Long-term care in the USA: lessons for New Zealand?

• Author: Booth, Mark
• Position: Report

Abstract

The USA and New Zealand have different health and social care systems, but both share a desire for high-quality, affordable, long-term care for elders. In the USA moves have been made to integrate long-term care services within single capitated providers to provide clients with a seamless, easy-to-use service. Other initiatives seek to improve consumer direction by giving clients control of funding their own long-term care services. Such initiatives use different incentives to balance the need for high-quality care with affordability at both an individual and societal level. Initial analysis suggests that satisfaction and outcomes improve under these schemes. The integration models provide an interesting comparison for New Zealand as primary health care changes are further developed.

INTRODUCTION

This paper (1) examines long-term care for the elderly in the USA, focusing on two programmes that appear to be producing positive results. Although the paper concentrates on policies in a single country, the USA, long-term care for the elderly is a topic that is challenging all Western societies. Recent policy developments have been seen in a number of countries, such as the United Kingdom, where a Royal Commission Report and an influential policy group report have led to the adoption of a very different approach to the funding of long term care in Scotland and England (Wanless 2006, Royal Commission on Long Term Care 1999).

Although the health-care and social-care policy contexts for long-term care for the elderly differ considerably between New Zealand and the USA, both countries face similar challenges in relation to the provision of long-term care. Both have seen a decline in the proportion of the age-adjusted population with significant activities of daily living (ADL) impairments, but at the same time anticipate substantial growth in the number of older people, meaning that there will still be a large absolute increase in the number of people requiring assistance. In both countries the workforce is declining, the number of frail elderly requiring significant levels of care is rising, and consumer expectations are increasing. Both countries are facing pressures on funding at both the individual (related to low levels of personal saving) and societal (related to inadequate reserves to cover large future liabilities without increasing tax rates) levels. There is a consensus in both countries that caring for older people within their own homes or community is preferable to doing so in residential care settings. This is coupled with a desire to contain costs while ensuring high standards of quality and safety in a sector dominated by private providers (Bryant et al. 2004, Cornwall and Davey 2004, Ministry of Health 2002, Miller and Mor 2006).

Both the USA and New Zealand have seen the number of people in nursing-home care decline in recent years as more emphasis is put on community-based care. Accurate information on the use of aged-care services in New Zealand is difficult to obtain, but internationally New Zealand spends a relatively small amount of its gross domestic product (GDP) on long-term care services, as illustrated in Figure 1. The graph, using data from 2003, shows that New Zealand spends a similar proportion of its GDP to the USA on long-term care, and that in spite of the decline in residential care both countries are still heavily reliant on residential care.

The USA has investigated a number of approaches to funding and providing long-term care in recent years. This paper considers two initiatives that are judged to have had positive results, in terms of improving outcomes for the elderly, to see if any lessons can be learnt that are applicable to long-term care in New Zealand. The first initiative (managed long-term care) explores the integration of services to help highly vulnerable elders remain in their own homes; the second (cash and counselling) considers consumer direction of long-term care resources. The paper initially considers the context for long-term care in the USA by reviewing health-care funding and long-term care funding in that country and the links between the two. The two initiatives are then described, and this is followed by a discussion of the implications for New Zealand.

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HEALTH-CARE FUNDING IN THE USA

The USA has traditionally adopted a policy path that emphasises minimal government intervention, with accompanying low levels of taxation and an emphasis on individualism. Central government tax receipts as a proportion of GDP are, at 33%, among the lowest in the OECD (this compares with an OECD average of 38% and 47% for New Zealand (OECD 2006)). In line with this underlying philosophy, the USA does not have a "universal" government-funded health-care delivery system or insurance scheme for its citizens, but relies on a mixed system with funding from both public and private sources.

The majority (55% in 2004, see Centers for Medicare and Medicaid Services 2006) of funding is from private sources--out-of-pocket expenditures and private health insurance. Premiums for health insurance can be very high, particularly for families. The majority of Americans who are covered by private health insurance are covered by employer-sponsored schemes as part of their employment packages. Clearly the amount of cover available depends on the comprehensiveness of the scheme, which is directly related to its cost. It is estimated that 46.1 million non-elderly US citizens (approximately 18% of the population) lacked any health insurance in 2005 (Kaiser Foundation 2006) and so would face extreme difficulty in accessing non-emergency health-care services. Recent research from the Kaiser Foundation has shown that the number of uninsured is rising as health insurance premiums increase and employers, particularly those employing low-paid workers, cease offering health insurance as a part of remuneration packages (Kaiser Foundation 2006).

The remaining 45% of funding comes through publicly funded sources at the federal and state level, through either the Medicare or Medicaid programmes. Medicare is a federal-level health insurance programme, which provides funding for the elderly (defined as age 65 and over) and those with a permanent disability. This is an entitlement scheme, such that basic coverage is provided as a right (unlike the Medicaid programme, as discussed below) and covers hospital inpatient services--called Part A coverage. Individuals are able to purchase more comprehensive Medicare coverage if they wish, which covers doctors' services and other ambulatory services (known as Part B coverage), as well as a wider range of plans with lower deductibles (Part C coverage). More recently, individuals have also been able to purchase coverage for pharmaceuticals prescribed outside the hospital (Part D). In addition, private insurance is available to top-up Medicare coverage, either by covering co-payments or covering areas not included in Medicare--these are known as "Medigap" policies. Such plans are provided by a large number of different companies each providing a range of different options to consumers.

Medicaid provides health insurance for low-income pregnant women, children in low-income families up to the age of 19, parents with children under 19 who are on low incomes, low-income people with disabilities, and Medicaid-eligible (financially and medically) Medicare beneficiaries who require long-term care services not covered by Medicare. The Medicaid programme is not an entitlement system, and access depends on...