Question

For our send discussion this week, let’s review the financial picture of the long-term care (LTC) industry. Who are the main payers? What are some of the main financial challenges that the industry is facing?

Answer 1

Long-term care is the assisting and promoting of activities of daily living such as bathing, dressing, toileting, transferring and also includes the intentional activities of cooking, transportation, housekeeping, and finances. Long-term provides in various settings such as at home, care communities, retirement communities etc. Long-term care is more expensive. It creates the financial risk to the individual and the families. The cost of LTC care exceeded and users need to pay out of their pocket. Annually, the total expenditure of LTC is $100billion.

Medicaid and Medicare are the main payers. Thus the government funding covers 63% through Medicaid and Medicare as 40% and 23% respectively. The remaining 37 % covers by Out of pocket(22%), LTC insurance(9%), private sources(3%), public sources(3%).

Some of the financial challenges are

• It is difficult for the middle class to plan for future LTC.
• Medicare covers only short duration for some type of services. e.g post-acute care.
• Financial threat on future demand.
• Most of them are covered through Medicare but Medicare does not cover most of the LTC services.
• The post-acute payment rate is higher compared to Medicaid reimbursement.
• Additional expenses are not included by Medicaid reimbursement.
• Families are denied by the coverage.