Medicare Critical to Long-Term Care for Senior Citizens

Elderly Americans most frequently turn to Medicaid for long-term care, as the cost of nursing homes and other intensive care quickly diminishes the financial resources of many families.
Among the different types of health care services, Medicaid plays the largest role in the funding of long-term care. According to the 2006 National Health Expenditure data, Medicaid is estimated to have paid for 34 percent of all home health care and 43 percent of all nursing home care in the U.S.

Medicaid has a major responsibility for providing long-term care because the program covers some aged and many disabled persons, who tend to be the most frequent and most costly users of it, and because private health insurance and Medicare often furnish only limited coverage for such care, particularly for nursing homes.

Many people who pay for nursing home care privately become impoverished because nursing home care is very expensive; as a result, these people eventually become eligible for Medicaid.
Medicaid spent $99.9 billion on long-term care and $66.6 billion on managed care and other premiums in FY 2007.

During FY 2000 through FY 2005, Medicaid growth was faster than in the previous 6 years, with spending increasing an average of 8.9 percent per year over the 6-year period.

Several trends contributed to this acceleration. First, Medicaid enrollment increased at an average rate of 6.4 percent per year between FY 2000 and FY 2005. It grew fastest between FY 2000 and FY 2002, coinciding with the 2001economic recession, and reached a peak of 9.3 percent in FY 2002.

While blind or disabled enrollees and aged enrollees are the smallest enrollment groups in Medicaid, they are projected to account for the majority of spending. As indicated in the table below, for FY 2007, estimated benefit spending was $126.7 billion for blind or disabled enrollees and $70.9 billion for aged enrollees.

Combined, spending on these two groups constituted 67 percent of Medicaid expenditures (excluding DSH, territory expenditures, and adjustments which cannot be allocated by eligibility group). Medicaid spending on non-disabled children was about 19 percent of total Medicaid benefit expenditures, and spending on non-disabled and non-aged adults was about 13 percent.

~Serena Brock