Seniors Overestimate Their Likelihood of Going to a Nursing Home

Yesterday, I was helping someone think through options to care for their parent who has dementia and recently suffered a serious fall. This person’s parent does not have private long term care (LTC) insurance (most don’t) and my friend said that “this must be due to the fact that elders underestimate their likelihood of moving to a nursing home”, the most expensive LTC setting.

In fact, it is the opposite based on work I have done using the HRS. From a 2006 paper in Health Services Research:

ScreenHunter_01 Jun. 17 17.59

The simple comparison of the stated probability that a person who was age 65+ would move to a nursing home within 5 years was higher than the actual probability (for full sample, mean perception 0.14 v observed 0.08; see first column of p values).

Private LTC insurance is rare in spite of the elderly over-estimating their likelihood of needing such care. Why?

From a Health Affairs paper on the topic, here are the 6 primary reasons people do not buy such insurance.

  • No clear risk signal for need of LTC when young
  • myopia about the need for and cost of LTC; so people don’t understand and/or face up to the risk
  • 3 in 10 of those achieving age 65 will not use LTC, so if everyone bought private policies, a substantial minority would never claim benefits from their policy
  • Medicaid coverage of NH care likely crowds out the purchase of private coverage
  • A substantial proportion of the population has insufficient income to pay LTC insurance premiums, and/or insufficient wealth to “protect” from the cost of LTC
  • The structure of the policies themselves lead to rational non-purchase: (benefits denominated in dollars per day and not care, which is risky especially when insuring against something that is probabilistically a long way off; history of premium increases when claims experience is higher than predicted; denial of applications).

Keep in mind the paper comparing stated v actual probabilities was done in people age 65 and over. So, if young people are myopic and wait too late to purchase, it is too late. However, there are many rational reasons that people don’t purchase LTC insurance.

Papers cited:

Donald H. Taylor, Jr., Jan Ostermann, S. Will Acuff, Truls Ostbye. Do Seniors Understand Their Risk of Moving to a Nursing Home? Health Services Research 2005;40(3):811-828.

Donald H. Taylor, Jr. Robert Cook-Deegan, Susan Hiraki, Scott Roberts, Dan G. Blazer, Robert C. Green. How Genetic Testing for Risk of Alzheimer’s Disease Could Affect Long Term Care Insurance. Health Affairs 2010;29(1):102-108.

Pre-fund VA health benefits?

Michael Cannon and Christopher Preble have an interesting suggestion in the New York Times–pre fund Veterans benefits via private insurance

We propose a system of veterans’ benefits that would be funded by Congress in advance. It would allow veterans to purchase life, disability and health insurance from private insurers. Those policies would cover losses related to their term of service, and would pay benefits when they left active duty through the remainder of their lives.

To cover the cost, military personnel would receive additional pay sufficient to purchase a statutorily defined package of benefits at actuarially fair rates. The precise amount would be determined with reference to premiums quoted by competing insurers, and would vary with the risks posed by particular military jobs.

This is an interesting idea, and I am not conceptually opposed to the use of private insurance to meet health care commitments to veterans. I suspect this idea is ultimately found to be unworkable, and the best place to get a sense of why are a quick look at the problems in the private long term care insurance market (general post on insuring LTC). The following problems are likely to be particularly tricky with Cannon & Preble’s proposal:

  • when you set up an insurance contract with a potentially long lag time between initiation and collection of benefits, there is a very real question of whether the company will be around when needed. Private insurers are exiting the long term care insurance market in droves currently. With major medical insurance, for example, the contract is only for the coming year. For an 18 year old enlistee, their point of need may be 5 or 6 decades away.
  • The longer the lead time, the harder it is to get the premium straight and/or the benefits appropriate. Both the insurer and the covered person are at risk here. LTC insurance is denominated in dollars per day (instead of care), and if you have say a 5% rider, and the true cost rises 5.1% for 30 years, that turns out to be a big miss.
  • The reason private insurers are leaving the LTC market are because of the difficulty of underwriting LTC risks. It might be simpler with the military in the sense of you don’t have (presumably) 19 year olds with pre-existing reasons to make them more likely to have disability/complicated long term health claims, while private LTC insurance is rife with selection (bad risks want to buy). The exposure to military service is what is causing the need. I am unsure of how well one could underwrite need based on military job?
  • One problem with private LTC insurance policies is that while premiums cannot be raised on individuals, they can be raised for an entire class of policies if losses overshoot what underwriters expected. Regulators are left with the un-enviable choice of the insurer saying they will go bankrupt or premiums are raised on everyone. This often leads persons to drop premiums, leaving them uncovered when they have LTC needs. You can say that folks in the military/vets shouldn’t make bad decisions, but the plain reality is that politically we won’t let such actions harm people. So, the insurance will not ever really be private. This is probably the biggest problem with the proposal.
  • I am open to the use of private insurance to meet the needs of vets, especially for the non-specialized services that many need. However, it seems much more likely to be a pay-as-you-go as compared to a pre-fund set up, though I give credit to Michael C for proposing a solution (I often hector him about him only being against stuff).

This discussion would be useful to have while we are talking about starting a war, as it would help to make the true costs more evident.It is quite possible that is both the main point, and the most useful aspect of this proposal.

Long Term Care Support Group

Today I talked with the Duke Fuqua School of Business Caregiver Support Group–about 12 persons who are currently caring for a loved one, most typically a spouse. All of the stories are different of course, but there is a thread that runs through them. Medicare pays for lots of physician and hospital care, without regard for whether it is needed or works. But, it pays for very little in the way of Long Term Care–help and support to enable someone to deal with disability. The folks in this room were ready to have a discussion about trading off some types of curative/high costs disease modifying care for low tech custodial Long Term Care. I have a paper coming out later this Summer that sheds more light on such conversations and trade offs…..more on that later.

Another theme running through many people’s story was that changes in setting often reduced hospital and other formal spending paid for by Medicare. However, the impact on the societal cost of care was ambiguous–it was often simple shifted to families.

Increasingly, I think one motivation for seeking cost savings in Medicare should be to reallocate some of the money spent on medical care to Long Term Care.

Emerging Area for Health Care Entrepeneurs

I spent last week in Washington DC leading about 20 MBA and 5 MPP students during a “Week In DC” associated with the Duke Fuqua Health Sector Management’s class HLTH716 “Health Systems and Policy” (the course-work was in the Fall semester). I did my first ever twitter interview via Direct Message on the way home (I wasn’t driving) about the course, that is captured by Duke’s Office of Federal Relations.

The week in DC was interesting, great fun and I learned a lot. I have one overriding impression from the week: one of the hottest potential business opportunities in the next few years may be to identify ways to keep vulnerable groups (elderly, living alone with low income) out of the hospital, most typically by triaging problems with housing and/or substandard community based long term care arrangements, and/or connecting such vulnerable persons with the correct resources. Several points on this:

  • Most such interventions of this type will likely be low cost, and based on sending relatively low wage/low skilled persons to people’s homes. There is a potentially high gain from avoiding hospital readmissions. The key is figuring out who will pay for this value added?
  • Often the problems identified will not be “medical” in nature. Readmissions because of infections from bad insulin….call for a refrigerator that works, and so on. Not health care. But, cheaper than a readmit. Integrated delivery systems who are on the way to taking on more risk for more lives (in Medicare and Medicaid) would be where I would go to try and sell this type of service first.
  • From my own families experience of seeing my mother in law go from 3 hospitalizations in 44 days, to none in the last 366 days after a huge long term care change, I recall that the primary intervention was the same social worker seeing my mother in law and my family on all 3 admits. During the first 2, she asked my wife “can you care for your mother at your home safely?” The last time, she changed it ever so slightly, but forecefully to “it is clear that you cannot care for your mother in a safe way in your home.” A very low tech intervention.
  • In my mother in law’s case, Medicare has saved from the pace of readmits that we ended 2012 with, but the costs of increased (explicit) long term care costs were simply shifted to the family and private insurance company. The key for a business is adding value like this to the health system, but finding a way for LTC to work in a fragmented system in which most don’t have the mix of insurance and resources that my mother in law has. In her case it really included assisted living or a nursing home, but there will be some lower hanging fruit.
  • You could try 9 or 10 low investment companies using different angles on reducing readmissions in the time that you could try and bring a single drug or a device to the point where someone might be ready to pay something for it (a more traditional MBA Health Sector Management route). Only one of these has to take off……and you could be a part of truly transforming the health care system.

Get busy.

Do you want to know the future?

That is the big question being considered in this long read about the direct-to-consumer genetics firm 23andme and one mother’s struggle to make sense of (and peace with) a $99 genetic profile she got of her 5 year old adopted daughter. I was interviewed for this story because of my work on the use of genetic markers as potential risk adjustor/underwriting variables for private long term care insurance and the fact that the author’s daughter was found to have the e4/e4 variant of APOE-4 which confers increased risk of Alzheimer’s disease.

The author of the story (it is published under a pseudonym) and I talked for a long time, and her anxiety about her daughter getting Alzheimer’s disease was palpable, a result to which she had locked onto. My advice to her was this:

But I appreciate the advice from Duke’s Don Taylor most. “It’s possible the best thing you can do is burn that damn report and never think of it again,” he said. “I’m just talking now as a parent. Do not wreck yourself about your 5-year-old getting Alzheimer’s. Worry more about the fact that when she’s a teenager she might be driving around in cars with drunk boys.”

It is not that AD is not a terrible disease, and goodness knows our nation’s long term care system is messed up, but you can only worry about so many things at once. There must be good uses of such genetic profiles, but it seems easier to get it wrong than right. And coming up with a coherent long term system is not important because a given person is at increased risk of AD, but because we know for certain that many of use now alive will contract the disease, it is just not clear who.

A Long Term Care Story, ctd.

I wrote this post around two years ago about our family preparing to move to a new house into which my mother in law could move with us because she could no longer live alone. Thinking back, to say that I had no idea what was about to happen to my family is one of the great understatements of my life.

I have come to know that long term care transitions are exceedingly difficult. Moving my mother in law into our house, moving her from a hospital to a rehab facility after a fall last January, and then moving her from rehabilitation to an Assisted Living Facility were very difficult. At each of these transitions, the level of increased confusion and symptoms (wandering, anger, aggression; she has frontal-temporal dementia, a rare form of the disease that greatly impacts behavior before complete memory loss) as she moved from one place she used to hate but that had become where she felt secure, has been jarring and unsettling. At no point in all of this have we felt certain that we were doing the right thing.

My wife is a nurse, I am supposed to be an expert in long term care, and we are doing this with ample resources (my mother in law has a very robust private long term care insurance policy, and extra resources as well)….I have no idea how families survive this experience with less.

We are now undertaking another transition, from Assisted Living to dementia/memory care, as the Assisted Living facility feels they can no longer care for my mother in law safely. To provide a sense of the financial magnitudes, the assisted living facility in which she now lives costs around $6,000/month as a base price, with full care about $85,000 annually. For the past 5-6 weeks, we have been paying for private sitting care 24/7 on top of Assisted Living, as we tried to determine if she would stabilize and be able to remain in her current assisted living sitting. That private sitter care has cost around $3,000/week (not reimbursable by insurance), on top of the assisted living fees.

The supply of memory/dementia care beds in Durham/Chapel Hill is quite tight and she is on the waiting list at the facility linked to her Assisted Living location, but she will almost certainly have to move prior to a spot there becoming open. So, we are looking at multiple locations, including in Raleigh, and Burlington. The price of a private dementia/memory care bed ranges from around $6,000-$11,000/month in these markets.

Our family is blessed with reasonable resources to deal with these difficult issues for my mother in law, but many are not. There is no more important issue that receives less policy and political attention than long term care. That is a bad thing that does and will cost our country dearly.

CBO on Long Term Care

CBO released a great report on Long Term Care for the elderly (what is now most typically being called long term services and supports). Several key figures/graphs. The first shows that most people receiving LTC do not live in Nursing Homes, but in the community.

ScreenHunter_01 Jun. 27 17.18

A little over half of LTC care (in terms of its economic value) is provided by families and others on an informal, unpaid basis.

ScreenHunter_02 Jun. 27 17.20

So, when you see this break down of payments for LTC by type of payer, remember that over HALF of the total economic value of all LTC is not accounted for in the graph below, but is paid for implicitly by family members.

ScreenHunter_03 Jun. 27 17.24

Two quick policy take home points:

  • When evaluating a long term care proposal of any type, the correct cost to compare it with  is not zero; the default costs are huge, it is just that many of them accrue silently via informal care.
  • The lack of a coherent LTC system is causing problems in all sorts of other policy areas. Just two examples are in hospice policy, where long stays are likely driven at least in part by persons seeking care in a way that has turned hospice in some areas into a back door long term care benefit. Similarly, hospital re-admissions are at least partly driven by LTC break downs that are beyond the scope of any hospital-based program to address.

The hope for coherent policy making in this area is negligible in the near future.

What do re-admission rates measure?

Austin Frakt has a post on a paper noting that re-admission rates are not strongly correlated with mortality or process measures of quality of care.

At least some hospital re-admissions are related to problems with the long term care system available to patients; this reality should be added to the readmission mix, especially the discussion about what we are measuring, and what might be done about readmissions? Readmissions as imperfect measures of hospital quality became clear to me from the recent experience that my family has had in providing care to my mother-in-law. The short version is that she was admitted to the hospital 3 times in 40 days in late 2012-early 2013, and all of them were directly related to long term care issues, particularly our inability to successfully deal with wandering in a person with  escalating dementia, but who retained fairly robust lower-body mobility. The readmissions had little to do with the hospital in question, if anything at all.

One note however. A key 3 minute conversation between my wife, myself and a hospital social worker during the last inpatient stay was very important. After the first two admissions, my wife was asked by soical workers/discharge planner types: “can you safely care for your mother at home?” During the last admission, the social worker said: “it is obvious to me that you can no longer care for your mother safely at home” which in many ways “allowed” my wife to say that we had to seek institutional long term care, which we did. In any event, expansion to include the long term care system should be added to the discussion of readmissions as measures of “hospital quality.”

The counterfactual in long term care

I was looking at assisted living facilities for my grandmother yesterday and then beginning to navigate the ongoing family discussion about what is best for her (age 89; she still lives alone but has been hospitalized 5 times in recent months) and my mother (age 70), who is increasingly feeling unable to navigate the current situation. There are of course many other people involved: my sister (who lives near both my grandmother and my mother), my step dad, and my uncle who lives about 50 miles from my grandmother. I have become “expert” at assessing such facilities, and have devoted a great deal of my finite creativity over the past 18 months to navigating complicated family long term care situations. I put expert in quotes, because for all that I know about long term care, mixed now with personal experience, it is a truly difficult decision to decide what is best. In large part, this is because there are so many people involved and affected, along with the existence of many sources of uncertainty.

One thing has become clear

  • most people reflexively compare the (truly) high cost of something like assisted living to a cost of zero. “Oh my goodness, that is expensive!” is a correct statement, but it wrongly implies that the default, or current arrangement has a cost of zero.

The costs of the current living/long term care arrangement for my grandmother or anyone else can be difficult to estimate

  • explicit costs such as paying for walkers, home modifications and paying helpers is straightforward
  • implicit costs to caregivers are harder to estimate: the value of time, missed work, worry/anxiety/depression, feeling like you cannot travel, other health impacts, etc.

There are benefits of caregiving, such as connection with loved ones and of course the preferences of my grandmother are important. All of the costs and benefits must be netted out to make a decision. As with the societal level decision of what to do about long term care, having straight the counterfactual is the first step to making the best decision you can.

FTD (not the flower company)

About 18 months ago I shared the news that my family was moving to another house so that my mother in law could move in with us.

This move took place about 16 months ago, my mother-in-law’s house sold about a year ago and she moved into our new house last Summer. Her physical and cognitive decline since that time has been pronounced, and she was hospitalized 3 times in 40 days from Thanksgiving to Christmas; the last hospitalization occurring when she wandered from our house during the night for the third time that last 10 days she was with us. She fell in a ditch by a road near where we live, was found by a runner just before dawn, and was “Jane Doe” for around 4 hours in the ER before we realized that she was gone.

From the hospital she went to rehab in a Skilled Nursing Facility (SNF) for around 30 days, and moved into an Assisted Living Facility in Chapel Hill in early February. I came to understand the concept of ‘sandwich generation’ one day in January as I visited Assisted Living facilities while trying to help my daughter decide whether to apply to any more Universities just before the January 15 deadline; the juxtaposition of helping to plan and experience these two trajectories has been poignant and jarring.

It is difficult to say when our role as ‘caregivers’ for my mother in law really began. I have picked her Part D and Medicare Advantage plans for a while, and helped with financial decisions for many years. We had multiple middle of the night drives to her house across town to help her off the floor during 2011 that precipitated her moving in with us, and an increasing need for basic care that increased when she lived with us. I am unclear if she was simply in need of more care than we knew before she moved in with us, or if her decline has simply been that precipitous.

This past week, she received a formal diagnosis of frontotemporal degeneration (FTD), behavioral variant which is a form of non-Alzheimer’s dementia, that is fairly rare (~30,000 persons in USA with one of the variants of this disorder, which used to be more generally called Pick’s disease). Many persons who arrive at this diagnosis are misdiagnosed as having persistent mental illness, as many of the behaviors are similar to that observed in a person with bipolar disorder or a borderline personality disorder. Behavioral disturbances come first with FTD, then language and gait changes (and falls) onset before memory impairment is severe and full care needed, leading to this misdiagnosis which was the case in our experience.

If you want to wander around the ugly, fragmented side of the health system, you could pick mental health or long term care. Bouncing between the two has been quiet agony for all those involved.

Medicare pays for very little long term care (it did pay for the rehabilitation stay following the fall; 100% for 30 days, then with a $158/day deductible for the next few days, ending at 100 days). Home health is available, but has increasingly become medicalized over time though some of the eligibility rules have been lessened. Of course, Medicare paid for all 3 hospitalizations for my mother-in-law, all of which were really signals of a break down in the long term care system (her living with us) that we had put into place. It was a social worker changing the question from ‘can you keep doing this?’ to ‘you cannot keep doing this’ that was the trigger for the move to Assisted Living.

My mother in law is now living in an Assisted Living facility that has shown great care and flexibility in trying to adapt to the realities of a resident with this dementia variant. The cost is around $75,000/year and dementia care at the sister facility to which she will likely move sooner rather than later costs around $90,000/year, none of which is paid for by Medicare. The family is responsible for all of this cost, and in our case we are blessed that the resources to provide for this care were arranged for by my deceased father in law. Most families cannot arrange for such care and would have many fewer options than we have had (it is hard enough with resources). Of course, Medicaid sits as an ultimate backstop and once an individual’s assets have been eradicated, care in a Nursing Home (not the type of place where she now lives) is paid for until death.

I still note in many circles people noting the demise of the CLASS provisions of the ACA as a joke or a political scalp of sorts. This really pisses me off. I guarantee anyone viewing it that way hasn’t navigated long term care for a loved one. We as country desperately need to wrestle with the questions of the best way to insure Long Term Care.

Some version of this story comes for many of you, too.



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