News & Press Releases

Nation’s First Comprehensive Analysis of Major LTC Financing Research Now Available

Press Room – 2008 NIC Press Releases

Nation’s First Comprehensive Analysis of Major LTC Financing Research Now Available

Report to Provide Framework for Policymakers and Others Working to Solve
How to Pay for Boomers’ Care Needs in 20-40 Years

FOR IMMEDIATE RELEASE: March 20, 2008
Contact: Renee Tilton, (410) 626-0805 or rtilton@crosbymarketing.com

Annapolis, Md. – The first comprehensive review and analysis of research on long-term care financing for America’s elderly is now available, the National Investment Center for the Seniors Housing & Care Industry (NIC) announced today. This major undertaking, conducted by RTI International for NIC, involved compiling and analyzing all major studies and projection modeling to date on the issue.

The result – The NIC Compendium Project: A Guide to Long-Term Care Projection and Simulation Models – is a body of knowledge that will help policymakers and others determine the best combination of public- and private-sector funding that will be needed to pay for the nation’s growing care needs, especially when Baby Boomers reach their 70s and 80s.

“In a short 20 years from now, our nation’s economy will face an enormous challenge,” said Robert G. Kramer, President of NIC. “That is, how are we going to pay for the massive numbers of Baby Boomers who will move through the long-term care system?”

“The real impact of long-term care needs won’t be felt until 2030-2050,” continued Kramer. “How much will this care cost? How will the nation pay for it? And how can policymakers, seniors housing and care industry leaders, researchers and other decision-makers agree on the best plan to meet those needs? This Compendium will focus attention on the need for long-term care research and help stimulate a policy debate at the national level.”

The lead author and head of the research team for the project was Joshua M. Wiener, Ph.D., Senior Fellow and Program Director for Aging, Disability and Long-Term Care at RTI International. His past work includes leading the development of the first long-term care financing micro-simulation model, a predecessor to The Lewin Group’s Long-Term Care Financing Model. Marc P. Freiman, Ph.D., and David Brown are co-authors of the report.

Wiener pointed out several significant findings from the research that formed the Compendium:

  • The need for long-term care is a “normal” life experience. According to a study by Kemper, Komisar and Alecxih (2005/2006) among those turning 65 now, nearly 70 percent will need some form of long-term care before they die, and 20 percent will need it for more than five years. This includes informal care, paid home care, nursing home care and assisted living facility care.
  • The number of people with disabilities is likely to increase substantially, even if disability rates fall. A recent study from Johnson, Toomey and Wiener (2007) projected that the number of older people with disabilities will grow from 10 million in 2000 to between 15.1 million and 24.6 million in 2040. As such, policymakers cannot assume that declines in disability rates will solve the problem of long-term care.
  • The demand for long-term care services is likely to at least double by 2040. The same Johnson, Toomey and Wiener study projected that the use of paid home care will increase from 2.2 million people in 2000 to 3.9 million – 6.2 million in 2040, depending mostly on assumptions about disability rates. During the same period, the number of older people using nursing care will increase from 1.2 million to 2 million – 3.1 million.
  • The price of long-term care services will have a big impact on the level of expenditures. A 1994 study from Wiener, Illston and Hanley found that total expenditures (in 1993 dollars) for older people were projected to be $134 billion in 2018 if prices increased 4.5 percent annually; $215 billion, if prices increased 6.5 percent annually.
  • Despite problems with the pension system, the financial status of older people will improve over time. One report, Knickman and Snell (2002) projected that the proportion of older people who would be extremely likely to use Medicaid to pay for a significant period of long-term care would decline from 45 percent in 2000 to 29 percent in 2030.
  • Under the current system, most older people will not have private long-term care insurance in the future. The Wiener, Illston and Hanley (1994) study projected that no more than 20 percent of older people would have private long-term care insurance in 2018 because of its high cost.

The Compendium also pointed out limitations with current projection models. For example, they do not address the substitutability of services, such as home care and assisted living facilities, for nursing home care. There is also a lack of data on which to determine the impact of price changes on the use of services or “price elasticity.” And younger people with disabilities are not included as part of the projections, even though 22 percent of Medicaid nursing home expenditures in 2003 were for people under age 65.

“This issue on how we will fund future long-term care has huge implications for the seniors housing and care industry, and its leaders need to work closely with government and research communities to craft on-going, relevant research, especially in those areas that have been lacking in previous studies,” said Anthony J. Mullen, Senior Fellow for NIC, partner with Royal Star Properties, and one of the leading researchers and analysts in the seniors housing and care industry. “In addition to full micro-simulation models, stakeholders also need to develop simpler projection models that allow for easier input of ‘expert opinion.’ And the results of government-funded projection models should be more publicly available.”

The Compendium is available for purchase for $75 in either an electronic or a print version. For more information, visit www.NIC.org or call (410) 267-0504.

About NIC

Founded in 1991, the National Investment Center for the Seniors Housing & Care Industry is a nonprofit education and research organization providing information about business strategy and capital formation for the senior living industry. NIC is the leading provider of historical and trend data on the industry through its Key Financial Indicators™ (KFIs) that report nationwide statistics and its Market Area Profiles (MAP™) Data and Analysis Service that tracks properties in the 100 largest metropolitan areas. Proceeds from its annual conference are used to fund research on issues of importance to the industry, including data useful to policymakers making decisions about seniors housing and long-term care. For more information, visit www.NIC.org or call (410) 267-0504.

About RTI International
RTI International is one of the world’s leading research institutes with more than 2,600 individuals working in 40 countries. For almost five decades, the organization’s efforts have earned national and international recognition, and it has been credited with achieving major breakthroughs in scientific and social research. A major focus of the Institute is healthcare, ranging from the discovery of life-saving drugs to healthcare financing. RTI International has done research and policy analysis for the Centers for Medicare & Medicaid, the Centers for Disease Control, the National Institutes of Health, the Administration on Aging, the Office of the Assistant Secretary for Planning and Evaluation/U.S. Department of Health and Human Services, the Robert Wood Johnson Foundation and AARP. RTI International is headquartered in Research Triangle Park, N.C. For more information, visit www.rti.org or call (866) RTI-1958.

Note to Editor: An audio recording from a press briefing on the Compendium Project is available. For playback call-in information, please contact Renee Tilton atrtilton@crosbymarketing.com or (410) 626-0805.

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