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Will future demand and need for long-term care services by aging Americans vastly outstrip supply?

In the face of continued reports predicting increased need for care resulting from aging or disability a report reveals that the number of available nursing home beds in the U.S. continues to decline.  Several states reported double digit declines in the number of available beds compared to the prior year.

The report from the American Association for Long-Term Care Insurance indicates the number of available beds nationally at the beginning of 2009 was 1.67 million, a two percent decline from the prior year.  The decline in Massachusetts was 8.8% compared to the prior year. 

Financial executives predict that if population and economic trends continue, the nation may face a two-class system of providing long-term care for millions of aging and disabled individuals.  “Those with savings or private insurance will have options available,” predicts Jesse Slome, executive director of the industry trade group.  “We are likely to see a two classes of care with an increase in the number of skilled care facilities established exclusively for individuals who are not dependent on government programs, Medicare and Medicaid.” 

Skilled nursing facilities that depend on government payments face a projected Medicaid shortfall in 2009 of $15.64 a day per-resident.  “You can not provide quality service when you are losing almost $6,000 per-resident on an annual basis,” Slome explains.  “At some point you can not make up the shortfall in government programs by charging higher rates to those with the ability to pay privately.”  While experts report that the under-funding is not increasing sharply for 2009, it is expected to expand wider in 2010 as state budget shortfalls continue to affect available dollars from state-funded Medicaid programs.   

Nursing homes that depend on Medicare and Medicaid payments are facing serious financial difficulties.   Both programs funded by Federal and State taxes have cut benefit payments over the past year.  As a result of financial deficiencies, in Wisconsin 17 percent of nursing home facilities are reportedly in bankruptcy. 

States recently received $87 billion in increased federal medical assistant percentage (FMAP) funding as a result of the economic stimulus package.   Nursing home industry officials report that many have not used the funds to increase Medicaid rates paid to facilities.  Instead, they have used it to balance their budgets.  Looking forward, a total of 48 states face budget shortfalls.

According to the American Association for Long-Term Care Insurance’s annual update, majority of long-term care spending (49%) is financed by the Medicaid program which is funded jointly by the federal government and states.  Medicare, which currently provides health care to older Americans, financed about 22% of costs according to the Congressional Research Service.

“In a next few years, residents of Massachusetts will realize that only those who have set aside sufficient savings or who purchased long-term care insurance may have access to non-government supported facilities,” Slome explains.  “Unfortunately, for many, it will be too late to health-qualify for long-term care insurance.”

For more information on long-term care insurance or to access the Association’s free guide to reducing the cost of long-term care insurance, visit the Association’s Consumer Information Center.  The guide can be read free-of-charge and no personal information is required to access the information.

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