September 2013 | Fact Sheet
Five Key Facts About the Delivery and Financing
of Long-Term Services and Supports
Fact #1: People of All Ages Require Long-Term Services and Supports
As a result of physical limitations, cognitive impairments, mental
illness, and/or a disabling chronic condition, an individual may
need long-term assistance for several months or years. Assistance
can include help with completing daily self-care tasks, such as
bathing, dressing, or managing prescription medications, and also
with completing errands, such as grocery shopping or traveling to doctor appointments. Those with severely
disabling chronic conditions often require more extensive acute care and long-term services and supports
(LTSS) as they age. The 2011 U.S. Census Bureau American Community Survey estimates that:
 8 million people experience difficulty with self-care (i.e., completing “activities of daily living”)
 13 million adults experience difficulty with living independently
 14 million children and adults have difficulty remembering, concentrating, or making decisions
 20 million children and adults experience difficulty with walking or climbing stairs1
Fact #2: Many People Who Need Long-Term Services and Supports Rely on Unpaid, Informal
Care
Family caregivers have traditionally provided informal assistance with personal care and household chores, but
in many cases informal caregiving now includes skilled medical/nursing care tasks such as meal preparation
for a special diet, wound care, and care coordination. The majority of family members providing care to people
with multiple chronic physical and cognitive conditions were:
 female (58%)
 age 50 or above (66%)
 caring for a parent (38%)
 providing care for three or more years (44%)
 employed outside of the home (47%) and making less than $50,000 annually (48%)
Most family caregivers are willing to provide care for their family members and friends, but the caregiving
experience can be very demanding, leading to undesirable outcomes such as chronic stress or financial strain.2
Fact #3: When Paid, Formal Care is Needed, Many People Cannot Afford to Cover These
Expenses Out-of-Pocket
Paying for needed LTSS is expensive and often
burdensome. On average, nursing home care costs
over $90,000, assisted living facility care costs over
$42,000, home health aide services (at $20/hour, 20
hours/week) cost almost $21,000, and adult day care
(at $70/day, 5 days/week) costs about $18,000
annually.3 Thirty-four percent of seniors live below
200 percent of poverty ($22,002 for an individual age
65 or older) (Figure 1).4 Many individuals and families
Figure 1
Long-Term Care Costs Can Exceed Seniors’ Income
Average Annual Care Costs,
by Type of Service
$90,520
$42,600
Annual Gross Income
$22,002
$20,800
34%
$18,200
of seniors live below
200% of poverty
exhaust their assets paying for much needed services
Nursing
Assisted
Home
Adult Day
Home
Living
Health
Care
Facilities
Aide
and supports, thereby qualifying for financial needbased coverage under Medicaid. In the absence of
affordable private insurance coverage options or viable
public insurance alternatives, such as a national long-term care insurance system or expanded coverage for
Medicare beneficiaries, there will be a continued reliance on the Medicaid program.
SOURCES: MetLife Mature Market Institute. The 2012 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and
Home Care Costs, November 2012, available at: https://www.metlife.com/mmi/research/2012-market-survey-long-term-carecosts.html#keyfindings; U.S. Census Bureau, Current Population Survey, 2012 Annual Social and Economic Supplement, Table POV01.
Fact #4: Medicaid is the Primary Payer for Long-Term Services and Supports
Medicaid, administered by states and jointly financed
by the federal and state governments, is the primary
payer for LTSS for people who have low incomes and
who deplete their personal savings to pay for medical
and long-term care. In 2011, a total of $357 billion was
spent on LTSS. Medicaid accounted for 40 percent of
total expenditures, and Medicare, which provides
limited post-acute care, accounted for slightly more
than one-fifth of spending (21%). Direct out-of-pocket
spending accounted for 15 percent of total LTSS
spending, with private insurance and other public and
private funding sources covering 7 percent and 18
percent of total LTSS spending, respectively (Figure 2).
Figure 2
Medicaid is the Primary Payer for Long-Term Services and
Supports (LTSS)
Medicare
Post-Acute
Care, 21%
Other Public
and Private,
18%
Medicaid, 40%
Out-ofPocket,
15%
Total National LTSS
Spending, 2011 =
$357 billion
Private Insurance,
7%
NOTE: Total LTSS expenditures include spending on residential care facilities, nursing homes, home health services, and home and
community-based waiver services. Expenditures also include spending on ambulance providers. All home and community-based
waiver services are attributed to Medicaid.
SOURCE: KCMU estimates based on Centers for Medicare & Medicaid Services National Health Expenditure Accounts data for
2011.
Currently, home and community-based LTSS represent almost one-half (48%) of total Medicaid long-term care
expenditures, up from 20 percent in 1995.5 This shift in spending is a reflection of states’ efforts to meet their
community integration obligations under the U.S. Supreme Court’s 1999 Olmstead decision and beneficiaries’
preference for community-based care. Medicaid home and community-based services (HCBS) spending as a
share of Medicaid LTSS expenditures varies widely by state, ranging from Mississippi at 16 percent to Oregon
at 75 percent in 2011.6 The Affordable Care Act (ACA) provides a number of new and expanded options for
states, many with financial incentives, to increase the availability of HCBS; as of August 2013, all but three
states plan to pursue or are pursuing at least one ACA option, but it is too early to determine the full impact of
Five Key Facts About the Delivery and Financing of Long-Term Services and Supports
2
the various LTSS options on spending and beneficiary outcomes.7
Fact #5: With the Aging of America, the Demand for Long-Term Services and Supports is
Expected to Increase in the Coming Decades
Figure 3
The 65 and Over Population Will More Than Double and
the 85 and Over Population Will More Than Triple by 2050
100,000,000
90,000,000
80,000,000
Number of Individuals
The U.S. will experience a demographic shift by age in
the coming decades as a result of the “Baby Boomers”
reaching older adulthood, increased life expectancy, and
advances in medicine and medical technology. The
majority of Americans ages 65 and over will have longterm care needs (70% of “Baby Boomers” can expect to
use some form of long-term care during their lives), and
the 85 and over population – who is most likely to need
LTSS – is expected to increase by almost 70 percent in
the next 20 years (Figure 3).8 In the face of increased
70,000,000
Age 65+
60,000,000
Age 65 - 74
50,000,000
Age 75 - 84
40,000,000
Age 85+
30,000,000
20,000,000
10,000,000
0
2012
2032
2050
demand for LTSS, states and the nation will be
challenged to find innovative ways to deliver high quality,
person-centered LTSS, reduce unmet long-term care needs and HCBS workforce shortages, increase accessible
and affordable community-based housing options, and strengthen community-based provider and resource
networks.
SOURCE: A. Houser, W. Fox-Grage, and K. Ujvari. Across the States 2012: Profiles of Long-Term Services and Supports, AARP Public
Policy Institute, September 2012, available at: http://www.aarp.org/home-garden/livable-communities/info-09-2012/across-thestates-2012-profiles-of-long-term-services-supports-AARP-ppi-ltc.html.
Five Key Facts About the Delivery and Financing of Long-Term Services and Supports
3
ENDNOTES
U.S. Census Bureau, 2011 American Community Survey 1-Year Estimates, available at:
http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_11_1YR_S1810&prodType=tab
le.
1
S. Reinhard and C. Levine. Home Alone: Family Caregivers Providing Complex Chronic Care, AARP Public Policy
Institute, October 2012, available at:
http://www.aarp.org/content/dam/aarp/research/public_policy_institute/health/home-alone-family-caregiversproviding-complex-chronic-care-rev-AARP-ppi-health.pdf.
2
MetLife Mature Market Institute. The 2012 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day
Services, and Home Care Costs, November 2012, available at: https://www.metlife.com/mmi/research/2012-marketsurvey-long-term-care-costs.html#keyfindings.
3
U.S. Census Bureau, Current Population Survey, 2012 Annual Social and Economic Supplement, available at:
http://www.census.gov/hhes/www/cpstables/032012/pov/POV01_200.htm.
4
5
Urban Institute estimates based on data from HCFA-2082 and HCFA/CMS-64.
6
Urban Institute estimates based on data from CMS-64.
M. O’Malley Watts, M. Musumeci, and E. Reaves. How is the Affordable Care Act Leading to Changes in Medicaid
Long-Term Services and Supports (LTSS) Today? State Adoption of Six LTSS Options, The Henry J. Kaiser Family
Foundation, April 2013, available at: http://www.kff.org/medicaid/issue-brief/how-is-the-affordable-care-act-leading-tochanges-in-medicaid-long-term-services-and-supports-ltss-today-state-adoption-of-six-ltss-options/; Table 1 updated
August 2013, available at: http://www.kff.org/state-category/health-reform/medicaid-and-health-reform-health-reform/.
7
A. Houser, W. Fox-Grage, and K. Ujvari. Across the States 2012: Profiles of Long-Term Services and Supports, AARP
Public Policy Institute, September 2012, available at: http://www.aarp.org/home-garden/livable-communities/info-092012/across-the-states-2012-profiles-of-long-term-services-supports-AARP-ppi-ltc.html.
8
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Washington Offices and Barbara Jordan Conference Center: 1330 G Street, NW, Washington, DC 20005 | Phone 202-347-5270 | Fax 202-347-5274 | www.kff.org
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