council on Disability and the parent of a 29 year old son who lives in his own home with the assistance of Medicaid waiver long term supports and services. On behalf of NCD, I want to thank the NCB Development Corporation for graciously hosting this event today.

With me on the panel today are Michael Morris and Johnette Hartnette from the National Disability Institute which is a part of the NCB Development Corporation. Michael and Johnette, along with fellow researcher Donna Folkemer from the National Conference of State Legislatures, have produced a sterling piece of research on one of the most complex human policy issues facing this Nation - that issue is long-term services and supports (LTSS).

NCD is an independent federal agency making recommendations to the President and Congress on issues affecting 54 million Americans with disabilities. NCD is composed of 15 members appointed by the President and confirmed by the U.S. Senate. NCD is charged by Congress with monitoring federal statutes and programs pertaining to people with disabilities, and assessing the effectiveness of those programs in meeting the needs of people with disabilities. As part of its mission, NCD provides a voice in the Federal Government and to Congress for all people with disabilities in the development of policies and delivery of programs that affect their lives.

The last half of the 20th century will be remembered by Americans with disabilities for its legacy of public policy in civil rights, education and employment. However, public policy has fallen short in providing affordable non-medical services and supports needed by many Americans with disabilities to work and live in their communities.

Most Americans think of LTSS as long-term care for seniors with severe chronic disabilities who reside in nursing homes. This perception is a holdover from the 1960s when Medicaid and Medicare were first established and reflects a system of care that is outdated and no longer cost effective.

Even though the movement today is to provide services and supports in the home and community, almost 70 percent of Medicaid resources for LTSS still continues to support individuals in nursing facilities or state institutions.

Few Americans ever think of LTSS for individuals under the age of 65 with significant disabilities who
are living and working in the community. Many people do not realize that there is no LTSS
public policy for individuals of moderate to middle income whether over or under the age of 65.

Research shows that the incidence of disability is rising in the under age 65 population. And, while it has decreased slightly for seniors, it will begin to rise sharply as the current senior population of 34 million doubles over the next 20 years.

Research shows that between 9 and 12 million Americans need assistance with activities of daily living and that about 3.5 million of them are under 65 years of age. The literature also reports that 25 million people with chronic disabilities under age 65 are probably in need of some LTSS but are often not counted or deemed eligible because of income or family assets or because their disability can’t be evaluated by a traditional functional assessment.

Private insurance for long-term care that is now available is, on average, capped at a specific dollar amount, provides coverage for about 3 years, and is geared toward services and supports that cater to diseases of aging. But, almost 90 percent of Americans do not have long-term care insurance.

As the number of Americans requiring Long Term Services and Supports grows, the existing LTSS system can be viewed as a ship heading for an iceberg. Without a dramatic change of direction, disaster is inevitable.

Research Approach Used for This Report

NCD worked with the NCB Development Corporation and the National Conference of State Legislatures to conduct an exhaustive research agenda.

The research work was divided into five major goal areas. They are:

• Current federal experience;
• Future Market Demands and Gaps in Supply;
• Forecast and Design of a 21st Century Comprehensive Consumer Responsive System;
• Promising Practices and Challenges to Adoption of these Practices; and
• Policy Recommendations.

We used a broad definition of long-term service and supports that reflects people’s essential needs for maintaining a quality of life with maximum dignity and independence. Housing, transportation, nutrition, technology, personal assistance, and other social supports are included in the NCD definition of long-term services and supports.

We identified and reviewed selected activities in five (5) states that are leading to increased access to long term services and supports funded by federal and state dollars. Researchers profiled and analyzed current activities that are in different stages of development of comprehensive, person-centered service and support programs in Texas, Minnesota, Vermont, Indiana and Washington. Researchers also identified six (6) local and individual initiatives that are on the cutting edge of LTSS financing and systems reform. These are: Worker Cooperatives, Time Banks/Time Dollars, Together We Can and No Place Like Home affordable housing communities, the Self-Directed Support Corporation, the Pooled Trust, and the Child Trust Fund.

We reviewed and assessed LTSS-related reform proposals from six (6) influential organizations: the National Academy for State Health Policy, National Governors Association, National Academy of Social Insurance, Congressional Budget Office, ADAPT, and American Association for Retired Persons, and we also convened an Advisory Panel of Experts to ascertain their views regarding LTSS financing and systems reform.

This overall research was based on five assumptions.

• First, that people who are elderly and people with disabilities both desire and deserve choices when seeking assistance with daily living in order to maintain their self-determination, dignity and independence.
• Second, without significant reform, the current financing mechanisms, both public and private, will become unsustainable in the near future. LTSS must be affordable to all Americans regardless of income level and we must consider opportunities to leverage public and private support in new ways without impoverishing beneficiaries.
• Third, there is an opportunity with the changing demographic picture of the United States to explore the possibilities of a universal approach to the design and financing of supports that is responsive to individuals with disabilities both under and over the age of 65 without sacrificing individual choice and flexibility.
• Fourth, formal and informal care giving must be sustained; and family needs and workforce recruitment and retention challenges must be addressed.
• Fifth, the approach to quality must examine consumer direction and control of resources in addition to traditional external quality assurance mechanisms.

13 of NCD’s major Research Findings are: (say the number)

1. There is little political or public understanding of LTSS needs.

• 59% of Americans have given little or no thought at all to the issue of LTSS.

2. There is fragmentation of the Federal system of LTSS

• Depending on where you live, your age, your economic status, and the nature of your disability, you will face different options and levels of response to LTSS needs.
• There is no single federal program or federal agency charged with responsibility for management, funding, and oversight of LTSS.

3. This nation faces major challenges to its LTSS workforce

• LTSS workers who provide paid care are often without health insurance and other employee benefits and frequent turnover of staff occurs due to low wages and lack of benefits.

4. Policy makers are not asking the hard questions

• Most exercises in forecasting future visions for long-term service and support policy do not address the hard questions: What services should be guaranteed to individuals who are unable to provide for themselves? What protections from catastrophic loss should be afforded? And, most importantly, who will pay?

5. LTSS is not just for seniors

• Most LTSS data and definitions are based on people 65 and older. It’s impossible for policy makers and researchers to accurately calculate current and future costs without a clear consensus as to who is to be covered by a LTSS system and how eligibility will be calculated.

6. A growing senior population will need access to affordable LTSS

• Today, twenty percent of people 65 and over will require assistance with at least one ADL and 50% will require assistance by age 85. By 2045, people over age 65 who are in need of assistance with 2 ADLs will grow from 1.8 million to 3.8 million.

7. The incidence of Disability is rising for the younger population and the impact on future
LTSS costs is unclear

• Little data has forecast what this will mean for future LTSS costs and services.
  
• There is no aggregated data on the overall costs of LTSS using the NCD (or AARP) definition that includes transportation, nutrition, and housing.
• It is unclear what LTSS truly looks like for people under age 65 across disabilities who are working and living in the community.

8. There is little research on the disparities in LTSS needs and costs among diverse populations

• The issues of poverty, lack of insurance and continued segregation from an affordable and consistent health care system will increase the future needs and costs for LTSS for diverse populations in the U.S. who are projected to make up 50 percent of the American population by 2050.

9. The growth in Medicaid spending is unsustainable

• The ability of states to respond to current and future LTSS needs is beyond their capacity and resources if health care costs continue to rise at double-digit rates.

10. Private long term care insurance is not designed for people under 65 years of age

• Private long term care insurance targets individuals age 65 and older within specific disease categories. Over six million Americans own private long term care insurance and 50 percent of the claims paid are for Alzheimer’s and other forms of dementia.

11. In understanding future LTSS costs, the role of care giving and workforce issues is unclear

• 44 million American caregivers age 18 and over provide unpaid care to an adult age 18 or older. Six out of ten of these caregivers are employed while providing care, most are women age 50 or older.
  
• Paid direct care workers are in short supply. The turnover rate in nursing facilities is nearly 100%, while home care agencies have annual turnover rates between 40% and 60%.

12. There is no coordinated, comprehensive response to LTSS needs despite the diversity of challenges associated with varying types of disabilities

• The current system of response to individual LTSS needs is dependent on state specific differences in coverage, resource allocation and targeted populations. In addition, Medicaid LTSS provided to a person in one state does not transfer to another state if that person moves.
  
• Current costs are not a customized response to individual needs.

13. Americans with disabilities need to lead the LTSS policy discussion

• No proposals have provided a total picture of what LTSS costs for people with lifelong disabilities would look like, and no studies were found that provided viable funding alternatives for a new system.

[Recommendations for Incremental Reform ]

Based on our comprehensive research, NCD offers two sets of recommendations. The first set represents a more conventional set of strategies that would change the direction of the ship of LTSS gradually. The second set of recommendations changes the ship’s direction dramatically through a new millennium policy with multiple financing streams to sustain LTSS for Americans with disabilities across the lifespan regardless of where one lives or the level of personal resources and family support.

Both sets of recommendations identify specific agencies and committees within the Executive and Legislative branches of the Federal Government that would be responsible for additional research or for implementation.

9 Incremental Change Recommendations

• Increase policymaker knowledge and understanding of public and private costs and benefits of LTSS for people with disabilities under age 65 and their families.
• • Design and implement an action plan to monitor and oversee states’ activities to meet their ADA obligations as a result of the Olmstead Supreme Court decision.
• Decouple eligibility for Home and Community-Based Waiver Services from a determination of nursing home eligibility.
• Increase support for family members and others in their role as informal and unpaid caregivers for individuals with disabilities of all ages.
• Improve the supply, retention, and performance of direct support workers to meet increasing demand.
• Improve coordination and collaboration among Federal agencies to align public policy and transform infrastructure to be responsive to consumer needs and preferences for a comprehensive system of LTSS.
• Hold states accountable for rebalancing their system to increase home and community-based LTSS.
• Explore a possible relationship between a private LTSS insurance product and publicly financed LTSS.
• Improve consumer understanding, knowledge, and skills to develop a person-centered plan and self-direct an individual LTSS budget.

Recommendations for Charting a New Course

Ameriwell - The New Millennium LTSS Model

• AmeriWell is a prefunded, mandatory long-term services and support system that provides all Americans of any age with coverage from birth based on risk and function rather than category of disability. AmeriWell de-links LTSS from Medicaid and Medicare creating its own governing agency, regulations, oversight and Congressional committee.
• AmeriWell Part A provides LTSS coverage for all Americans of all ages. Premiums for Part A are paid by wage earners on a sliding scale, based on assessment of functioning and risk, into individual/family assigned accounts beginning at birth.
• AmeriWell Part B provides LTSS and ACUTE CARE for impoverished individuals of all
  ages who meet the function and risk eligibility criteria of AmeriWell Part A.
• AmeriWell Part B also provides health care and LTSS for individuals who were both Medicare and Medicaid eligible due to poverty and disability status.
• AmeriWell allows Medicaid to return to its original mission as a “safety-net” for low-
  income moms, children and persons under age 65. AmeriWell also provides a “buy-in”
  option for individuals with a disability who are working and do not have employer-
  sponsored insurance that meets their unique needs or who lose insurance coverage
  because of a lost job.

Conclusion

It is imperative that our nation transform its LTSS programs, financing, and policies to promote and protect individual dignity and independence within the context of supportive families and communities and to circumvent the impending storm created by our growing demographic and economic challenges.

This report documents the current crisis and the impending ‘perfect storm.’ It describes an extremely complex issue that, even though it will be difficult, MUST be transformed.

The analyses in this report provide the framework to identify, document, assess, and describe promising policy levers and policy changes that can facilitate the investment of key stakeholders in the transformation to a system of affordable and empowering long-term services and supports.

NCD believes that this study maps the course for long-term services and supports financing and systems reform for the 21st Century.