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Proper funding for home-based long-term care is essential

June 28, 2021

Time to Rethink Nursing Homes
The JAMA Forum
April 13, 2021
By Stuart M. Butler

“Hundreds of thousands of people who are older and disabled live in nursing homes not because they need specialized care or want to live in those facilities, but because Medicaid payment rules make that the only housing with daily living care they can afford.

Nursing homes serve two quite different populations. One requires short-term postacute care services. The other is long-stay residents who mostly need only basic daily living care, many of whom would prefer to be living in their own communities and among friends.”

Comment by Allison K. Hoffman

The COVID pandemic led many to question the safety and wisdom of long-term care in nursing homes, where the virus spread dramatically and tragically. In response, nursing homes and their regulation are under scrutiny, and some people are advocating for their end.  

However, moving long-term care into personal homes is not easy and not always the right option, even if older people might prefer to “be living in their own communities and among friends.” Historically, Medicaid had a distinct institutional bias, funding long-term care in institutional settings as a mandatory benefit and in home-based settings as an optional benefit. Over the past few decades, however, funding for Medicaid long-term services and supports has shifted dramatically from paying for care in institutions toward home- and community-based services (HCBS) – a process called “rebalancing.” Now, over half of Medicaid dollars fund care in home-based settings.

When long-term care happens in homes, however, much of the cost of that care is incurred by family members who serve as informal caregivers. Elsewhere, I’ve called these sizeable costs the “invisible copayment” of long-term care. Some scholars like Butler suggest that we’ll save money by moving care out of institutions and into homes.

But this move does not truly save costs; it shifts and hides them. Family members incur costs invisibly and behind closed doors in the form of lost wages, leisure time, and benefits and retirement savings, as well as poor health. My colleague Norma Coe and co-authors estimate that the median and indirect cost of caring for an older parent over two years are equal to the cost of full-time institutional care. Any response to nursing home problems that increases the already strong trends of relying on family caregiving will exacerbate these costs.

We’re far from a solution that will fully pay for home-based care, whether provided by formal caregivers or by family. President Biden proposed an additional $400B over the next 10 years to help fund home and community-based as part of the Americans Jobs Plan. Even if this full amount were to be enacted into law (a big if!), it barely scratches the surface of what it would take to fund the demand for long-term care at home. Already, states’ waiting lists for HCBS are long and formal caregivers are grossly underpaid, causing workforce shortages.

To meet the need for long-term care and to pay for it at a living wage, whether provided by formal caregivers or by family members, will take a much more dedicated effort. This is an essential topic in the single payer discussion.


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