Fertility rate below replacement rate Increased life expectancy due to improvements in public health Demographic pyramid is going to square, then inverting. It is losing its base of support. The wide-based demographic triangle is going to square and eventually will invert. In 1935, more than 16 workers supported each retiree. Presently there are 3.3. By the year 2030, the ratio will dip to a thoroughly unworkable 2.1 to one. Instead of having a wide base of young working people to support and pay for the elders' benefits, there will be an inverted triangle with a top-heavy elderly population. Is the continuation of entitlement programs fiscally sustainable as the Boomers age?
The age structure of the overall population is projected to change greatly over the next four decades (Figure 1). Much of this change is driven by the aging baby boomers and trends in immigration. Figure 1 illustrates the importance of the baby boom generation in shaping the overall population. In 2010, the baby boom generation will be 46 to 64 years old.4 The echo of the baby boom is also evident in the 2010 population pyramid for the age groups near 20.5 By 2030, all of the baby boomers will have moved into the ranks of the older population. This will result in a shift in the age structure, from 13 percent of the population aged 65 and older in 2010 to 19 percent in 2030.In 2010, 60 percent of the U.S. population will be aged 20–64. By 2030, as the baby boomers age, the proportion in these working ages will drop to 55 percent. Green color – 2010 Dark purple – 2030 Light purple – 2050 The aging Baby Boomers are going to dramatically affect society for many decades to come.
Dependency ratio – number of people per 100 who are too old or too young to be working and must DEPEND on productive wage earners. This is a measure of burden placed on working age population age 20-64 to support older people and children over the next 4 decades. Indicator of potential burden on those in the working population. Greater number = greater burden. Smaller portion working Larger portion of population depending on government services (or family/ personal savings) to get by. 2010 – 67 per 100 2030 – for every 100 people age 20 to 64, there will be 83 people who are probably too old or too young to be working. More retirees + fewer workers = trouble for the system. Dependency ratio and stress on Social Security system increases dramatically when cohorts of retiring workers are replaced by smaller cohorts of active workers.
Social Security Act of 1935 – old-age pension. Franklin D. Roosevelt’s “New Deal.” Defines age of retirement. Social Security is most important because it provides a foundation for retirement income. Social Security is the public retirement pension system and social insurance system administered by the federal government, the largest domestic government program today. Social Security covers almost all US workers except for some state and local government employees. The biggest controversies over Social Security revolve around this core retirement program, which is essentially a tax on wages during working years followed by a wage subsidy during retirement years. Strengthened with addition of survivors’ and dependents’ benefits (1939), disability insurance (1956), Medicare (1965), and automatic adjustment of benefits for inflation and supplement income (1972). The Social Security Act provided a safety net of income in return for a lifetime of employment; it never was intended to be the sole source of retirement income. It also provided a standard age by which retirement could be defined. Participation in the Social Security system is mandatory through payroll taxes called “contributions.” No means test is required to receive benefits; rather, it is an earnings-related program . Benefits are financed by payroll taxes paid by employees and employers on income up to a certain level. The richest retiree will receive benefits alongside the poorest retiree. Social Security was never meant to entirely fund seniors' expenses. It was never intended to be the sole income source for people in retirement. In fact, the large majority of beneficiaries have other income from a pension, savings, or continued part-time employment. Not surprisingly, up to 80% of Boomers plan to continue to work in some capacity after the traditional retirement age of 65. It was designed with the typical family of the 1930s in mind and was only meant to be a supplement to other forms of retirement income. In fact, when Social Security was created in 1935, only 5% of the population reached age 65. By1940, the life expectancy at birth had climbed slightly to 61.4 years for men, 65.7 years for women. The planners assumed the fund would remain solvent because the life expectancies of the era would prevent most people from living long enough to collect benefits. The rising life expectancy we see today is both a blessing and a challenge. Now, those who survive to age 65 can expect to live 15 (men) to 20 (women) years longer. The problem with most entitlement programs – they end up costing far more than originally envisioned, often by a factor 10, 20, 30, or even 40. As such, it provides only a bare subsistence. Social Security retirement benefits average $1,229 monthly for a single person ($14,748 annually) and $1,994 monthly for a retired couple. Social Security is funded through the Federal Insurance Contributions Act tax (FICA), a payroll tax. Employers and employees are responsible for making equal FICA contributions. During 2012 ] , Social Security taxes were levied on the first $110,100 of income for employment; amounts earned above that are not taxed. Covered workers are eligible for retirement and disability benefits. If a covered worker dies, his or her spouse and children may receive survivors' benefits. Social Security accounts are not the property of their beneficiary and are used solely to determine benefit levels. Social Security funds are not invested on behalf of beneficiaries. Instead, current receipts are used to pay current benefits (the system known as “pay-as-you-go"), as is typical of some insurance and defined-benefit plans. Federal spending for Medicare, Medicaid, and Social Security are expected to surge, nearly doubling by 2035, as people live longer and spend more time in retirement. Further, advances in medical technology and prescription drugs will likely keep pushing the costs of health care. Both minimum retirement age and work credits are needed to qualify for Social Security retirement benefits. A person may start receiving benefits as early as age 62 (early retirement) or as late as 70. Since 2003, the full Social Security retirement age has been slowly rising to accommodate demographic trends and increased life expectancies. For those individuals born before 1938, the full retirement age is 65 years. A person born in 1955 will reach full retirement age at 66 years and 2 months; an individual born in 1960 or later will not reach full retirement age until 67 years. Social Security benefits are based on the worker’s average of the highest years of earnings, adjusted for inflation. For each $1,130 that is earned, a person receives one Social Security “credit,” up to four per year. Most people need 40 credits (10 years of work) to be eligible for retirement benefits. Social Security has decreased poverty rates of the elderly, particularly for female elderly. Half of the older women in the US would live in poverty without their SS income. Approximately 75% of the poor elderly are women who depend on SS as the major source of income. Women represent 60% of all SS recipients at age 65; at age 85, women represent 71% of all SS recipients. Demographic pyramid – going to square and then to inversion. In 1935, more than 16 workers supported each retiree. Presently, there are 2.87 workers per beneficiary. By the year 2030, the ratio will dip to a thoroughly unworkable 2.1 to one. Instead of having a wide base of young working people to support and pay for the elders’ benefits, there will be an inverted triangle with a top-heavy elderly population. Is the continuation of Social Security income fiscally sustainable as the Boomers age? As the Boomers eventually retire, the number of beneficiaries will surge. The Congressional Budget Office estimates that the annual cost of Social Security will increase by 75% in the next decade, reaching a projected $1.3 billion in 2021. Finally, some analysts advocate means testing retirement benefits—reducing or eliminating benefits to retirees who have substantial private pensions, savings, and other sources of retirement income. Critics of means testing point out that this approach would alter the very nature of the system from one in which all benefit to a system targeted at low-income workers. Such a change could also reduce the political viability of the system by reducing the constituency with a stake in the program. Administrative costs as well as incentives for people to “game” the system would also increase. * Distinction here between a SOCIAL program which helps all equally or in proportion to their taxation and a POVERTY program which disproportionately helps the poor.
On August 14, 1935, President Roosevelt signs the Social Security Act in the Cabinet Room of the White House.
Phenomenon of retirement – How will it be redefined by the Boomers? Demographic pyramid – going to square and then to inversion. Not enough young working people to support the burgeoning elderly population through decades of retirement. The workforce as a whole is aging, and life expectancy has increased dramatically. It may not be sustainable for society in the near future to support large numbers of elders during decades of retirement. Many Boomers are not prepared in terms of "nest egg" savings and pensions to adequately cover their living expenses during retirement years. Social Security was originally meant to only supplement retirement income and is not sufficient for funding anything other than a "bare-bones" existence. Not surprisingly, up to 80% of Boomers plan to continue to work in some capacity after the traditional retirement age of 65. Work life extension is one solution and barriers to continued employment of seniors are being removed. Mandatory retirement was abolished in 1986 and, in 2000, the earnings penalty was removed from Social Security. Productive aging is defined by Caro, Bass, and Chen (2010) as "any activity by an older individual that produces goods or services, or develops the capacity to produce them, whether they are to be paid for or not" (p. 410). The notion of productive aging directly challenges the pervasive societal stereotypes of elders as being frail and dependent, rigid, or unable to learn new things. Obstacles to productive aging include institutional ageism, labor market conditions, cultural lag, unattractive volunteer/ employment assignments, and lack of interest by older people in community service and post-retirement employment opportunities. According to Bower and Sadler (2009), ways to plan for "Third Age" career strategies include: preparing a life portfolio, taking an honest inventory of one's strengths and weaknesses, evaluating one's needs, preparing oneself for the future, building networks, being flexible, and developing a support system.
The Medicare program was created in 1965 as Title XVIII of the Social Security Act. Its primary purpose was to provide health care coverage for the elderly, who were defined at that time as anyone 65 years of age or older. In 1972 provisions were added to the act to include people who were permanently disabled and those with kidney disease. Before Medicare, as many as half of people over age 65 were without health insurance, whereas today almost all people are covered. Much has changed in the Medicare population in more than three decades. Since 1965, life expectancy has risen from 70 to 77, and the 65+ population grew from 9% to 13% of the total US population. Medicare has had a major impact on the health of the elderly population: Since 1965, half as many Americans die of heart attacks and a third as many die of strokes, and this is a tremendous accomplishment. Medicare is the chief federal government program that pays for health care for 39.6 million Americans over age 65 and another 7.9 million disabled people of all ages. Medicare has serious limitations: It doesn’t pay for the first day of hospitalization; it doesn’t cover hearing aids, eyeglasses, or dental care. It also excludes long-term care coverage, except for limited periods after hospital discharge. The two main elements of the program are Part A, which provides hospital insurance, and Part B, which provides supplementary medical insurance that covers physician care, along with limited home and outpatient services. Part B is purchased by beneficiaries with payment of a small premium. That separation pretty well defines the major thrust of the program. It is oriented to the acute care, medical model. There is no Part C covering long-term care. Although some limited forms of long-term care coverage have been added over the years, this was not the original intent of the Medicare program. Medicare has expanded coverage of preventive services to encourage older people to stay healthy. Medicare pays for a “Welcome to Medicare” preventive exam and a preventive visit each year after that. This is given within the first 12 months of enrollment in Part B. It covers a medical and social health history with attention to modifiable risk factors for disease, education and counseling about preventive services, and referrals for care if needed. Services covered during this examination include measurement of height and weight and blood pressure, vision screening, an ECG, routine immunizations as needed, education and counseling on how to stay well, and a list of recommended screening tests and a timetable for when they should be obtained. The following screeening tests are recommended by Medicare: Screenings for breast, cervical, vaginal, colorectal, and prostate cancer; bone mass screening (once every 2 yrs for those at risk); fasting blood glucsoe screening (q6mos for those at risk); diabetes monitoring; flu, pneumonia & hepatitis B vaccinations; nutriton assessment; glaucoma screening; and smoking cessation counseling. Medicare is an entitlement program (like Social Security), meaning that anyone belonging to a particular population group is entitled to coverage. It is available primarily on the basis of age. here historically has been no requirement that recipients demonstrate financial need (as there is with Medicaid) (“means testing”). The wealthiest retiree has enjoyed the same rights to Medicare coverage as the poorest. This has become a major issue in recent years as the program struggles to provide coverage for a population that has grown many times faster than was predicted. In fact, the funding source for the program, the Medicare Trust Fund, is currently in considerable jeopardy. Like Social Security, Medicare is funded from payroll taxes, with additional funding from general revenues and premiums from beneficiaries. Unlike SS, whose problems lie many decades into the future, Medicare faces short-term financing problems. Overall, Medicare spending has risen much faster than the cost of living, and thus it presents government policymakers with a serious problem of cost control. The Trust Fund-Part A is headed for insolvency by the year 2024 (depending on your source) unless actions are taken to change either its funding source or the way in which those funds are spent. The Part B (Supplementary Medical Insurance Trust Fund) is projected to last longer because beneficiary premiums cover about 25% of it. Based on US Census Bureau middle-range population forecasts, it is estimated that the Medicare costs for the oldest-old (85+) could increase sixfold by the year 2040. In light of these troubling forecasts and trends, there is serious discussion about the rationing of health care for the elderly in the future. When the 2003 Medicare prescription drug bill was passed there was a little noticed provision tacked on that added a "means" test to the bill. M eans testing —reducing, eliminating, or charging more for benefits to seniors who have substantial private pensions, savings, and other sources of retirement income. Medicare means testing was implemented for the first time on January 1, 2007. The Part B premium is "means tested," meaning the government determines the Medicare Part B premium based on a person’s income. Seniors with incomes of $80,000 per year or higher will pay more for services than lower-income seniors. It also introduced a scale of premiums which goes up as income rises. Starting in 2007 the premium for Medicare Part B increases substantially for high income individuals. This has affect about 2 million people. The increase is in the form of a premium surcharge that is to be paid in addition to the normal Part B premium. This surtax is owed even if the individual Medicare recipient has not sign up for prescription drug coverage. Means testing radically changes the nature of Medicare. The program was designed as universal social insurance with everyone paying a uniform premium and receiving a standard package of benefits. Supporters of means testing argue that it's needed to cut Medicare costs and make the program more sustainable. Government estimates, however, indicate that higher premiums for some will not save Medicare. In 1965, when it was first enacted, Medicare spent a little more than $3 billion. Today, it spends more than $200 billion each year. Last year, Medicare paid out $516 billion in benefits. Program income was $486 billion. Nearly two thirds of that total goes to hospitals, where acute and often high-technology care are provided. If health care rationing on the grounds of age were ever to be introduced, it would probably take place in the Medicare program and would show up in the large sector of Medicare concentrated in hospitals. Although Medicare expenditures have climbed dramatically, Medicare still covers only about half of the out-of-pocket expenses of older people; roughly the same percentage as when the Medicare program was first enacted in 1965. Part of the reason is that Medicare B reimburses 80% of physicians’ “reasonable charges.” In fact, the amount reimbursed may or may not reflect actual charges in a specific geographic area. Because of what limits on what Medicare will pay, around 30% of Medicare beneficiaries also have private Medigap insurance policies to cover the remainder of their medical bills.
One of the identified weaknesses of Medicare has been its lack of emphasis on preventive care. To address this service gap, the new healthcare reform law expanded coverage of preventive services to help older people stay healthy and experience optimal functionality and quality of life. As of January 1, 2011, many preventive services are now covered under Medicare. Some preventive services are provided at no cost to the beneficiary while others require a co-insurance payment.
Medicare covers all the cost for a one-time comprehensive “Welcome to Medicare Preventive Visit,” if given within the first 12 months of enrollment in Part B. There is no co-payment or deductible for this visit. This one-time preventive visit covers a detailed medical and social history, family history, identification of modifiable risk factors for disease, review of medications, depression screen, functional ability and safety screen, a focused physical exam, counseling about preventive care services, discussion of advance directives, and referral for further tests if needed. Services covered during this examination include measurement of blood pressure, weight, and height, vision screening, an electrocardiogram, routine immunizations, wellness education and counseling, and a list and timetable of recommended screening tests. Those beneficiaries who have been enrolled in Part B longer than 12 months are eligible for an annual “wellness” visit. There is no cost for the yearly “wellness” visit. If additional tests or services are needed during the visit, however, then the beneficiary must pay co-insurance or deductibles for the extra costs.
Despite the changes in Medicare to promote access to preventive services, many older adults currently do not receive vaccinations, screenings, and other preventive services that national experts recommend. A contributing factor is that many older adults are still unaware of these services. Nurses are in a pivotal position to educate and encourage older adults to take advantage of these preventive health services and to make healthy lifestyle changes.
Medicare Part C, formerly known as "Medicare+Choice," is now known as "Medicare Advantage". MA was brought into existence by Part C of Medicare. It involves p rivatized corporate sponsored health insurance rather than traditional government sponsored, single payer health insurance which is what Medicare is. This section of Medicare allows private companies such as UnitedHealth, Blue Cross Blue Shield, Humana, Kaiser, and Coventry Health Care to arrange care for Medicare beneficiaries enrolled in the plan. To join a Medicare Advantage Plan, one must have Medicare Part A and Part B before being able to get Part C. In addition, the enrollee might have to pay a monthly premium to the Medicare Advantage Plan for the extra benefits that they offer. Medicare now serves 47.5 million elderly and disabled people. About 25 percent of beneficiaries have chosen to enroll in Part C “Medicare Advantage” private health plans that contract with Medicare to provide Part A and Part B health services. Many of these plans offer extra benefits like vision and dental care. But independent studies have found that the private plans cost the government more per person than traditional Medicare. Medicare Part D is a federal program to subsidize the costs of prescription drugs for Medicare beneficiaries. It was enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and went into effect on January 1, 2006. Medicare Prescription Drug Plan (Part D): The Medicare Prescription Drug, Improvement and Modernization Act of 2003 added Part D. Medicare Part D pays for outpatient prescription drugs. See handout for details of deductibles, copayments, and the “donut hole.”
Original Medicare covers many health care services and supplies, but there are many costs (“gaps”) it doesn’t cover. A Medigap policy is health insurance sold by private insurance companies to fill the “gaps” in Original Medicare Plan coverage. Medigap policies help pay some of the health care costs that the Original Medicare Plan doesn’t cover (such as copayments, coinsurance, and deductibles). In 2006, 18% of Medicare beneficiaries were covered by a Medigap policy. A person must be enrolled in part A and B of Medicare before they can enroll in a Medigap plan. During the open enrollment period which begins within 6 months of turning 65 or enrolling in Medicare Part B at 65 or older, a person may obtain a Medigap plan on a guaranteed issue basis (i.e. no medical screening required). Outside of open enrollment, the issuing insurance company may require medical screening and may obtain an attending physician's statement if necessary. Medigap insurance is not compatible with other forms of private Medicare coverage, such as a Medicare Advantage plan. If a senior is in the Original Medicare Plan and has a Medigap policy, then Medicare and the Medigap policy will pay both their shares of covered health care costs. Medicare pays first; then the Medigap policy pays its share. If a person is enrolled in a Medicare Advantage Plan, then the person doesn’t need and can’t use a Medigap policy. Medigap offerings have been standardized by the Centers for Medicare and Medicaid Services (CMS) into twelve different plans, labeled A through L, sold and administered by private companies. Each Medigap plan offers a different combination of benefits. The coverage provided is roughly proportional to the premium paid.
Medicare covers: “Skilled nursing care” in nursing facilities or units in hospitals. Skilled nursing (SNFs) may be free-standing or they can be units in hospitals or nursing facilities. Skilled nursing care is health care given when skilled nursing or rehabilitation staff are needed to manage, observe, and evaluate the patient’s care. Examples of skilled care include changing sterile dressings and physical therapy. Other “unskilled” care in nursing facilities is not covered at all by Medicare. Skilled services must be certified as necessary by a physician, be related to a hospital admission (occur within 30 days of a hospital stay of at least 3 days for the same condition), and be needed on a daily period, with the patient paying a portion of the cost from day 21 through 100. Medicare coverage of skilled nursing services is limited to 100 days per benefit period. A benefit period is defined as beginning when the Medicare beneficiary first enters the hospital until there has been a 60-day break in hospital or SNF services. Subacute care is not a separate category under Medicare. It is generally provided in Medicare-certified SNFs or units and is reimbursed through the SNF mechanism. Medicare has embraced home health care services. To receive that reimbursement, these services must be provided by agencies certified by the Medicare program. Medicare covers hospice care for people who are certified to be terminally ill, with 6 months or less to live. The care must be palliative rather than curative, and as with other types of Medicare coverage, must be delivered by a provider organization that is certified by that program. Medicare does not regularly provide coverage in settings such as assisted living or adult day care.
“ Never events” – in 2007 accounted for $22 billion in expenses: Wrong site surgeries Transfusion with the wrong blood Pressure ulcers (stage III and IV) Falls or trauma Iatrogenic/ nosocomial infections involving surgeries or catheters The 10 categories of HACs include: Foreign Object Retained After Surgery Air Embolism Blood Incompatibility Stage III and IV Pressure Ulcers Falls and Trauma Fractures Dislocations Intracranial Injuries Crushing Injuries Burns Electric Shock Manifestations of Poor Glycemic Control Diabetic Ketoacidosis Nonketotic Hyperosmolar Coma Hypoglycemic Coma Secondary Diabetes with Ketoacidosis Secondary Diabetes with Hyperosmolarity Catheter-Associated Urinary Tract Infection (UTI) Vascular Catheter-Associated Infection Surgical Site Infection Following: Coronary Artery Bypass Graft (CABG) - Mediastinitis Bariatric Surgery Laparoscopic Gastric Bypass Gastroenterostomy Laparoscopic Gastric Restrictive Surgery Orthopedic Procedures Spine Neck Shoulder Elbow Deep Vein Thrombosis (DVT)/Pulmonary Embolism (PE) Total Knee Replacement Hip Replacement
Medicaid – At the same time that the Medicare program was developed to provide health care for the elderly, Congress also created Medicaid as a program to provide health care for the poor. Enacted as Title XIX of the Social Security Act, Medicaid is different from Medicare in several very specific ways. Medicaid serves the "medically indigent," those have no other coverage, and cannot afford to pay for their own care. Medicaid is managed by state governments under federal guidelines. First, it has no age limitations but covers people of all ages. Second, it does have income restrictions, covering only those who are “medically indigent” and who cannot pay for their own health care insurance. Third, Medicare is funded and operated by the federal government, but Medicaid is jointly funded by the federal and state governments and is run by the states under federal guidelines. Finally, whereas Medicare coverage is limited in terms of the types of services covered and the length of time they are covered, Medicaid essentially covers most services needed by its beneficiaries. Recently, some clinics and physicians are refusing to accept Medicare assignments; some will not treat Medicaid recipients; and some limit the number (ratio) of Medicaid patients they will service. The problematic financial situation has numerous causes: high cost of well developed and technologically advanced treatments; high costs of malpractice insurance, aggressive lawyers, and large settlements; large gaps between the wealthy and the poor; expensive and extensive research necessary for development of new treatments; and others. Add to all those variables the extensive and mind-boggling demands within the insurance agencies themselves. Medicare and Medicaid are not always necessarily separate programs. In some instances, Medicare recipients with low incomes may also be eligible to receive aid from Medicaid. If someone is covered by both, first Medicare will pay, then Medicaid. For those who are fully covered by Medicaid, the Medicare health care coverage is supplemented by services provided under their respective State's Medicaid program. Some such services include: Nursing facility care beyond the 100-day limit provided by Medicare. Prescription drugs. Eyeglasses. Hearing aids. Medicaid is the primary public medical assistance provider in the state of North Carolina. In 2009, the N.C. Medicaid program served about 21% of the total state population, or 1 out of 5 every resident in the state. An estimated 10% and 16% of the total recipients were seniors and residents with disability, respectively. These groups account for 65% of total Medicaid expenditures, amounting to about $5.6 billion combined. Medicaid enrollees have increased dramatically during the recession, from an 18.8% baseline during 2006 (relatively prosperous year) to 21% during 2009. Eligibility: Income 100-200% of the federal poverty level (depending on Medicaid program). Less than $40,000 annually for a family of four. The Affordable Care Act of 2010, signed by President Obama on March 23, 2010, creates a national Medicaid minimum eligibility level of 133% of the federal poverty level ($29,700 for a family of four in 2011) for nearly all Americans under age 65. This Medicaid eligibility expansion goes into effect on January 1, 2014. One of the most controversial parts of the U.S. Supreme Court ruling on the Affordable Care Act allows states to opt out of expanding Medicaid coverage in 2014. In North Carolina, where roughly one in five residents is uninsured, the expansion would initially add roughly 525,000 residents to the program. The number grows to 560,000 by 2019 with about 75 percent of those currently not insured. Who determines whether NC opts-out of the Medicaid expansion? Governor McCrory will. In the year 2009 (the latest year for which data are available), 71.81% of NC Medicaid expenditures were paid by the federal government, and 28.19% of the expenses were paid by the State of North Carolina. Total expenditure to the State: $3,069,599,500. Last year, the state ran into a $200 million shortfall with Medicaid expenditures. Total overall expenditures in 2009: $10,888,466,523.00 Major reimburser of long-term care. Costs for LTC consumer 1/3 of Medicaid funds. 60% of Medicaid funds spent for LTC involves costs for nursing homes (20% of total Medicaid funds at this time). The elderly and disabled account for 2/3’s of Medicaid expenditures. Nearly 40% of all Medicaid benefits go to the elderly, chiefly for nursing home care. 50% of Medicaid dollars spent for elderly = cost of nursing homes.
Total NC Medicaid paid in 2009: $10,888,466,523.00 Federal portion paid: $7,818,867,023.00 (71.81%) State portion paid: $3,069,599,500.00 (28.19%) Enrollment in 2006: 1,667,247 Enrollment in 2009: 1,974,287 2 nd largest expenditure in the state. Second only to K-12 public education.
In most states, Medicaid coverage is extensive, particularly in long-term care. This makes it a major source of funding for long-term care consumers and providers. Medicaid also serves as a backup to Medicare, paying for services for low-income elders beyond those covered by Medicare. Because Medicaid is a welfare-type program, it is not intended as a reimbursement source for anyone with other resources. This means that consumers must not be eligible for other forms of health insurance, public or private. They must also use up all of their available resources before becoming eligible for Medicaid. Medicaid coverage for long-term care services ranges from none at all for some providers to being the primary funding source for others. Medicaid accounts for over 40% of all funding for most nursing facilities. Medicaid is also a provider of reimbursement for assisted living facilities and programs. The coverage is far from universal, varying from state to state, but it is growing. Medicaid is the second largest source of funding for home health care agencies, although it falls far behind Medicare. Other forms of long-term care, such as subacute care, hospice, and adult day care, are generally not covered by Medicaid, but may be covered as a supplement to Medicare or under some of the waiver innovations.
Approximately 40% of older adults will spend some time in a nursing home during the last years of their lives. Another side product of the quandary caused by conflicting societal obligations is an ethical issue that has been gaining considerable attention. Related to financing, and therefore to access, it is the issue of “spending down” one’s resources to qualify for Medicaid coverage. This has produced one of the most urgent and pervasive ethical debates associated with long-term care. Many of those who do not qualify for Medicaid still do not have enough assets to pay for long-term car themselves. They face a cruel choice: struggle to provide home-based care or do what is necessary to obtain Medicaid. To qualify for Medicaid, it is necessary to “spend down” lifetime accumulated assets to become impoverished and therefore eligible for assistance. Under regulations of the Medicaid law, spouses of those thus impoverished may obtain some protection, but children and grandchildren lose their share of accumulated life savings. One major problem with Medicaid financing of long-term care is that it introduces inequities across families, age groups, and social classes. For example, should people who become poor in old age be treated the same as those with a lifetime of poverty? Should families that contribute their own labor for caregiving have that contribution taken into account? In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in "countable" assets. The spouse of a nursing home resident--called the "community spouse" -- is limited to one half of the couple's joint assets up to $109,560 (in 2009) in "countable" assets. This figure changes each year to reflect inflation. In addition, the community spouse may keep the first $21,912 (in 2009), even if that is more than half of the couple's assets. This figure is higher in some states, even up to the full maximum of $109,560 (in 2009). Most people who enter nursing homes as private-pay residents spend their assets by the end of 1 year and require government support for their care; one-third of the Medicaid budget is spent on long-term care. As the percentage of the advanced-age population grows, society will face an increasing demand for the provision of and payment for services to this group. In this era of budget deficits, shrinking revenue, and increased competition for funding of other special interests, questions may arise about the ongoing ability of the government to provide a wide range of services for older adults. To what extent does the government owe each of us coverage for our care, regardless of our ability to pay for it? Consumers faced with spending down ask why, after they have been paying their taxes all these years, have to lose all that they have saved just to be eligible for long-term care? After all, is it not the same care that is covered for those who were not so farsighted and prudent? Should coverage not be an entitlement as so many other government benefits? People feel that the savings that they put away over many years were meant to be passed on to children and grandchildren. They believe it is unfair to take all of that way from them, in effect penalizing them for being frugal, and point to others who either spent all they had frivolously or never bothered to provide for themselves in the first place. Where is the incentive to save if it is to be taken away by the government? Countering arguments, primarily coming from government entities that are hard-pressed to finance Medicaid programs, center on the unfairness of providing coverage to those who have their own resources. Which is more or less ethical – to take away an individual’s savings or to force government to pay for someone who has those savings? The issues also affects the children and grandchildren of the individual consumers of long-term care. If asset transference is not allowed, they may not receive the inheritance that they, and their parents, had anticipated. On the other hand, if today’s elderly are allowed to collect Medicaid while transferring their assets to their children and grandchildren, these later generations may not have a public system on which to fall back. According to public pinion surveys, 82% of the general public recognize that they cannot afford to pay the cost of long-term care either at home or in a nursing home. They also know that they cannot rely on the family alone; 86% want the government to help pay for long-term care instead of leaving it entirely up to the family. But despite such clear public sentiment, a universal public insurance program for long-term care is still not available in the US. On the contrary, Medicaid has become the public program of last resort to pay nursing home costs. In fact, it is the fastest-growing component of state budgets, and it is increasingly becoming an old-age program. Nearly 40% of all Medicaid benefits go to the elderly, chiefly for nursing home care.
The U.S. Department of Health and Human Services estimates that 70 percent of persons aged 65 and older will need some sort of institutional or community long-term care services before they die. Forty percent will require care in a nursing home. An estimated 9 million people over the age of 65 require ongoing help with health and personal care. The longer people live, the more likely the need for long-term care services. Older adults aged 75 to 84 make up 60 percent of the long-term care population. And, one in five seniors aged 85 and above is institutionalized in a nursing home - quite a shocking statistic. With an average stay of 19 months and an average cost of $70,000 per year, the high cost of a nursing home stay is a serious threat to the economic well-being and assets of most middle-income older Americans. Even though it could take years if not decades for the need for long-term care services to materialize, everyone should have a fiscal plan in place for this contingency. One practical consideration is long-term care (LTC) insurance, which is a type of insurance coverage that is available for people who need long-term care services. Once certain criteria are met, LTC insurance generally covers services needed for an extended period of time in settings outside of the acute-care hospital. Services include custodial care, medical care, diagnostic testing, rehabilitation, hospice, respite care, help with household chores, and/or caregiver training. The settings include the personal residence of the policyholder, assisted living facilities, nursing homes, and adult day care. Most long-term care is not medical care, but rather assistance with personal tasks of everyday life (activities of daily living) or tasks required to live independently in a community setting (instrumental activities of daily living), which is known as custodial care. Traditional health insurance or Medicare covers part of the cost for hospital stays, prescription drugs, and provider visits, but usually does not help with the cost of custodial long-term care services. Some older people mistakenly believe that Medicare will cover such expenses. In fact, Medicare covers very little of the actual cost for long-term care; coverage is under restricted circumstances for short periods of time. Long-term care insurance is bought mainly by people over age 55. The average age for new applicants is 57, and half the current policyholders are in their 60s. Once a person purchases a LTC policy, the policy cannot be changed and is usually guaranteed renewable for life. The insurance company cannot cancel the policy for any reason other than non-payment or depletion of benefits. This type of insurance can be purchased at any time. The age when a policy is first purchased is important because premiums are based on the age and health status at purchase and afterwards remain stable for the life of the policy. The best time to purchase LTC insurance is between the ages of 45 and 55, because it is reasonably affordable. After the age of 55, premium costs start to accelerate rapidly. The annual premium for LTC insurance more than doubles from age 50 to age 60 and more than triples from age 55 to age 65. The same policy that goes for $400 a year at age 50 would cost up to $1100 a year at age 65. Regardless of age, people with certain chronic or disabling conditions may not qualify for LTC insurance at all. Long-term care insurance is vastly underutilized and therefore plays a relatively minor role in financing long-term care. Even though m ore than 100 insurance companies now offer these policies, and more than 2.5 million policies are now in force, LTC insurance provides only 7 percent of total funding for long-term care in the United States, while out-of-pocket expenditures cover nearly 25%. Currently, about 4 to10% of noninstitutionalized Americans over the age of 55 have private insurance protection for LTC expenses. One barrier to LTC insurance is the cost. For the elderly, premiums are high when compared to income. Ideally, healthy middle-age adults should buy LTC insurance while the rates are still relatively low, as a hedge against future needs, but this is not happening to a large degree. Many people are in a state of denial about their possible future LTC care needs. In considering a LTC policy, it is important to understand what services the policy covers and how it covers these services. Before signing on the dotted line, read the policy carefully to scrutinize restrictions, exclusions, and limitations. Make sure that you, as the future beneficiary, understand every part of the policy. Investigate the policy coverage in terms of deductible, coverage, dependency requirements, preadmission hospitalization requirements, benefit periods, and lifetime benefit ceilings. Policies vary greatly according to policy restrictions. Some policies require a deductible, which is stated in terms of nursing home days. Also, most LTC policies provide a fixed daily fee, or specific dollar amount for each day you spend in a nursing home or for each home-care visit, rather than the actual cost. Because of deductibles and fixed daily fees, out-of-pocket expenses could be considerable, despite having LTC insurance. Additionally, some policies require a certain amount of disability before benefits will be paid (such as functional dependency in three activities of daily living). A comprehensive policy is probably the best option if you anticipate eventually needing several layers of long-term care services. In the home setting, comprehensive polices generally cover these services: skilled nursing care; occupational, speech, physical, and rehabilitation therapy; and, help with personal care. Many comprehensive policies also offer homemaker services, such as light housekeeping, laundry, and meal preparation. Another alarming fact is North Carolina's low savings rate of about 4%. Currently, many residents rely on publicly-funded LTC programs. Medicaid is the primary public medical assistance provider in the state of North Carolina.
Social security and medicare & medicaid spring 2013
Social Security and Medicare & Medicaid NURS 4100 Care of the Older Adult Spring 2013 Joy A. Shepard, PhD(c), MSN, RN, CNE1
Objectives Analyze the benefits of Social Security Discuss the phenomenon of retirement as it relates to an aging society Compare and contrast the Medicare and Medicaid programs List the benefits and barriers to long- term care insurance2
Social Security Social Security Act of 1935 Federal public retirement pension system Full retirement age steadily rising (since 1980s) Has decreased poverty rates Major recipients female elderly No means test Qualifications Financially sustainable? Procrastination – bad policy What suggestions do YOU have to save Social Security? Text of the 1935 Social Security Act8
Review Question Which of the following factors would not threaten the solvency of Social Security? A. Baby Boomers taking early retirement. B. Means testing being implemented for Social Security. C. Another recession or depression. D. Aging of the population.10
Retirement Phenomenon of retirement – How will it be redefined by the Boomers? Decades of retirement - feasible? Social Security sufficient? Are Boomers prepared? “Third Age” career strategies12
President Lyndon Johnson Signing Medicare Bill: July 30, 196514
Medicare Title XVIII of the Social Security Act (1965) Covers elderly and some disabled – Part A – Hospital insurance – Part B Supplemental medical insurance (physician care) Preventive services Limitedmeans test Covers ~ 45% of elders’ medical care bills15
Medicare Preventive Services Prevention is any activity that reduces the burden of mortality or morbidity from disease. Services performed in a clinical setting that are designed to prevent disease, injury, or disability, prolong life, and promote health are known as preventive health services. Examples: Screening, testing, counseling, immunization, preventive medication, and preventive treatment. Help people avoid disease or injury (primary), delay the onset of disease (primary), detect disease in its earliest and most treatable state (secondary), or alter and change the course of chronic conditions by restoring function and reducing complications (tertiary). Result: Longer, healthier, and more productive lives.16
Medicare Preventive Services (Part B): One-time “Welcome to Medicare” preventive visi vis Abdominal aortic aneurysm screening Alcohol misuse screenings and counseling Bone mass measurements (bone density) Cardiovascular disease screenings Cardiovascular disease (behavioral therapy) Colorectal cancer screenings Depression screenings Diabetes screenings17
Medicare Preventive Services Cont’d… Diabetes self-management training Glaucoma tests HIV screenings Mammograms (screening) Nutrition therapy services Obesity screenings and counseling Pap tests and pelvic exams (screening) Prostate cancer screenings Sexually transmitted infections screening and cou18
Medicare Covers (with some limitations): – Skilled nursing in nursing facilities and subacute care – Home health care – Hospice26
Medicare no longer covers the cost of 10 hospital-acquired conditions Foreign object Poor glycemic control retained after surgery Catheter-assoc UTI Air embolism Vascular catheter- associated infection Blood incompatibility Certain surgical site Stage III & IV pressure infections (CABG, ulcers bariatric, orthopedic) DVT or PE following Falls & trauma TKR, hip replacement For more information, please see http://www.cms.hhs.gov/HospitalAcqCond/06_Hospital-Acquired_Conditions.asp#TopOfPage27 http://www.cms.hhs.gov/apps/media/press/factsheet.asp? Counter=3227&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=6&intPage=&showAll=&p
Review Question Medicare recently issued a new ruling. It will cease paying for 10 preventable hospital- acquired conditions. Which of the following conditions are included in the new ruling? – A. Hematoma after venipuncture – B. Skin tear after being turned and repositioned – C. Cellulitis after IV infusion – D. Pneumonia after aspirating on meal tray28
Medicaid TitleXIX Social Security Act (1965) Covers “medically indigent” Funded partly by federal and partly by state governments Run by states under federal guidelines North Carolina statistics North Carolina Medicaid State Plan North Carolina Division of Medical Assistance29
Latest Data: NC Medicaid Enrollments & Payments Rising Enrollments Federal Share/ State Share: 71.81%/28.19%30
Medicaid Covers (depending on state’s program): – Nursing care facilities – Assisted living – Home health31
Affordable Care Act of 2010 Expands Medicaid Eligibility in 2014 The Affordable Care Act of 2010, signed by President Obama on March 23, 2010, creates a national Medicaid minimum eligibility level of 133% of the federal poverty level ($29,700 for a family of four in 2011) for nearly all Americans under age 65. This Medicaid eligibility expansion goes into effect on January 1, 2014 but states can choose to expand coverage with Federal support anytime before this date-see related Federal Policy Guidance and states that have expanded Medicaid prior to 2014. States can also choose to opt out of the expansion. See eligibility provisions in the Affordable Care Act. http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Eligibility.html32
Review Question What is federally mandated and state administered? A. Medicaid B. Medicare34
Review Question _________ is a $432 billion public health insurance program for low- income individuals and the largest long- term care program for the disabled and elderly. A. Medicaid B. Medicare35
Review Question Which of the following applies to Medicare and which applies to Medicaid? A. Federally administered, nationwide healthcare coverage program for elderly/ disabled B. Entitlement program—all individuals have a legal right to apply for the program; if they meet the eligibility criteria, they are entitled to receive coverage C. Uniform: one set of requirements applies to all participating providers/ beneficiaries D. Joint federal/ state partnership: healthcare coverage for low-income individuals E. Differences among state programs: covered populations, benefits, cost sharing, delivery systems and reimbursement to providers F. Means-tested program that provides benefits to certain categories of people who meet rigorous income and asset rules G. States may cover other individuals under “waiver” programs H. Every state has a limit on what things (“assets”) a recipient may own and keep36
Ethical Issue: Transfer of Assets & “Spend Down” Is transferring assets to qualify for Medicaid ethical? Right to leave assets to children? Should wealthy be subsidized? Punished for being frugal?37