Long Term Care in the U.S.: From Community to Corporate Control

The U.S. Long Term Care System
Long term care for impaired younger and older adults has been a major part of the nation’s health care system for several decades, but until now it has not received much attention from the media or policymakers. With the projected doubling of the 70+ population over the next thirty years, however, it is being looked at with renewed interest.

The current publicly (mostly Medicaid) supported long term care (LTC) system is a mix of nursing home, assisted living and in-home supportive services. This mix is slowly but steadily shifting in the direction of community-based services. This shift is largely in response to the proven cost effectiveness of community based alternatives to nursing home care and the overwhelming preference of both older and younger impaired persons for them.

Most paid LTC services are funded by the Medicaid program and, to a much lesser extent, Federal Older Americans Act funds. In most states, these federal funds are administered through the non -profit Aging Network (AN), which consists of over 600 Area Agencies on Aging (AAAs), several thousand mostly non-profit service providers, and many advocates for aging services. As documented by AARP in recent reports¹, state and local Aging Networks have built an extensive infrastructure of community-based services over the last thirty years and administered them in a comparatively efficient, low-cost manner.

The Move to Managed Long Term Care
The relative cost effectiveness of AN has not, however, stopped states from seeking to convert their Medicaid-supported LTC system from non-profit Aging Network administered home and community based systems into managed LTC systems that are largely controlled by for-profit HMO organizations. This transition to HMO-run managed LTC systems is occurring in the absence of much, if any, evidence that these services can be provided as cost effectively by HMOs as they have been for several years through the Aging Network. In fact, four studies conducted in Florida since 2003², have found that the state’s HMO-administered community-based program was consistently less cost effective than the Aging Network run programs.

The move toward HMO-administered managed long term care (MLTC) programs has received a boost from the federal government through the recent Dual Eligible Demonstration Project, implemented in over fifteen states. Most of these projects are administered by HMOs under a merged Medicare/Medicaid capitation rate.

Does the future belong to HMO-administered MLTC? Is the AN on the cusp of becoming a LTC side show over the next decade? Has the MLTC train left the station? In some states the answers would appear to be yes. In these states the HMO infrastructure for MLTC is established and the AN has either become a limited player in community-based LTC or else it was never a major LTC player to begin with. In other states, where the AN is established, well-organized, and relatively sophisticated, the train is unlikely to arrive, or, if it does, it would not mean HMOs would displace and marginalize AN organizations (Oregon, Washington, and a few other states). In the remaining states, mixed models of LTC involving the AN and HMOs, are likely to emerge over the next decade (Massachusetts, Minnesota, and Ohio). These hybrid models might provide opportunities for extensive partnerships between HMOs and AN organizations, but only if the latter continue to receive sufficient support from policymakers.

Preserving the Aging Network Role in Long Term Care
I think it is important for several reasons that the AN role in LTC be preserved and even strengthened in the future. First, the older population is growing rapidly and the need for LTC services is projected to double over the next twenty years, heightening the need for efficient and low-cost administration of services. The AN has a 20-year history of managing LTC services with an administrative overhead of around 5% and minimal increases in reimbursement rates. It is highly doubtful that for-profit HMOs can match this record while meeting shareholder profit expectations. In order to avoid serious threats to the quality of services or access to care, HMO-administered LTC services could well end up costing substantially more than AN-run services, creating fiscal pressures that could lead to unmet needs and declining quality. Policymakers and the elderly could, in short, be caught between the escalating need for services, on the one hand, and cost increases that could seriously jeopardize the states’ capacity to meet a minimally acceptable levels of care, on the other.

A second reason for maintaining the role of the Aging Networks is the Network’s demonstrated ability to strengthen and maintain informal caregiving networks. Long term care’s labor intensive and, at its best, depends on close interaction between formal (paid) and informal (unpaid) care from family, friends, neighbors, and volunteers. The social capital (community trust and support) of non-profit organizations in the AN is essential for building and maintaining the formal-informal caregiving networks and for avoiding a potential crisis in caregiving as described by the President’s Council on Bioethics in 2005:

…The danger is that some old people will be abandoned or impoverished, with no one to care for them, no advocate to stand with them, and inadequate resources to provide for themselves.³

An increasing number of baby boomers will lack children or spouses to help provide care, which means that we as a nation are facing a major caregiver challenge. An AN-based LTC system deeply embedded in the community is what we need to meet this challenge. It could become an

essential part of a more comprehensive, community-based model guided by an “ethic of care” rather than the maximization of shareholder value. This kind of community-embedded and oriented care could provide a framework for integrating all domains of care from preventative and acute care services to LTC for the huge number of elderly who will need help over the next several years.

Why Managed Long Term Care Now?
Since the evidence indicates that the non-profit aging network organizations have long been a cost-effective provider of community-based care with the demonstrated capacity to administer an integrated LTC system, why have for-profit HMOs been enlisted to replace them in several states with the support of the Federal Center for Medicare and Medicaid Services (CMS). My co-author, Professor Baozhen Luo, and I are now completing a paper that addresses this question by suggesting that this innovation is a product of the public policy driven by the neoliberal political economy, which has been ascendant in the last several years.

The neoliberal political economy and policy agenda are based on several ideological assumptions about how the economy and government should work, individuals live, and communities function. Neoliberalism assumes the supremacy of the free market in determining the value of goods and services and the superiority of market incentives to maximize profits over collective efforts to achieve the common good. The neoliberal policy agenda prioritizes cuts in spending on public programs and privatizing what remains, cutting and virtually never raising taxes, removing as much public regulation as possible, and maximizing the scope of individual responsibility for every aspect of life from daycare and education to retirement security and long term care. This economic model denies the value of the public sector and its ability to create the conditions (including substantial government subsidies) necessary for economic growth.

What’s At Stake?
Long term care is one of the last remaining domains of the U.S. health care system not dominated by corporate health organizations. This situation, however, is rapidly changing, as HMOs have become convinced that they can profitably administer LTC programs created by the non-profit AN, and as the neoliberal policy agenda has gained traction at the Federal and state levels for over thirty years. I seriously doubt that the neoliberal corporate model will be able to achieve the same efficiencies and quality of care outcomes as has the AN in most states for over twenty-five years. If the AN has been allowed to wither away and the corporate model fails to contain costs or meet quality standards, the critical LTC challenge facing the U.S. will become dire, and, we will have little choice but to either pay the corporate piper anyway or allow the need for LTC services to go unmet.

In most states the AN organizations are essential and widely-supported elements of their local communities. They are well-positioned to serve as hubs for community based, integrated health and LTC systems. The displacement of these aging network by HMOs would, in my judgment, represent a lost opportunity for further developing such systems of community-based and person-centered systems of care. The AN is a civic asset whose benefits radiate throughout their local communities and contribute to the creation of strong communities with a sense of control over their own fates.

Even in those states that move toward comprehensive HMO-administered MLTC systems, AN organizations, including services providers, should be given the chance to evolve in a manner conducive to their survival and even to thrive in modified roles. This eventuality is unlikely, however, in the absence of a serious discussion about LTC policy at the federal and state levels and a renewal of aging advocacy activity.

References

1. Reinhard, S. C., et al. 2014, AARP, Raising Expectations, Second Edition.
2. Polivka, L. & Zayac, H. 2008, The Gerontologist, Forum, Vol. 48, No. 5, 564-572
The Florida Legislature, OPPAGA 2010, Report No. 10-33.
3. The President’s Council on Bioethics 2005, Taking Care: Ethical Caregiving in Our Aging Society, https://bioethicsarchive.georgetown.edu/pcbe/reports/taking_care/.