The Need for Long-Term Care Continues to Grow
In 2011, the oldest Baby Boomers (defined by those born between 1946 and 1964) began celebrating their 65th birthdays and each day through 2029, 10,000 more will cross that threshold nationwide. As this demographic trend plays out, there will be an increased demand for services providing care for the elderly. Pennsylvania now has 2.2 million citizens age 65 and older.
The state ranks 4th among all states in the percentage 65 and older and in the percentage age 85 and older. This older demographic is the group most in need of personal care, assisted living and services in a skilled nursing facility. By 2030, Pennsylvania’s 60 and older population is expected to be 29% of the population—approximately 4 million people. The number of Pennsylvanians age 85 and older is expected to exceed 400,000 residents in 2030. Trends in our aging demographic, their care needs and those of their caregivers, providers of long-term services and supports and the financing of this care are all essential to understand as we work to ensure access to high quality care continues.
Long-Term Care Statistics
- Most people will need some form of long-term services and supports in their lifetime, including assistance with daily activities such as bathing and dressing, because of a physical impairment or a cognitive impairment like Alzheimer’s disease.
- An estimated 70% of people currently turning 65 will require long-term care in their lifetime, and they will receive care for an average of 3 years.
- Eighteen percent of all seniors will require more than one year in a nursing facility.
- Most individuals and families cannot simply cover these costs and services with their income and assets.
- Annual spending on long-term care in the United States–excluding unpaid family caregiving–has reached nearly $275 billion. Who is paying?–47% is Medicaid, 23% is Medicare, 23% by Families out-of-pocket expenses, less than 4% by Veterans/State programs and less than 3% is private long-term care insurance.
- While the majority of long term services have been provided by Medicare and Medicaid, funding deficiencies at the State and Federal level have placed a focus on the importance of long term care insurance. The market for these insurance products has been rocky and remained small to date.
- The value of uncompensated care provided by family or friends is estimated at $450 billion annually.
Pennsylvania’s Nursing Homes
- Pennsylvania has approximately 700 nursing homes with more than 88,000 beds.
- Nursing homes, on average, are 91% occupied (over 80,000 residents).
- Nationally, the median annual cost for a private room in a nursing home is $92,378. The median annual cost for a private room in a Pennsylvania nursing home is $116,800. These median costs vary by region across Pennsylvania from approximately $69,500 to $135,000.
- Nationally, the median annual cost for a semi-private room in a nursing home is $82,125. The median annual cost for a private room in a Pennsylvania nursing home is $108,847. These median costs vary by region across Pennsylvania from approximately $84,000 to $128,000.
- In Pennsylvania, the typical nursing home resident is more likely to be female, over the age of 85, widowed and have some form of dementia, although the number of post-acute hospital short stay patients requiring intensive medical rehabilitation services is increasing.
Pennsylvania’s Assisted Living Residences and Personal Care Homes
- Pennsylvania has more than 1,200 licensed personal care homes serving approximately 46,500 residents. Assisted living residences and personal care homes were one and the same in Pennsylvania prior to 2011.
- In January 2011 the Pennsylvania Office of Long-Term Living began to license Assisted Living Residences (ALR). As of December 2015 there are only 35 licensed ALRs spanning 19 counties. They differ from personal care homes in several ways.
- The median cost of an assisted living residence or personal care home in Pennsylvania is $3,600 a month for a one-bedroom unit, translating to an annual cost of $43,200. This is below the national median cost of $43,539.
Medicare and Medicaid
- Medicaid is a joint state and federal program that pays for 66 percent of resident days of care in Pennsylvania’s nursing homes. Medicare, a federal program, pays for 13 percent of care.
- The Medicaid program is designed to help people with low income and virtually no assets pay for health care. Nineteen percent of nursing home residents were eligible for Medicaid benefits before entering a nursing home. Another 19 percent will exhaust their personal assets and become eligible for Medicaid during their first year in the nursing home and 4 percent more will become eligible after the first year.
- Medicaid reimbursement rates equate to approximately $8.25 per hour for care and services in nursing homes. According to a 2016 report by ELJAY, LLC for the American Health Care Association, the cost to nursing homes to care for Medicaid patients exceeded their actual Medicaid reimbursement by $25.43 per day in 2015. That means that the State now under funds nursing home care by an average of $9,000 per Medicaid resident per year.
- A 2014 study by Avalere Health reported profit margins for publicly traded SNFs were the lowest of any healthcare sector in 2012; hospital and managed care margins were more than double those of SNFs. Avalere’s analysis also found that total profit margins for freestanding SNFs in Pennsylvania decreased from 3.2 percent to 1.2 percent between FY 2007 and FY 2012. Those SNFs caring for the highest proportion of resident qualifying for Medicaid were operating at the lowest margins–only 0.3%.
Impact of Long-Term Care in PA
- Long term care facilities (including nursing homes, personal care homes, assisted living residences and other residential care facilities) have approximately 193,000 employees in PA and support a total of nearly 283,000 total jobs. They generate $11.8 billion in economic activity in the Commonwealth and support or induce another $11.7 billion in other sectors of the economy.
- The figures for nursing homes alone are substantial–83,000 employees in PA with a total of 130,000 jobs support both directly and indirectly; direct expenditures of $5.2 billion generate a total economic impact on the Commonwealth of nearly $11.8 billion.
- For every $1 spent on nursing homes in Pennsylvania, the Commonwealth realizes $2.28 in economic impact.
- Pew Research Center. “Baby Boomers Approach 65- Glumly”. Dec. 29, 2010. Accessed Mar 10, 2015: http://www.pewsocialtrends.org/2010/12/20/baby-boomers-approach-65-glumly
- PA State Data Center. State and County Population Projections by Age and Gender, 2010 to 2040.
- S. Census Bureau, Demographic Profiles: Census 2010
- Legislative Budget and Finance Committee April 2005 “Long-Term Care for the Elderly in Pennsylvania”
- Kemper P, Komisar HI, Alecxih L. “Long-term Care Over an Uncertain Future: What Can Current Retirees Expect?” Inquiry. Winter 2005/2006. 42(4): 335-350.
- The SCAN Foundation. “Briefing: What’s The State Of LTC Financing – And What Are The Options For The Future?” Posted March 20, 2013. http://www.thescanfoundation.org/briefing-whats-state-ltc-financing-and-what-are-options-future. Accessed June 28, 2013.
- Feinberg L, Reinhard S, Houser A, Choula R. “Valuing the Invaluable: 2011 Update. The Growing Contributions and Costs of Family Caregiving” 2011. http://assets.aarp.org/rgcenter/ppi/ltc/i51-caregiving.pdf. Accessed June 28, 2013.
- Kaiser Family Fountation, 2010 Medicare Chartbook, http://kff.org/medicare/report/medicare-chartbook-2010/
- PA Department of Health website, Nursing Care Facility Locator Page, Dec. 23, 2015
- PA Department of Health 2005-2014 Nursing Home Reports
- Genworth Financial 2016 Cost of Care Survey
- PA Department of Public Welfare Jan. 2015 Personal Care Homes Monthly Statistical Report
- PA Department of Aging website, Directory of Assisted Living Residences by County, Dec. 2015
- Waidman, T. and K. Liu. “Asset Transfer and Nursing Home Use: Empirical Evidence and Policy Significance,” Kaiser Commission on Medicaid and the Uninsured. April 2006. http://www.kff.org/medicaid/upload/7487.pdf
- Average daily Medicaid rate (weighted by Medicaid days) from FY15-16 proposed rate files divided by 24 hours
- ELJAY, LLC for American Health Care Association, March 2015 “A Report on Shortfalls in Medicaid Funding for Nursing Home Care”
- Avalere Health, Skilled Nursing Facilities in Pennsylvania: Analysis of Total Profit Margins for Freestanding Facilities, February 2014.
- American Health Care Association, January 2011 economic impact analysis using IMPLAN model and 2009 data
- Economic analysis conducted by Avalere Health for The Alliance for Quality Nursing Home Care using 2009 BLS data, published in The Alliance’s Care Context, February 2011