Anew compendium project on the future of long-term care (LTC), spearheaded by the National Investment Center for the Seniors Housing & Care Industry (NIC), is providing a wake-up call to everyone involved in any aspect of long-term care to prepare for the influx of baby boomers and those with disabilities needing care in the next 20 to 30 years.

“We have time to get ready [for the influx], but it is imperative we start now,” says Robert G. Kramer, president of NIC. To that end, the NIC commissioned RTI International, a Research Triangle Park, NC-based company providing health, social, and economic research, to conduct “The NIC Compendium Project: A Guide to Long-Term Care Projection and Simulation Models.” Joshua M. Wiener, PhD; Marc P. Freiman, PhD; and David Brown, MA; were principal RTI researchers. According to the NIC, quantitative projections of long-term care use and cost are central to the policy debate on financing and can help inform investment decisions by the private sector. Financing decisions made now have implications far into the future. Long-term care projection and simulation models are important in helping to shape the current policy debate. The NIC hopes to update the project every three years.

The NIC Compendium Project has five key components:

• Analysis of uses, strengths, and limitations of the existing models

• A research agenda to improve projections

• Analysis of major long-term care financing options

• Summary of key research using the models

• Summary of other important recent research on factors affecting long-term care use and spending

Anthony J. Mullen, senior fellow for NIC, partner with Royal Star Properties, and one of the leading researchers and analysts in seniors housing and care, says the Compendium Project can provide the common touchstone to unite, in a formal way, all the various factions that impact the future of long-term care—government, associations, private-pay institutions, long-term care facility owners and administrators, researchers, consumers, consumer advocates, policymakers, and a host of other related industries and interests. “We know so little about each other,” Mullen says. “We need to break down the silos and come up with a simplified model we could all use.” Kramer says the importance of focusing on projection/simulation models is that, eventually, all the constituencies with interests in the LTC market will come looking for “a number” concerning aspects of the LTC market. “All of us need to have that number,” Mullen says. “We need good numbers with which to begin qualitative discussions.”

A review of the findings contained in the Compendium Project include:

• Far from being a rarity, the need for long-term care is a “normal” life experience. Among people turning 65 now, nearly 50% will need some form of long-term care (informal care, paid home care, nursing home care, and assisted living facility care) before they die and 20% will need care for more than five years.1

• The number of people with disabilities is likely to increase substantially, even if disability rates fall. One study projected that the number of older people with disabilities will increase from 10 million in 2000 to between 15.1 and 24.6 million in 2040.2

• Demand for LTC services is likely to be at least double by 2040. Johnson, Toomey, and Wiener2 projected that use of paid home care will increase from 2.2 million people in 2000 to between 3.9 and 6.2 million in 2040. Similarly, they project that the number of older people using nursing home care will increase from 1.2 million people in 2000 to between 2.0 and 3.1 million people in 2040.

• Despite the current problems with pension systems, the financial status of older people will improve over time. Knickman and Snell3 estimate that in 2030, roughly one-third of older persons would need to rely on Medicaid should they face substantial LTC expenses, and another third would exhaust their income and wealth. Nevertheless, this represents an improvement in the financial status of older people compared to 2000.

• The number of people with private long-term care insurance is likely to grow over time, but it is unlikely to be a major source of financing under the current system. Wiener, Illston, and Hanley4 estimated that no more than about 20% of older people would have private long-term care insurance in 2018.

The analysis points out that given the importance of projection models in charting the course of long-term care, policymakers, long-term care providers, investors, consumers, and the general public need information from all stakeholders, with each group contributing its own unique perspectives, information, and technical skills. To this end, Kramer is making the Compendium Project available without charge to researchers and policymakers in the LTC industry. The compendium is available to others for $75.

Finally, the review of projection and simulation models suggests that there are at least seven key questions that financing reform options should address:

• What is the role of the public and private sectors?

• Will government program eligibility be related to income and assets?

• What proportion of the population will have comprehensive coverage for long-term care?

• Will younger people with disabilities be covered?

• What will be the cost to government? What will be the cost to people with disabilities using services?

• How will costs be contained?

• How will the policy address personal preferences and changes in the delivery system over time?

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