Demand for Skilled Nursing Services Substantially Greater Than Expected

Total U.S. demand for skilled nursing care is significantly higher than previously projected, according to a new study from the RAND Corporation.

While previous research studies have consistently found that about 35% of older Americans will spend at least one night at a nursing home during their lifetimes, mirroring data from the Department of Health and Human Services, the RAND study arrived at 56%.

“It is important to provide individuals and families a reliable assessment of the likelihood of entering a nursing home in retirement,” lead author and RAND senior principal researcher Michael Hurd said in a release announcing the results. “This information could help people make better decisions about how they or their loved ones will pay for the care they are likely to need.”

The international non-profit research firm identified a few culprits for the substantial increase, including an aging population and a shift toward short stays. Stints of 21 nights or fewer accounted for 34% of nursing home stays in 2010, up from 28% in 1998, the researchers found. The spike may have stemmed from a desire to lower Medicare and Medicaid costs by speeding up discharges from hospitals to lower-cost skilled nursing settings, Hurd said.

The study used data from the Health and Retirement Study — a trove of information collected by the National Institute on Aging and the Social Security Administration — and specifically analyzed Americans aged 57 to 61, projecting their anticipated demand for health services out over their lifetimes.

RAND also used that data to probe the cost of care, finding that only a third of Americans will ever pay for nursing home services out of pocket — with a full 43% receiving complete coverage from either private plans or public insurance programs. But while the researchers noted that most people will experience “affordable” short-term care, they also determined that 5% of Americans will need longer-term stays that could cost more than $47,000, and 10% will require stays of longer than 1,000 days.

The research team said lawmakers should keep these findings in mind when attempting to reform the health care system, and Medicaid in particular: During the recent failed attempt by Congressional Republicans to repeal the Affordable Care Act, both the House and Senate proposed stark cuts to Medicaid, alarming many in the long-term care industry and prompting increased awareness of the program’s role in elder care.

“People think of Medicaid as being for the indigent, which is true at younger ages,” Hurd said in the release. “But Medicaid is the most important payer for nursing homes, covering a greater proportion of costs than individuals and families pay out of pocket. At older ages, Medicaid is an insurance program that many of us may need to use.”

The study appears in the journal Proceedings of the National Academy of Sciences, and was co-authored with Pierre-Carl Michaud and Susann Rohwedder.

Written by Alex Spanko

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