Library Index :: Death and Dying: End-of-Life Controversies :: The Cost of Health Care - Increasing Costs, Government Health Care Programs, Who Pays For End-of-life Care?

The Cost of Health Care - Long-term Health Care

Longer life spans and life-sustaining technologies have created an increasing need for long-term care. For some older people, relatives provide the long-term care; but those who require labor-intensive, round-the-clock care often stay in nursing homes.

Home Health Care

The concept of home health care began as post-acute care after hospitalization, an alternative to longer, costlier hospital stays. Home health care services have grown tremendously since the 1980s. In 1997 the U.S. Department of Census estimated that approximately twenty thousand home care agencies existed. In 2003 the National Association for Home Care and Hospice (NAHC) reported that 7,265 home care agencies were Medicare certified.

In 1972 Medicare extended home care coverage to people under sixty-five only if they were disabled or suffered from end-stage renal disease. By the year 2000 Medicare coverage for home health care was limited to patients immediately following discharge

TABLE 9.4 Medicaid recipients and medical vendor payments, by eligibility, race, and ethnicity, selected fiscal years 1972–2001

TABLE 9.4
Medicaid recipients and medical vendor payments, by eligibility, race, and ethnicity, selected fiscal years 1972–2001
[Data are compiled by the Centers for Medicare & Medicaid Services for the Medicaid data system]
Basis of eligibility and race and ethnicity 1972 1980 1990 1995 1997 1998a 1999b 2000 2001
Recipients Number in millions
All recipients 17.6 21.6 25.3 36.3 34.9 40.6 40.1 42.8 46.0
Percent of recipients
Basis of eligibility:c
    Aged (65 years and over) 18.8 15.9 12.7 11.4 11.3 9.8 9.4 8.7 8.3
    Blind and disabled 9.8 13.5 14.7 16.1 17.6 16.3 16.7 16.1 15.4
    Adults in families with dependent childrend 17.8 22.6 23.8 21.0 19.5 19.5 18.7 20.5 21.1
    Children under age 21e 44.5 43.2 44.4 47.3 45.3 46.7 46.9 46.1 45.7
    Other Title XIXf 9.0 6.9 3.9 1.7 6.3 7.8 8.4 8.6 9.5
Race and ethnicity:g
    White 42.8 45.5 44.4 41.3 40.2
    Black or African American 25.1 24.7 23.5 24.2 23.1
    American Indian or Alaska Native 1.0 0.8 1.0 0.8 1.3
    Asian or Pacific Islander 2.0 2.2 1.9 2.5 3.0
    Hispanic or Latino 15.2 17.2 14.3 15.6 17.9
    Unknown 14.0 9.6 14.9 15.5 14.6
Vendor paymentsh Amount in billions
All payments $6.3 $23.3 $64.9 $120.1 $124.4 $142.3 $153.5 $168.3 $186.3
Percent distribution
    Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Basis of eligibility:
    Aged (65 years and over) 30.6 37.5 33.2 30.4 30.3 28.5 27.7 26.4 25.9
    Blind and disabled 22.2 32.7 37.6 41.1 43.5 42.4 42.9 43.2 43.1
    Adults in families with dependent childrend 15.3 13.9 13.2 11.2 9.9 10.4 10.3 10.6 10.7
    Children under age 21e 18.1 13.4 14.0 15.0 14.1 16.0 15.7 15.9 16.3
    Other Title XIXf 13.9 2.6 1.6 1.2 2.2 2.6 3.4 3.9 3.9
Race and ethnicity:g
    White 53.4 54.3 55.0 54.3 54.4
    Black or African American 18.3 19.2 18.5 19.6 19.8
    American Indian or Alaska Native 0.6 0.5 0.6 0.8 1.1
    Asian or Pacific Islander 1.0 1.2 0.9 1.4 2.5
    Hispanic or Latino 5.3 7.3 6.8 8.2 9.4
    Unknown 21.3 17.6 18.2 15.7 12.9

from the hospital. As of 2003 Medicare covered beneficiaries' home health care services with no requirement for prior hospitalization. There were also no limits to the number of professional visits or to the length of coverage. As long as the patient's condition warranted it, the following services were provided:

  • Part-time or intermittent skilled nursing and home health aide services
  • Speech-language pathology services
  • Physical and occupational therapy
  • Medical social services
  • Medical supplies
  • Durable medical equipment (with a 20% co-pay)

Over time, the population receiving home care services has changed. Today much of home health care is associated with rehabilitation from critical illnesses, and fewer users are long-term patients with chronic conditions. In 2000, 75% (1,017,900) of home health users received medical/skilled nursing services, 44% (600,900) received personal care, 37% (502,600) received therapy, and 12% (160,000) received psychosocial services. (See Table 9.10.)

Medicare payments for home health care peaked in 1997 and began to decline in 1998. From 1998 to 1999 Medicare spending for home health care dropped nearly 33%. (See Table 9.11.) Likewise, the number of home care agencies that were Medicare certified declined from a high of 10,444 in 1997, to 8,080 in 1998, then to 7,747 in 1999. (See Table 9.12.) NAHC believes that the decline in agencies since 1997 is the direct result of changes in Medicare home health reimbursement enacted as part of the Balanced Budget Act of 1997 (PL 105-33; see next section).

Relaxed eligibility criteria for home health care, including elimination of the requirement of an acute hospitalization before receiving home care in 2003, enabled an increased number of beneficiaries to use home

TABLE 9.4 Medicaid recipients and medical vendor payments, by eligibility, race, and ethnicity, selected fiscal years 1972–2001 [CONTINUED] "Table 142. Medicaid Recipients and Medical Vendor Payments, according to Basis of Eligibility, and Race and Ethnicity: United States, Selected Fiscal Years 1972–2001," in Health, United States, 2005, Centers for Disease Control and Prevention, National Center for Health Statistics, November 2005, http://www.cdc.gov/nchs/data/hus/hus05.pdf (accessed February 27, 2006)

TABLE 9.4
Medicaid recipients and medical vendor payments, by eligibility, race, and ethnicity, selected fiscal years 1972–2001 [CONTINUED]
[Data are compiled by the Centers for Medicare & Medicaid Services from the Medicaid data system]
Basis of eligibility and race and ethnicity 1972 1980 1990 1995 1997 1998a 1999b 2000 2001
aPrior to 1999 recipient counts exclude those individuals who only received coverage under prepaid health care and for whom no direct vendor payments were made during the year; and vendor payments exclude payments to health maintenance organizations and other prepaid health plans ($19.3 billion in 1998 and $18 billion in 1997). The total number of persons who were Medicaid eligible and enrolled was 41.4 million in 1998, 41.6 million in 1997, and 41.2 million in 1996.
bStarting in 1999, the Medicaid data system was changed.
cIn 1980 and 1985 recipients are included in more than one category. In 1990–96, 0.2-2.5 percent of recipients have unknown basis of eligibility. From 1997 onwards, unknowns are included in "Other Title XIX."
dIncludes adults in the Aid to Families with Dependent Children (AFDC) program. From 1997 onwards includes adults in the Temporary Assistance for Needy Families (TANF) program. From 2001 onwards includes women in the Breast and Cervical Cancer Prevention and Treatment Program.
eIncludes children in the AFDC program. From 1997 onwards includes children and foster care children in the TANF program.
fIncludes some participants in the supplemental security income program and other people deemed medically needy in participating states. From 1997 onwards excludes foster care children and includes unknown eligibility.
gRace and ethnicity as determined on initial Medicaid application. Categories are mutually exclusive. Starting in 2001, Hispanic category included Hispanic persons regardless of race. Persons indicating more than one race were included in the unknown category.
hVendor payments exclude disproportionate share hospital payments ($15.5 billion in fiscal year 2001).
Notes: "—" = Data not available. 1972 data are for fiscal year ending June 30. All other years are for fiscal year ending September 30.
SOURCE: "Table 142. Medicaid Recipients and Medical Vendor Payments, according to Basis of Eligibility, and Race and Ethnicity: United States, Selected Fiscal Years 1972–2001," in Health, United States, 2005, Centers for Disease Control and Prevention, National Center for Health Statistics, November 2005, http://www.cdc.gov/nchs/data/hus/hus05.pdf (accessed February 27, 2006)
Vendor payments per recipienth Amount
All recipients $358 $1,079 $2,568 $3,311 $3,568 $3,501 $3,819 $3,936 $4,053
Basis of eligibility:
    Aged (65 years and over) 580 2,540 6,717 8,868 9,538 10,242 11,268 11,929 12,725
    Blind and disabled 807 2,618 6,564 8,435 8,832 9,095 9,832 10,559 11,318
    Adults in families with dependent childrend 307 662 1,429 1,777 1,809 1,876 2,104 2,030 2,059
    Children under age 21e 145 335 811 1,047 1,111 1,203 1,282 1,358 1,448
    Other Title XIXf 555 398 1,062 2,380 1,242 1,166 1,532 1,778 1,680
Race and ethnicity:g
    White 3,207 3,953 4,421 4,609 5,489
    Black or African American 1,878 2,568 2,798 2,836 3,480
    American Indian or Alaska Native 1,706 2,142 2,500 3,297 3,452
    Asian or Pacific Islander 1,257 1,713 1,610 1,924 3,283
    Hispanic or Latino 903 1,400 1,699 1,842 2,126
    Unknown 3,909 6,099 4,356 3,531 3,576

health services. Table 9.12 shows that the number of Medicare-certified home care agencies increased from a low of 6,861 in 2001 to 7,265 in 2003. In addition, Medicare payments for home health care increased by 7.5% in 2002 over 2001. In 2004 and 2005 payments increased 10.9% and 11.6% over the prior year, respectively. (See Table 9.11.)

MEDICARE LIMITS HOME CARE SERVICES

The Balanced Budget Act of 1997 (PL 105-33) aimed to cut approximately $16.2 billion from Medicare home care expenditures over a period of five years. The federal government sought to return home health care to its original concept of short-term care plus skilled nursing and therapy services. Medicare beneficiaries who received home health care would lose certain personal care services, such as assistance with bathing, dressing, and eating.

The Balanced Budget Act sharply curtailed the growth of home care spending, greatly affecting health care providers. As mentioned in the prior section, annual Medicare home health care spending fell nearly 33% between 1998 and 1999 in response to tightened eligibility requirements for skilled nursing services, limited per-visit payments, and increasingly stringent claims review. (See Table 9.11.) The changes forced many agencies to close and transfer their patients to other home health care companies. In addition, the number of current home health care patients declined (see Figure 9.2), in large part due to decreased funding. However, the decline began one year prior to the Balanced Budget Act, so more factors than decreased Medicare funding are likely to be playing a role in the decline.

Nursing Home Care

Growth of the home health care industry in the 1980s and early to mid-1990s is only partly responsible for the decline in the rate of Americans entering nursing homes (residents per one thousand population), as shown in Table 9.13. Declines also occurred in years when numbers of home health care patients declined as well. Another reason for the decline in the rate of nursing home residents may be that the elderly are choosing assisted living and continuing-care retirement communities that offer alternatives to nursing home care. There is also a

TABLE 9.5 Medicare-certified hospices, by type, 1984–2004 "Table 1. Number of Medicare-Certified Hospices, by Auspice, 1984–2004," in Hospice Facts & Statistics, National Association for Home Care & Hospice, March 2005, http://www.nahc.org/hospicefands.pdf (accessed November 10, 2005)

TABLE 9.5
Medicare-certified hospices, by type, 1984–2004
Year Home health agency-based Hospital-based Skilled nursing facility-based Freestanding Total
Notes: Home health agency-based (HHA) hospices are owned and operated by freestanding proprietary and nonprofit home care agencies. Hospital-based (HOSP) hospices are operating units or departments of a hospital.
SOURCE: "Table 1. Number of Medicare-Certified Hospices, by Auspice, 1984–2004," in Hospice Facts & Statistics, National Association for Home Care & Hospice, March 2005, http://www.nahc.org/hospicefands.pdf (accessed November 10, 2005)
1984 n/a n/a n/a n/a 31
1985 n/a n/a n/a n/a 158
1986 113 54 10 68 245
1987 155 101 11 122 389
1988 213 138 11 191 553
1989 286 182 13 220 701
1990 313 221 12 260 806
1991 325 282 10 394 1,011
1992 334 291 10 404 1,039
1993 438 341 10 499 1,288
1994 583 401 12 608 1,604
1995 699 460 19 679 1,857
1996 815 526 22 791 2,154
1997 823 561 22 868 2,274
1998 763 553 21 878 2,215
1999 762 562 22 928 2,274
2000 739 554 20 960 2,273
2001 690 552 20 1,003 2,265
2002 676 557 17 1,072 2,322
2003 653 561 16 1,214 2,444
2004 656 562 14 1,438 2,670

TABLE 9.6 Comparison of hospital, SNF, and hospice Medicare charges, 1998–2004 "Table 13. Comparison of Hospital, SNF, and Hospice Medicare Charges, 1998–2004," in Hospice Facts & Statistics, National Association for Home Care & Hospice, March 2005, http://www.nahc.org/hospicefands.pdf (accessed November 10, 2005)

TABLE 9.6
Comparison of hospital, SNF, and hospice Medicare charges, 1998–2004
1998 1999 2000 2001 2002 2003 2004
SOURCE: "Table 13. Comparison of Hospital, SNF, and Hospice Medicare Charges, 1998–2004," in Hospice Facts & Statistics, National Association for Home Care & Hospice, March 2005, http://www.nahc.org/hospicefands.pdf (accessed November 10, 2005)
Hospital inpatient charges per day $2,177 $2,583 $2,762 $3,069 $3,164 $3,354 $3,502
Skilled nursing facility charges per day 482 424 413 422 444 465 493
Hospice charges per covered day of care 113 116 121 125 128 123 127

trend toward healthy aging—more older adults are living longer with fewer disabilities.

Still, in 1999 (the latest data available) nearly 1.5 million adults age sixty-five and older were nursing home residents. Most were white (87.1%) and female (74.3%), and more than half (51.5%) were eighty-five years and older. (See Table 9.13.)

Nursing homes provide terminally ill residents with end-of-life services in different ways:

  • Caring for patients in the nursing home
  • Transferring patients who request it to hospitals or hospices
  • Contracting with hospices to provide palliative care (care that relieves the pain but does not cure the illness) within the nursing home

A combination of federal, state, and private monies finance nursing home care. According to the Administration on Aging, in 2000 almost half of the funds came from Medicaid, one-third came from private payment, 10% from Medicare, and 5% from private insurance.

Patients in a Persistent Vegetative State

The precise number of patients in a persistent vegetative state (PVS) is unknown because no system is in place to count them. The costs to maintain such patients range from $2,000 to $10,000 per month, depending on the acuity of care needed (the type, degree, or extent of required services).

The End-Stage Renal Disease Program

End-stage renal disease (ESRD) is the final phase of irreversible kidney disease and requires either kidney

TABLE 9.7 Medicare benefit payments, fiscal years 2004 and 2005 "Table 4. Medicare Benefit Payments, FY2004 and FY2005," in Hospice Facts & Statistics, National Association for Home Care & Hospice, March 2005, http://www.nahc.org/hospicefands.pdf (accessed November 10, 2005)

TABLE 9.7
Medicare benefit payments, fiscal years 2004 and 2005
2004 (estimated) 2005 (projected)
Amount ($ millions) Percent of total Amount ($ millions) Percent of total
*Part A total does not include peer review organization payments. Figures may not add to totals due to rounding.
SOURCE: "Table 4. Medicare Benefit Payments, FY2004 and FY2005," in Hospice Facts & Statistics, National Association for Home Care & Hospice, March 2005, http://www.nahc.org/hospicefands.pdf (accessed November 10, 2005)
    Total Medicare benefit payments* 295,334 100.0 326,019 100.0
Part A
Hospital care 113,624 38.5 119,398 36.6
Skilled nursing facility 16,468 5.6 16,976 5.2
Home health 5,501 1.9 6,152 1.9
Hospice 7,238 2.5 8,599 2.6
Managed care 20,932 7.1 27,764 8.5
    Total 163,764 55.5 178,889 54.9
Part B
Physician 52,022 17.6 56,096 17.2
Durable medical equipment 7,868 2.7 8,136 2.5
Carrier lab 3,202 1.1 3,447 1.1
Other carrier 13,821 4.7 14,731 4.5
Hospital 16,883 5.7 18,573 5.7
Home health 5,689 1.9 6,370 2.0
Intermediary lab 2,651 0.9 2,834 0.9
Other intermediary 10,414 3.5 11,213 3.4
Managed care 18,830 6.4 24,573 7.5
    Total 131,379 44.5 145,975 44.8

TABLE 9.8 Medicaid payments, by type of service, fiscal years 2001 and 2002 "Table 9. Medicaid Payments, by Type of Service, FY 2001 & FY 2002," in Hospice Facts & Statistics, National Association for Home Care & Hospice, March 2005, http://www.nahc.org/hospicefands.pdf (accessed November 10, 2005)

TABLE 9.8
Medicaid payments, by type of service, fiscal years 2001 and 2002
2001 ($ millions) Percent of total 2002 ($ millions) Percent of total
aTotal outlays include hospice outlays from the Form CMS-64 plus payments for all service types included in the Medicaid Statistical Information System (MSIS), not just the eight service types listed.
bHospice outlays come from Form CMS-64 and do not include Medicaid State Children's Health Insurance Program (SCHIP). All other expenditures come from the MSIS. The federal share of Medicaid's hospice spending in 2001 was $314.6 million, or 57.6% of the total. In fiscal year 2002, it was $404.7 million, or 57.3% of total Medicaid hospice payments.
cICF is intermediate care facilities. MR is Medicaid reimbursed.
dHome health includes both home health and personal support services.
SOURCE: "Table 9. Medicaid Payments, by Type of Service, FY 2001 & FY 2002," in Hospice Facts & Statistics, National Association for Home Care & Hospice, March 2005, http://www.nahc.org/hospicefands.pdf (accessed November 10, 2005)
Inpatient hospital 25,943.1 13.8 29,127.1 13.6
Nursing home 37,322.7 19.9 39,282.2 18.3
Physician 7,438.7 4.0 8,354.6 3.9
Outpatient hospital 7,496.1 4.0 8,470.6 4.0
Home healthd 16,655.4 8.9 19,287.8 9.0
Hospiceb 546.1 0.3 706.2 0.3
Prescription drugs 23,764.4 12.7 28,408.2 13.3
ICF (MR) servicesc 9,700.9 5.2 10,681.3 5.0
Other 58,592.5 31.3 69,879.5 32.6
    Total paymentsa 187,459.9 100.0 214,197.5 100.0

TABLE 9.9 Number of states offering hospice under Medicaid, selected years 1987–2002 "Table 10. Number of States Offering Hospice under Medicaid, Selected Years, 1987–2002," in Hospice Facts & Statistics, National Association for Home Care & Hospice, March 2005, http://www.nahc.org/hospicefands.pdf (accessed November 10, 2005)

TABLE 9.9
Number of states offering hospice under Medicaid, selected years 1987–2002
Year Total number States added States dropped
SOURCE: "Table 10. Number of States Offering Hospice under Medicaid, Selected Years, 1987–2002," in Hospice Facts & Statistics, National Association for Home Care & Hospice, March 2005, http://www.nahc.org/hospicefands.pdf (accessed November 10, 2005)
1987 6 FL, KY, MI, MN, ND, VT
1988 15 DE, HI, IL, MA, NE, NY, NC, RI, TX, WI MN
1989 24 AZ, CA, GA, ID, KS, MO, MT, PA, TN, UT NE
1990 32 AL, AK, IA, MD, MN, NM, OH, VA, WA TN
1991 34 CO, MS, TN AK
1992 35 NJ
1993 36 DC, WV AZ
1994 38 OR, WY
1995 40 AK, SC
1996 41 AR
1997 42 IN
1998 44 AZ, NV
1999 44
2002 47 TN, MN, ME

transplantation or dialysis to maintain life. Dialysis is a medical procedure in which a machine takes over the function of the kidneys by removing waste products from the blood. Medicare beneficiaries with ESRD are high-cost users of Medicare services. Amendments to the Social Security Act in 1972 extended Medicare coverage to include ESRD patients. According to the Centers for Medicare and Medicaid's 2005 CMS Statistics, Medicare enrollees with end-stage renal disease increased from 66,700 in 1980 to 359,400 in 2004, an increase of 439%.

TABLE 9.10 Number of current home health care patients by services received, 2000 Adapted from "Table 6. Number of Current Home Health Care Patients by Services Received, by Sex and Race: United States, 2000," in National Home and Hospice Care Data, Centers for Disease Control and Prevention, National Center for Health Statistics, http://www.cdc.gov/nchs/data/nhhcsd/curhomecare00.pdf (accessed November 7, 2005)

TABLE 9.10
Number of current home health care patients by services received, 2000
Selected servicesa Number
*Figure does not meet standard of reliability or precision because the sample size is between 30 and 59.
aNumbers will not add to totals because a patient may be included in more than one category.
bTotal number of home health care patients.
cIncludes Meals on Wheels.
dIV is intravenous.
eIncludes enteral nutrition and dialysis.
fIncludes dental, vocational therapy, volunteers, and other services.
SOURCE: Adapted from "Table 6. Number of Current Home Health Care Patients by Services Received, by Sex and Race: United States, 2000." in National Home and Hospice Care Data, Centers for Disease Control and Prevention, National Center for Health Statistics, http://www.cdc.gov/nchs/data/nhhcsd/curhomecare00.pdf (accessed November 7, 2005)
All patientsb 1,355,300
Medical/skilled nursing
Total medical and/or skilled nursing 1,017,900
Physician    32,300
Skilled nursing 1,016,500
Equipment and/or medication
Total equipment/medication   174,800
Durable medical equipment and supplies   109,500
Medications    88,900
Personal care
Total personal care   600,900
Continuous home care    53,100
Companion    40,400
Homemaker-householdc   329,400
Personal care   476,400
Transportation    25,300*
Respite care    17,000*
Therapeutic
Total therapeutic   502,600
Dietary and/or nutritional    60,200
Enterostomal therapy    17,700*
IV therapyd    52,700
Occupational therapy   112,300
Physical therapy   360,700
Respiratory therapy    29,500
Speech therapy and/or audiology    30,600
Other high tech caree    11,000*
Psychosocial
Total psychosocial   160,000
Counseling    22,400
Psychological    14,700*
Social   117,500
Spiritual and/or pastoral care    15,300*
Referral    34,800
Othere,f    46,300

The segment of Medicare beneficiaries with a disability or ESRD rose from 3% of all Medicare beneficiaries in 1980 to 5.4% in 2000. This group is projected to grow to 8.7% by the year 2020 and level off in the next decade. (See Figure 9.3.)

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