LTC Bullet: LTC Wake-Up Call
Friday, August 7, 2015
LTC Comment: What can aging demographics tell us about likely future Medicaid LTC expenditures? Answers after the ***news.***
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LTC BULLET: LTC WAKE-UP CALL
LTC Comment: Recent LTC Bullets have focused on academics’ and policy-makers’ complacency about unusually small health and long-term care expenditure increases over the past few years. See LTC Bullet: Cassandra’s Quandary (7/17/15) and LTC Bullet: Pandora Meets Rosy Scenario in CMS Projections (8/1/15).
Everyone seems to agree that the recent moderate medical inflation will not continue indefinitely. But few people in a position to do something about it appear to be taking full cognizance of the potential risk and cost. Just as consumers are enabled to be in denial about long-term care because government has indemnified them against most catastrophic LTC costs over the years, so public officials and too many of the experts who advise them have allowed mild health and LTC inflation recently to dull their level of concern about the future.
Let’s get specific. I’m working on a study of Medicaid and long-term care financing in New Hampshire. The Granite State is interesting on this topic for many reasons. It has a lot of old people already and its over-65 and over-85 cohorts are growing faster than they are in most other states. New Hampshire is also suffering from a “birth dearth” with declining rates of child-bearing and in-migration suggesting a future shortage of workers, including LTC caregivers. As elsewhere, Medicaid strains the state budget already despite notoriously low reimbursement rates for providers. And, of course, being the first-in-the-nation presidential primary state, New Hampshire offers a unique opportunity to push hard questions about Medicaid and LTC financing into the faces of an unusually large number of presidential candidates this year.
So, given New Hampshire’s vulnerability to LTC risk and cost, why aren’t thought-leaders and decision-makers in the “live free or die state” more concerned? I think a decade of relatively tame Medicaid LTC expenditure increases has desensitized them. For example, from 2005 to 2014 New Hampshire’s Medicaid long-term care expenditures for the elderly in . . .
Together, these LTC expenditure data convey a message that rebalancing from institutional to home and community-based care is working to keep overall cost increases moderate. For the sake of argument, let’s assume that this is true and that over time nursing home costs will continue to increase only slowly while increases in home care costs will moderate some, other factors remaining equal. Should that give us peace of mind about the future?
No! Because other factors will decidedly not remain the same. For now, never mind the potential inflation in the market price of all levels of long-term care services. Set aside any concerns about the financial viability of Medicaid or the risk of another national economic downturn. Let’s look only at the predictable growth of the elderly population in New Hampshire. This is not speculation. Most of the baby boomers in the state who will need long-term care in the future are already there. Of course, some will move out but demographers predict the future holds more, many more, not fewer aged people in New Hampshire. What’s the potential impact?
Home Nursing Services (Choices for Independence Waiver)
Mid-Level Care (Choices for Independence Waiver)
Total Medicaid Long-Term Care for the Elderly
LTC Comment: It is interesting to note how the estimate of growth in expenditures through 2032 is higher based on age 65+ population growth than it is based on age 85+ population growth. Even more remarkable is that costs would increase only slightly between 2032 and 2050 based on growth in the 65+ population (from $532 million to $574 million) whereas they skyrocket (from $503 million in 2032 to over $1 billion) based on growth in the 85+ population. That’s true because the age 85+ population growth is expected to accelerate considerably between 2032 and 2050 growing from 3.2 percent of the population to 5.9 percent. But in the same period, the percentage of the population aged 65+ decreases from 8.0 percent to 7.4 percent. For the same reason, and because 85 is the age at which the incidence of dementia begins to spike causing the highest long-term care expenses, the growth in the 85-plus population is probably the better factor to consider in estimating likely future costs.
Bottom line, the take away from this analysis is that other things being equal New Hampshire’s Medicaid long-term care expenditures may nearly quadruple over the next 35 years to more than one billion dollars based on nothing other than highly predictable increases in the “old-old” (85+) population.
Ceteris Non Paribus
Unfortunately, other things are never equal. Much more than aging demographics goes into reasonably predicting future Medicaid LTC expenditures. In our report titled “Apply the LTC Vulnerability Index to Your State: The New Hampshire Example,” we identified six additional critical factors:
Our forthcoming report on Medicaid and long-term care financing in New Hampshire will expand on all of these factors and integrate them into a reasonable prognostication of what the state can expect to happen going forward. We’ll also have some recommendations for state and federal policy changes to correct the dangerous course New Hampshire and the country are pursuing currently. So, stay tuned.
New Hampshire population: 1,326,813
From 2005 to 2014: Nursing homes $174,491,000 to $192,854,000 or 10.5% increase. As of 2014: $145.35 per state resident;
$978.95 per 197,000 age 65+ in 2012; 372,000 age 65+ in 2032 without inflation = $364,171,000 or 88.8% increase; 401,000 age 65+ in 2050 without inflation = $392,980,000 or 103.8% increase;
$6,887.64 per 28,000 age 85+ in 2012; 50,000 85+ in 2032 without inflation = $344,382,000 or 78.6% increase; 104,000 85+ in 2050 without inflation = $716,560,000 or 271.6% increase
Home Nursing Services
From 2005 to 2014: Home Nursing Services $26,086,000 to $43,512,000 or 66.8% increase. As of 2014: $32.79 per state resident;
$220.87 per 197,000 age 65+ in 2012; 372,000 age 65+ in 2032 without inflation = $82,163,640 or 88.8% increase; 401,000 age 65+ in 2050 without inflation = $88,568,870 or 103.6% increase;
$1,554 per 28,000 age 85+ in 2012; 50,000 age 85+ in 2032 without inflation = $77,700,000 or 78.6%; 104,000 age 85+ in 2050 without inflation = $161,616,000 or 271.4% increase
From 2005 to 2014: Mid-Level Care $1,497,000 to $ 9,327,000 or 523.0% increase. As of 2014: $7.03 per state resident;
$47.35 per 197,000 age 65+ in 2012; 372,000 age 65+ in 2032 without inflation = $17,612,406 or 88.8% increase; 401,000 age 65+ in 2050 without inflation = $18,987,350 or 103.6% increase;
$333.11 per 28,000 age 85+ in 2012; 50,000 age 85+ in 2032 without inflation = $16,655.357 or 78.6%; 104,000 age 85+ in 2050 without inflation = $34,643,440 or 271.4% increase
From 2005 to 2014: Medical Services $50,536,000 to $36,052,000 or 28.7% decrease, but has leveled out around $36,000. As of 2014: $27.17 per state resident;
$183.00 per 197,000 age 65+ in 2012; 372,000 age 65+ in 2032 without inflation = $68,076,000 or 88.8% increase; 401,000 age 65+ in 2050 without inflation = $73,383,000 or 103.6% increase;
$1,287.57 per 28,000 age 85+ in 2012; 50,000 age 85+ in 2032 without inflation = $64,378,571 or 78.6%; 104,000 age 85+ in 2050 without inflation = $133,907,280 or 271.4% increase
 Ari Houser, Wendy Fox-Grage, Kathleen Ujvari, “Across the States: Profiles of Long-Term Services and Supports, Ninth Edition 2012,” AARP, Washington, DC, 2012, p. 216; http://www.aarp.org/home-garden/livable-communities/info-09-2012/across-the-states-2012-profiles-of-long-term-services-supports-AARP-ppi-ltc.html.
 Source for Medicaid LTC expenditure data: Office of Legislative Budget Assistant, State of New Hampshire
 From the U.S. Census Bureau QuickFacts: http://quickfacts.census.gov/qfd/states/33000.html