The survey was conducted by the Census Bureau under the co-sponsorship of two components of the Department of Health and Human Services: the Health Care Financing Administration and the Assistant Secretary for Planning and Evaluation. A nationally stratified sample of functionally impaired elderly Medicare beneficiaries living in the community were the subjects of the survey. An initial screening of about 36,000 persons resulted in interviews of 6,088 who met the project criteria of problems performing any Activities of Daily Living (ADL, e.g., eating, toileting) or Instrumental Activities of Daily Living (IADL, e.g., shopping, cooking) for a period of at least three months.
Those who met the survey criteria were asked questions about the following subjects: demographic characteristics, housing characteristics, household composition, children of sample person not living in the household, paid and unpaid caregivers, type of care provided by caregivers, extent of ADL and IADL limitations, medical expenses, income (individual and family members living in household), source of income, mental status, and other variables that might affect their ability to live in the community.
The 1984 survey builds on the 1982 Long-Term Care Survey described above. The 1984 survey is the first nationwide, longitudinal tracking of functionally impaired elderly persons (whether they are living in the community or in institutions). In addition to following up on all of the people in the 1982 survey, the 1984 survey includes a new sample of elderly who were not yet age 65 in 1982.
All functionally impaired elderly living in the community were asked similar questions in 1982 and 1984. Data gathered from the institutionalized elderly (1984 survey) included: problems with activities of daily living and instrumental activities of daily living, source of payment, and demographic characteristics. For those persons who died since the 1982 survey, a proxy respondent was asked about place of residence at time of death and other pertinent questions.
This survey is sponsored by the National Center for Health Services Research and Health Care Technology Assessment and the National Center for Health Statistics; it is conducted by three subcontractors. The survey is designed to provide a comprehensive statistical picture of how health services are used and financed by the civilian, noninstitutionalized population in the U.S.
The survey is a one-time panel sample of about 14,000 randomly selected households. Respondents were interviewed six times over an 18-month period during 1977 and 1978. The survey was complemented by additional surveys of physicians and health care facilities providing care to household members during 1977 and of employers and insurance companies responsible for their insurance coverage.
Data collected include: expenditures and sources of payment for all major forms of medical care, sociodemographic and economic characteristics of respondents, insurance coverage of respondents, information from medical providers about respondents, and access to medical care.
The National Center for Health Statistics has conducted the National Health Interview Survey, a principal source of information about the health of the civilian, noninstitutionalized population in the U.S., annually since 1957. The "core" survey remains virtually unchanged from year to year. Special supplements on topical issues are added each year.
Data are collected from about 42,000 households on the incidence of illness and accidental injuries, prevalence of chronic diseases and impairments, disability, physician and dental visits, hospitalizations, other health topics, and on the relationship between demographic and socioeconomic characteristics and health characteristics.
Several components of the Department of Health and Human Services (Office of the Assistant Secretary for Planning and Evaluation, Health Care Financing Administration, and Administration on Aging) conducted a national demonstration project from 1982 to 1985 to channel those individuals over 65 at risk of institutionalization into appropriate community based services. The demonstration tested whether and to what extent the long-term care needs of elderly impaired persons could be met in a cost-effective way through a community based system of comprehensive needs assessment, care planning, and case management. Jurisdictions in 10 States (Kentucky, Maine, Maryland, New Jersey, Texas, Florida, Massachusetts, New York, Ohio, and Pennsylvania) took part in the project.
Applicants judged appropriate for the demonstration were randomly assigned to either a client or a control group. The experimental design permitted a direct comparison of the impact of the demonstration on participants with the outcomes of the control group members who receive their services through the conventional delivery system. Data collection for both client and control groups included an initial baseline assessment and follow-up interviews. Information was gathered about health, quality of life, use of formal and informal services, and expenditures for services (including Medicare and Medicaid).
The National Center for Health Statistics collected data from a nationwide sample of all nursing homes in the continental U.S. (including homes not certified by Medicaid or Medicare. This is the second of three National Nursing Home Surveys; the first was conducted in 1973-1974. A 1985 National Nursing Home Survey is in progress. In the 1977 survey, all levels of care were included, e.g., skilled, intermediate, and custodial. The sample included 1,451 nursing homes, 7,033 current residents of these homes 5,142 discharged residents and 13,634 staff from these homes. There were five questionnaires: current resident, discharged resident, facility, expense, and staff.
Data collected about current reside include: demographic characteristics, impairments, therapy services, previous living arrangement and household composition, expected date of discharge, expected household arrangement after discharge, if the patient receives medication, frequency of physician visits, primary diagnosis, and primary reasons resident entered the facility.
Data collected about discharged reside include: demographic characteristics, impairments, whether discharged dead or alive, where resident stayed after discharge and typo of facility, primary diagnosis at admission, use of aids, if the patient saw a physician during the last stay, and what services were received during the seven days prior to discharge.
Data collected about facilities include: whether or not the facility is a distinct nursing home unit of a hospital, another health institution or a retirement center; number of beds in the entire facility; type of ownership, physical, and structural characteristics of the building; level of certification, number of beds at each certification level, and total number of inpatient days of care by certification level; reimbursement mechanisms authorized by Medicare; Medicare and Medicaid certification; admission policy, staffing and services.
Data collected about expenses include: revenues from patients and non-patients, and enumeration of numerous categories of expenses.
Data collected about staff include: type of tasks performed by the staff, and other personnel items.
The Consumer Expenditure Survey (CES), sponsored by the Bureau of Labor Statistics through a contract to the Bureau of the Census, gathers information on the consumer expenditures and socioeconomic characteristics of American families. This ongoing national survey has two parts: a Diary Survey with 5,000 respondents who keep a diary of their expenditures and an Interview Survey with 5,000 respondents who are interviewed five times at quarterly intervals. Information is collected on demographic characteristics, type and amount of expenditures, income and assets. The most recently published CES results are from the 1982-1983 survey.
The Current Population Survey (CPS), sponsored by the Bureau of Labor Statistics and carried out by the U.S. Bureau of Census, provides monthly national estimates of employment and unemployment. A national sample of about 59,000 addressees (representing the civilian noninstitutionalized labor force) is interviewed each month. The CPS has been ongoing since 1942.
In addition to employment data, monthly supplements on special topics such as income, work experience, school enrollment, pension plans, etc. are asked. The CPS provides much information on the demographic and economic characteristics of Americans and is the leading source of data for annual poverty estimates.
| TABLE A2-1: Long-Term Care Insurance Examples: Policy Features of Insurance Companies | |
|---|---|
| BLUE CROSS OF NORTH DAKOTA Skilled care covered: Yes. Intermediate care covered: Yes. Custodial care covered: No. Home care covered: No. Indemnity benefit: Yes. Choice of up to $50 per day. Waiting/elimination deductible period: 100 days. Length of coverage: Choice offered of nursing home care for 2 to 5 years. Sales screened for health status: Yes. Specific questions asked about illnesses and institutionalizations. Preexisting condition period: 180 days. Prior hospitalization required: No. Use must be recommended and reviewed by physician: Yes. Covers mental and nervous disorders: Yes. Guaranteed renewable: No. Company can change premiums: Yes. |
BLUE CROSS
OF SOUTHERN CALIFORNIA -- ULTRACARE Skilled care covered: Yes, but limited to Medicare gaps. Intermediate care covered: No. Custodial care covered: No. Home care covered: Yes. Indemnity benefit: No. Waiting/elimination deductible period: No. Length of coverage: Nursing home benefit covers days 20-100, home health benefits as needed. Sales screened for health status: No. Preexisting condition period: No. Prior hospitalization required: Yes, for nursing home. No, for home health. Use must be recommended and reviewed by physician: Yes Covers mental and nervous disorders: Yes Guaranteed renewable: No. Company can change premiums: Yes. |
| COLUMBIA LIFE INSURANCE COMPANY Skilled care covered: Yes. Intermediate care covered: Yes. Custodial care covered: Yes. Home care covered: No. Indemnity benefit: Yes. Choice of up to $50 per day. Waiting/elimination deductible period: Choice offered: 0, 20, 60 or 100 days. Length of coverage: Skilled care, 5 years. Intermediate or custodial care, 6 or 12 months. Sales screened for health status: Yes. Specific questions asked about illnesses and institutionalizations. Preexisting condition period: 6 months for conditions appearing in previous 5 years, plus some conditions specifically excluded. Prior hospitalization required: Yes. Confinement must begin within 14 days after hospitalization of 3 or more days. Use must be recommended and reviewed by physician: Yes. Physician must certify that patient needs no greater or lesser care and physical exam can be required at company's expense. Covers mental and nervious disorders: No. Guaranteed renewable: No. Nonrenewable statewide. Company can change premiums: Yes. |
EQUITABLE
LIFE AND CASUALTY INSURANCE COMPANY Skilled care covered: Yes. Intermediate care covered: Yes. Custodial care covered: Yes. Home care covered: Yes. Indemnity benefit: Yes. Choice of up to $60 per day for skilled care, $30 per day for intermediate care, $15 per day for custodial care, $7.50 per day for home care. Waiting/elimination deductible period: Choice offered 0, 20, or 100 days. Length of coverage: 24 months for skilled care, 12 months for intermediate care, 6 months for custodial care, and 30 days for home confinement with a $90,000 lifetime maximum benefit. Sales screened for health status: Yes. Detailed list of condition information requested. Preexisting condition period: 6 months for conditions appearing in previous 5 years. Prior hospitalization required: Yes. Confinement must begin within 14 days after hospitalization of 3 or more days. Use must be recommended and reviewed by physician: No explicit statement, but physical exam can be required at company’s expense. Covers mental and nervous disorders: Yes, if demonstrable organic disease. Guaranteed renewable: Yes. Company can change premiums: Yes. |
| FEDERATED AMERICAN LIFE INSURANCE COMPANY
Skilled care covered: Yes. Intermediate care covered: Yes. Custodial care covered: Yes. Home care covered: No. Indemnity benefit: Yes. Choice of up to $30. Waiting/elimination deductible period: 20 days. Length of coverage: 4 years. Sales screened for health status: Yes. General questions asked about institutionalization and physician care in previous 12 months and ability to perform daily activities. Preexisting condition period: 30 days. Prior hospitalization required: Yes. Confinement must begin within 90 days after hospitalization of 3 or more days. Use must be recommended and reviewed by physician: Yes. Confinement must be recommended by physician and physical exam can be required at company’s expense. Covers mental and nervous disorders: Yes, if demonstrable organic disease. Guaranteed renewable: Yes. Company can change premiums: Yes. |
FIREMENS
FUND AMERICAN LIFE INSURANCE COMPANY Skilled care covered: Yes. Intermediate care covered: Yes. Custodial care covered: Yes. Home care covered: Yes. Indemnity benefit: Yes. Choice of up to $60 per day for nursing home. $30 per day for home care. Waiting/elimination deductible period: Choice offered, 20 or 100 days. Length of coverage: 4 years for any nursing home confinement. 180 days for home health. Sales screened for health status: Yes. General questions asked about institutional and physician care in previous months and ability to perform daily activities. Preexisting condition period: 90 days. Prior hospitalization required: Yes. Confinement must begin within 90 days after hospitalization of 3 or more days. Use must be recommended and reviewed by physician: Yes. Confinement must be recommended by physician and physical exam can be required at company’s expense. Covers mental and nervous disorders: Yes, if demonstrable organic illness. Guaranteed renewable: No. Nonrenewable statewide. Company can change premiums: Yes. |
| GREAT REPUBLIC LIFE INSURANCE COMPANY
Skilled care covered: Yes. Intermediate care covered: Yes. Added as optional rider. Custodial care covered: Yes. Added as optional rider. Home care covered: Yes. Private duty nurse. Indemnity benefit: No. Pays actual charge up to $20 per day for days 1-100; $40 for days 101-1095 for skilled care; $25 per day for private duty nurse at home. 70% of actual charge up to $40 per day for intermediate or custodial care. Waiting/elimination deductible period: None for skilled nursing home care or private duty nurse. 90 days for intermediate and/or custodial care benefit. Length of coverage: 3 years for skilled nursing home care and private duty nurse. 2 years for intermediate or custodial care benefit. Sales screened for health status: Yes. Specific questions asked about illnesses and institutionalizations. Preexisting condition period: 1 year for conditions appearing in previous year. Prior hospitalization required: Yes. Confinement must begin within 28 days after hospitalization of 3 or more days. Use must be recommended and reviewed by physician: Yes. Confinement must be recommended by physician and physical exam can be required at company’s expense. Covers mental and nervous disorders: No. Guaranteed renewable: Yes. Company can change premiums: Yes. |
HEALTH
INSURANCE CORPORATION Skilled care covered: Yes. Intermediate care covered: Yes, by rider. Custodial care covered: Yes, by rider. Home care covered: No. Indemnity benefit: Yes. Intermediate and custodial care paid at one-half of rate chosen for skilled care. Waiting/elimination deductible period: None. Length of coverage: 1 year for care in a skilled nursing facility. Care in an intermediate and custodial facility is subject to the amount of skilled care received on a 2- for 1-day basis for up to 730 days. Sales screened for health status: No. Preexisting condition period: 12 months. Prior hospitalization required: Yes. Confinement must begin within 30 days after hospitalization of 3 or more days. Use must be recommended and reviewed by physician: Yes. Confinement must be recommended by physician and physical exam can be required at company’s expense. Covers mental and nervous disorders: No. Guaranteed renewable: No. Nonrenewable statewide. Company can change premiums: Yes. |
| KEMPER GROUP Skilled care covered: Yes. Intermediate care covered: Yes, but very limited. Custodial care covered: Yes, but very limited. Home care covered: Yes, private duty nurse. Indemnity benefit: Yes. $20 per day for days 1-100, $40 per day for days 101-1095, $10 per day for less than skilled care, $25 per day for private duty nurse at home. Waiting/elimination deductible period: None for skilled nursing home care or private duty nurse. Length of coverage: 3 years for skilled nursing home care and private duty nurse. 2 years for intermediate or custodial care benefit. Sales screened for health status: Yes. Specific questions asked about illnesses and institutionalizations. Preexisting condition period: 12 months. Prior hospitalization required: Yes. Confinement must begin within 28 days after hospitalization of 3 or more days. Nonskilled care must also follow 20 days of covered care in a skilled nursing facility. Use must be recommended and reviewed by physician: Yes. Confinement must be recommended and reviewed by physician. Covers mental and nervous disorders: No. Guaranteed renewable: Yes. Company can change premiums: Yes. |
MASSACHUSETTS INDEMNITY AND LIFE INSURANCE COMPANY
Skilled care covered: Yes. Intermediate care covered: Yes. Custodial care covered: No. Home care covered: No. Indemnity benefit: Yes. $50 per day for skilled care or $40 per day for intermediate care. Waiting/elimination deductible period: 60 days. Length of coverage: $75,000 lifetime maximum benefit allows 4.9 years of skilled care or 5.9 years of intermediate care. Sales screened for health status: Yes, but limited evaluation to those hospitalized or in a skilled nursing home in prior 12 months. Preexisting condition period: 12 months. Prior hospitalization required: Yes. Confinement must begin within 28 days after hospitalization of 3 or more days. Use must be recommended and reviewed by physician: Yes. Confinement must be recommended by a physician and must be recertified every 30 days. Covers mental and nervous disorders: Yes, if demonstrable organic disease. Guaranteed renewable: No. Nonrenewable on group basis. Company can change premiums: Yes. |
| MERCHANTS AND MANUFACTERERS INSURANCE COMPANY
Skilled care covered: Yes. Intermediate care covered: Yes. Custodial care covered: Yes. Home care covered: Yes, private duty nurse. Indemnity benefit: Yes. Up to $40 per day for all nursing home care, up to $50 per day for private duty nurse at home. Waiting/elimination deductible period: None. Length of coverage: 4 years for skilled nursing home and home health benefit. 2 years for intermediate or custodial care. Sales screened for health status: Yes. Specific questions asked about illnesses and institutionalizations. Preexisting condition period: 6 months. Prior hospitalization required: Yes. Confinement or home care must begin within 14 days after hospitalization of 3 or more days. Use must be recommended and reviewed by physician: Yes. Physician must certify at least once a month that beneficiary needs no greater or lesser care. Covers mental and nervous disorders: No. Guaranteed renewable: Yes. Company can change premiums: Yes. |
MUTUAL
PROTECTIVE/MEDICO LIFE INSURANCE COMPANY Skilled care covered: Yes. Intermediate care covered: Yes, but very limited. Custodial care covered: Yes, but very limited. Home care covered: Yes, but very limited. Indemnity benefit: Yes. 2 plans. Skilled care, $6/$12 for days 1-20, $20/30 for days 21-100, $40/$60 for day 101 to 4 years. Intermediate care, $10/$20 per day. Custodial care, $5/$10 per day. Home care, $5/$10 per day. Waiting/elimination deductible period: None. Length of coverage: Skilled care, 4 years. Intermediate care, 180 days. Custodial care, 180 days. Home Care, 30 days. Sales screened for health status: Yes. Specific questions asked about illnesses and institutionalizations. Preexisting condition period: 6 months for conditions appearing in previous 5 years. Prior hospitalization required: Yes. Confinement must begin within 14 days after a hospitalization of 3 or more days. Use must be recommended and reviewed by physician: Yes. Confinement must be recommended by a physician; for skilled care the physician must certify once a month that care the physician must certify once a month that care is needed and received. Covers mental and nervous disorders: Yes, if demonstrable organic condition. Guaranteed renewable: No. Nonrenewable statewide. Company can change premiums: Yes |
| NATIONAL FOUNDATION LIFE INSURANCE COMPANY
Skilled care covered: Yes. Intermediate care covered: Yes. Custodial care covered: Yes, but very limited. Home care covered: Yes. Separate, limited policy. Indemnity benefit: Yes. Choice of $20-$50. Waiting/elimination deductible period: None. Length of coverage: 3 years for skilled and intermediate care. 90 days for custodial care. Sales screened for health status: Yes. Specific questions asked about illnesses and institutionalizations. Preexisting condition period: For persons 64 and over, 6 months (2 years for other ages) for condition appearing in previous 5 years. Prior hospitalization required: Yes. Confinement must begin within 14 days after hospitalization of 3 or more days. Use must be recommended and reviewed by physician: No specific statement. Covers mental and nervous disorders: Yes, if demonstrable organic disease. Guaranteed renewable: Yes. Company can change premiums: Yes. |
TRANSPORT
LIFE INSURANCE COMPANY Skilled care covered: Yes. Intermediate care covered: Unclear. Custodial care covered: Yes, but very limited. Home care covered: No. Indemnity benefit: Yes. Choice of up to $60 per day for skilled care, up to $15 per day for custodial care. Waiting/elimination deductible period: None for individual policy. 0 or 100 days for group policy. Length of coverage: 3 years for skilled nursing care. 120 days for custodial care. Group policy limits skilled nursing care to 2 years. Sales screened for health status: Yes. Specific questions asked about illnesses and institutionalizations. Preexisting condition period: 6 months for conditions appearing in previous 12 months. Prior hospitalization required: Yes. Confinement must begin within 90 days after hospitalization or 3 or more days. Use must be recommended and reviewed by physician: Yes. Confinement must be medically necessary. Covers mental and nervous disorders: No. Guaranteed renewable: Yes. Company can change premiums: Yes. |
| UNITED AUTO WORKERS Skilled care covered: Yes. Intermediate care covered: Yes. Custodial care covered: No. Home care covered: Yes. Indemnity benefit: None. Waiting/elimination deductible period: Direct tradeoff of nursing home days (2 for 1) and home visits (3 for 1) with hospital days. Length of coverage: No. Sales screened for health status: No. Preexisting condition period: No. Prior hospitalization required: No. Use must be recommended and reviewed by physician: No specific statement. Covers mental and nervous disorders: Yes, but only up to 90 days. Guaranteed renewable: As long as employed. Company can change premiums: Not applicable employee benefit. |
UNITED
EQUITABLE INSURANCE COMPANY Skilled care covered: Yes. Intermediate care covered: Yes. Custodial care covered: Yes. Home care covered: No. Indemnity benefit: Yes. Choice of up to $40 for skilled care benefit, one-half chosen rate for intermediate or custodial benefit. Waiting/elimination deductible period: Choice offered 0, 20, or 100 days, intermediate or custodial benefit must follow at least 20 days in skilled nursing care. Length of coverage: 4 years for skilled care benefit. Choice offered of 6 or 12 months coverage for intermediate or custodial care. Sales screened for health status: Yes. Asks for detailed information about illnesses, institutional care in previous 6 months, and activity restrictions. Preexisting condition period: 180 days. Prior hospitalization required: Yes. Confinement must begin within 30 days after hospitalization of 3 or more days. Use must be recommended and reviewed by physician: Yes. Confinement must be recommended by physician and physical exam can be required at company’s expense. Covers mental and nervous disorders: Yes, if demonstrable organic disease. Guaranteed renewable: Yes. Company can change premiums: Yes. |
| TABLE A2-2: Annual Premium Rates per $100 Monthly Benefits for Firemans Fund Policies Original Policy | ||||
|---|---|---|---|---|
| Age | 2-Year Benefit | 4-Year Benefit | ||
| 1st Day | 21st Day | 1st Day | 21st Day | |
| 50-64 | $41 | $26 | $48 | $30 |
| 65-71 | 48 | 34 | 57 | 40 |
| 72-79 | 57 | 46 | 63 | 51 |
| Current Policy* -- Annual Premiums per $100 Monthly Benefit | ||||
| Age | 21st Day | 101st Day | ||
| Under 64 | $25 | $20 | ||
| 60-65 | 30 | 23 | ||
| 70 | 42 | 32 | ||
| 71 | 44 | 34 | ||
| 72 | 47 | 36 | ||
| 73 | 50 | 39 | ||
| 74 | 53 | 41 | ||
| 75 | 58 | 45 | ||
| 76 | 63 | 49 | ||
| 77 | 58 | 52 | ||
| 78 | 73 | 56 | ||
| 79 | 78 | 60 | ||
| 80* | 78 | 60 | ||
| 81* | 78 | 60 | ||
| * Only available if spouse is insured for like or greater amount and under age 80. | ||||
| TABLE A2-3: Annual Premium Rates for Federated American Policy | |
|---|---|
| Age | $30 Daily Benefit, 4 Years Coverage, 20 Day Waiting Period |
| 50-64 | $170 |
| 65-71 | 290 |
| 72-84 | 440 |
| TABLE A2-4: Annual Premium Rates for Massachusetts Indemnity Policies | ||
|---|---|---|
| Age | $50 SNF Benefit -- $40 ICF Benefit -- 60 Day Waiting Period -- $75,000 Maximum Benefit | |
| Minnesota | Other States | |
| 18-39 | $55 | $75 |
| 40-54 | 75 | 105 |
| 55-64 | 135 | 185 |
| 65-69 | 260 | 310 |
| 70-74 | 465 | 550 |
| 75-79 | 600 | 715 |
| 80-84 | 795 | 940 |
| 85+ | 1,055 | 1,245 |
| TABLE A2-5: Annual Premium Rates for Great Republic Policy | ||
|---|---|---|
| Age | Skilled Nursing Home Care Policy | Intermediate and Custodial Care Rider |
| 55-69 | $195 | $130 |
| 70-74 | 227 | 180 |
| 75-79 | 295 | 260 |
| 80-84 | 295 | 330 |
| TABLE A2-6: Annual Premium Rates for United Equitable Policies | ||||||
|---|---|---|---|---|---|---|
| Age | Intermediate and Custodial Benefit | |||||
| 6 Month Benefit Period | 12 Month Benefit Period | |||||
| Benefits Begin | Benefits Begin | |||||
| 1st Day | 21st Day | 101st Day | 1st Day | 21st Day | 101st Day | |
| 62-69 | $260 | $212 | $100 | $340 | $292 | $180 |
| 70-74 | 420 | 340 | 156 | 548 | 468 | 284 |
| 75-79 | 602 | 492 | 238 | 782 | 672 | 418 |
| 80-84 | 774 | 640 | 336 | 998 | 864 | 560 |
| Annual Premium | ||||||
| Age | Wisconsin Policy | |||||
| 65-69 | $860 | |||||
| 70-74 | 1,070 | |||||
| 75-79 | 1,300 | |||||
| 80-84 | 1,500 | |||||
| TABLE A2-7: Annual Premium Rates per $5 Daily Benefits for Health Insurance Corporation Policy | ||
|---|---|---|
| Age | Skilled Benefit Only | Skilled, Intermediate and Custodial Benefit |
| Through 80 | $38.00 | $66.50 |
| 81 and over | 47.50 | 83.00 |
| TABLE A2-8: Annual Premium Rates for Equitable Life Policies | ||||||
|---|---|---|---|---|---|---|
| Age | $45,000 Maximum, $30 Per Day Skilled Benefit | $90,000 Maximum, $60 Per Day Skilled Benefit | ||||
| Benefits Begin | Benefits Begin | |||||
| 1st Day | 21st Day | 101st Day | 1st Day | 21st Day | 101st Day | |
| 50-70 | $216.65 | $186.65 | $138.32 | $433.29 | $373.303 | $276.64 |
| 71-75 | 341.63 | 293.30 | 216.65 | 683.27 | 586.61 | 433.29 |
| 76-80 | 499.95 | 433.29 | 314.97 | 999.90 | 866.58 | 629.94 |
| 81-85 | 656.60 | 576.61 | 419.96 | 1313.20 | 1153.22 | 839.92 |
| TABLE A2-9: Annual Premium Rates for Transport Life Insurance Company | ||||
|---|---|---|---|---|
| Age | Individual Plan -- $60 Daily Benefit | Group Plans -- $60 Daily Benefit | ||
| 1st - 730th Day | $30 1st - 730th Day | 101st - 730th Day | ||
| 60-64 | $405.00 | $329.00 | $270.00 | $207.00 |
| 65-69 | 450.00 | 365.40 | 292.00 | 230.40 |
| 70-74 | 705.00 | 572.40 | 468.00 | 361.80 |
| 75-79 | 930.00 | 756.00 | 617.40 | 477.00 |
| 80-84 | 1,170.00 | 950.40 | 774.00 | 599.40 |
| TABLE A2-10: Annual Premium Rates for Kemper Group Policies | |||
|---|---|---|---|
| Age | Hospital Indemnity Add On | Medicare Supplement Add On | Skilled Nursing Home |
| 50-59 | --- | --- | $219 |
| 60-64 | --- | --- | 263 |
| 65-69 | $200 | $186.25 | 305 |
| 70-74 | 270 | 228.75 | 370 |
| 75-79 | 330 | 278.75 | 461 |
| 80-84 | 380 | 321.25 | 552 |
| TABLE A2-11: Annual Premium Rates for Merchants and Manufactures Policy | |||
|---|---|---|---|
| Age | Daily Benefit | ||
| $20 | $30 | $40 | |
| 65-69 | $442.11 | $687.67 | $937.23 |
| 70-79 | 464.74 | 734.94 | 1,005.14 |
| 80-85 | 680.88 | 1,005.50 | --- |
| TABLE A2-12: Annual Premium Rates for National Foundation Life Insurance Policy | ||||
|---|---|---|---|---|
| Age | Daily Benefit | |||
| $20 | $30 | $40 | $50 | |
| 18-34 | $20 | $35 | $50 | $65 |
| 35-44 | 48 | 68 | 88 | 108 |
| 45-54 | 97 | 127 | 157 | 187 |
| 55-64 | 168 | 208 | 248 | 288 |
| 65-84 | 289 | 339 | 389 | 439 |
| TABLE A2-13: Annual Renewal Premium Rates for Mutual Protective/Medico Life Insurance Company Policies | |||
| At Attained Ages | Plan 1 | Plan 2 | |
| Basic Rate | 18-69 | $164.00 | $268.00 |
|---|---|---|---|
| 70-79 | 202.00 | 334.00 | |
| 80-84 | 219.00 | 362.00 | |
| With one condition | 18-69 | $244.00 | $398.00 |
| 70-79 | 300.00 | 496.00 | |
| 80-84 | 324.00 | 536.00 | |
| With two conditions | 18-69 | $324.00 | $528.00 |
| 70-79 | 398.00 | 658.00 | |
| 80-84 | 429.00 | 710.00 | |
| TABLE A2-14: Annual Premium Rates per $10 a Day for Columbia Life Insurance Company | |||
|---|---|---|---|
| All Rates Include 60 Months Benefit Period for Skilled Nursing Care | |||
| Issue Age | Elimination Period No. of Days | Intermediate and Custodial Care Optional Benefit Period of: | |
| 6 Months | 12 Months | ||
| 60-64 | 0 | 44.00 | 63.00 |
| 20 | 38.00 | 58.00 | |
| 60 | 31.00 | 50.00 | |
| 100 | 25.00 | 43.00 | |
| 65-69 | 0 | 61.00 | 86.00 |
| 20 | 53.00 | 78.00 | |
| 60 | 43.00 | 67.00 | |
| 100 | 34.00 | 58.00 | |
| 70-74 | 0 | 91.00 | 127.00 |
| 20 | 79.00 | 115.00 | |
| 60 | 64.00 | 99.00 | |
| 100 | 50.00 | 85.00 | |
| TABLE A2-15: Annual Premium Rates for Blue Cross of North Dakota Policies | |||||
|---|---|---|---|---|---|
| Attained Age | Base Policy | Increase Days to 1000 | Paid up at 80 | Addition $1.00 per Day | |
| Male | Female | ||||
| 55-59 | $298 | $90 | $25.86 | $42.83 | $8.50 |
| 60-64 | 347 | 105 | 45.64 | 72.95 | 10.00 |
| 65-69 | 404 | 122 | 88.64 | 134.85 | 11.50 |
| 70-74 | 437 | 132 | 206.33 | 294.08 | 12.50 |
| 75-79 | 505 | 153 | --- | --- | 14.50 |
| 80+ | 600 | 181 | --- | --- | 17.00 |
| Original Policy ($35 SNF/$30 ICF daily benefit for days 101-730) | |||||
The National Center for Home Equity Conversion (NCHEC) has several reference materials available for purchase at cost. A sampling of some of these materials includes:
Home-Made Pension Plans - Overview of the HEC concept, analytical perspectives summary of specific plans, etc.
National Directory and Sourcebook - Up-to-date listing o HEC Programs in operation and under development throughout the country.
Analyzing RAM and HELP - Detailed analysis of first 3.50 transactions completed by San Francisco RAM program and the Buffalo HELP program.
Sale Leaseback Guide and Model Documents - Provides guidance to sellers, buyers, attorneys and brokers. Legal analysis explains model documents including sale leaseback agreement, secured promissory note, deed of trust, lease and memorandum of lease.
For more information on the products available, call or write:
NCHEC - Room 622
110 East Main Street
Madison, Wisconsin 53703
(608) 256-2111
The American Bar Association, Commission on Legal Problems of the Elderly bas developed an "Attorney's Guide to Home Equity Conversion”.
The guide can be used to facilitate research by attorneys on legal issues involved with HEC. It examines the three most widely used plans, highlights the Federal law framework for each, suggests provisions which should be included in documents governing the transaction and suggests issues that may arise under State law. For more information write or call:
Commission on Legal Problems of the Elderly
American Bar Association
1800 M. Street, N.W.
Washington, D.C. 20036
(202) 331-2297
The Bureau of Maine’s Elderly, Department of Human Services, developed “A Consumer’s Guide to Home Equity Conversion". The intent of the guide is to provide elderly consumers with a basic understanding of the HEC concept to help them decide if it is an appropriate choice. For more information call or write:
The American Association of Retired Persons (AARP) is developing a series of publications on HEC which will be available sometime in 1986. They include Guides for Attorneys, Bankers, Accountants and Consumers. They are also planning to publish model sale leaseback documents, model reverse mortgage documents and state specific brochures on deferred payment loans/property tax deferral. For more information write:
AARP - Consumer Affairs
1909 K Street, N.W.
Washington, D.C. 20049
Premium/contribution estimates in this report produced by the actuaries from the Social Security Administration reflect the judgement that increased third party payments (insurance) for the cost of nursing home care will significantly increase the demand for nursing home care by those insured. The balance of this appendix explains the rationale for the details of this assumed induced demand.
Both economic theory and experience indicate that, with very few exceptions, reducing the price of a good or service will result in an increase in demand for that good or service. Health services are no exception to this principle. Past experience has shown that whenever the out-of-pocket price to the consumer of a health service is reduced, either due to lower costs for the provider or increased payment by a third party (insurance), demand for that health service increases.
Data presented in this report indicate that there are at least as many elderly persons with limitations in Activities of Daily Living who are not in nursing homes as there are in nursing homes. The decisions not to enter a nursing home for such persons is based, at least in part, on the very high out-of-pocket expense of residing in a nursing home. Should nursing home insurance (private or public) become more widely available, this barrier to receiving nursing home care will be greatly reduced for many, with the result that entering a nursing home will become relatively more attractive for those insured than is now the case.
Nursing home prevalence rates, by age group, derived from the 1977 National Nursing Home Survey, form the basis for projected nursing home utilization under the current policy (base) cases presented in this report. It is assumed that nursing home insurance policies developed for study would be widely marketed to a diverse group of persons for whom nursing home utilization, in the absence of insurance, would be about the same as for the general population.
For the broadest level of coverage considered, that is, (1) no elimination period, (2) no limit on number of years of nursing home care for which payments would be made, and (3) reimbursement at an annual rate of $25,000 per year ($68.50 per day) in 1986 dollars, average utilization is assumed to be 50 percent higher than would be expected in the absence of such insurance. In other words, induced demand is assured at 50 percent.
The baseline assumption of 50 percent induced demand for broad coverage is based on informal judgement after consulting with experts in the area of health utilization experience under both private and private insurance programs. No reliable data are available for the precise determination of this baseline assumption. The actual level of induced demand that would occur for such broad coverage could easily be somewhat less or much more than 50 percent.
In order to readily compute reasonable and consistent induced demand levels for nursing home insurance with various levels of coverage, a formula was developed which reflects four basic assumptions: (1) the baseline induced demand level for broad coverage (described above) is So percent, (2) induced demand drops as the elimination period is increased, (3) induced demand drops as the number of years of coverage is decreased, and (4) induced demand drops as the annual dollar amount of coverage is decreased.
The formula which was developed is as follows:
Induced Demand = [(9-a / 2) x (12+2b / 3) + 2] x (c / 25,000
where
a = 1 for 0-day elimination period
a = 2 for 30-day elimination period
a = 3 for 60-day elimination period
a = 4 for 90-day elimination period
a = 5 for 180-day elimination period
a = 6 for 365-day elimination period
b = the maximum number of years of coverage, 12 is used for unlimited coverage,
and c = the annual dollar amount of coverage provided in 1986 dollars.
The table below presents examples of the results of this induced demand formula.
| TABLE A4-1: Assumed Induced Demand Levels for Various Levels of Nursing Home Insurance Coverage | ||||
|---|---|---|---|---|
| Coverage Amount | Maximum Number of Years of Coverage | Elimination Period (in days) | ||
| 0 | 90 | 365 | ||
| $25,000 | 1 | 21% | 14% | 9% |
| 6 | 34 | 22 | 14 | |
| no limit | 50 | 32 | 20 | |
| 18,262 ($50/day) | 1 | 15 | 10 | 7 |
| 6 | 25 | 16 | 10 | |
| no limit | 37 | 23 | 15 | |
The induced demand assumptions described above presume that an increased nursing home bed supply will be available to satisfy the increased demand for insured individuals. For insurance plans which cover only a minority of the elderly population, this presumption is easily met because relatively few additional beds would be required by the insured population. Even if the total supply of beds did not increase, the insured population would be better able to pay nursing home costs and would thus likely displace some uninsured persons.
If nursing home insurance coverage were to become universal, either through a public program or mandated private coverage, the supply of nursing home beds would likely rise to satisfy the additional demand because of the enhanced ability to pay for such care. If, however, universal nursing home insurance coverage was accompanied by no increase in the supply of nursing home beds (as compared with the number of beds available in the absence of such coverage), then no induced demand would be realized. Projections of the impact of nursing home insurance which includes no induced demand are applicable only in this last case, where universal coverage is met with no increase in the supply of nursing home beds.
Office of the Actuary
Social Security Administration
September 5, 1986
Simulations of the potential impact of various private financing mechanisms were conducted using an econometric model developed by staff of ICF Incorporated and the Brookings Institution. The Brookings/ICF Long-Term Care Financing Model is a “microsimulation” model. For a representative sample of individuals, the Brookings/ICF Long-Term Care Financing Model simulates for each of these individuals in each year from 1986 to 2020: 1) their sources and levels of income; 2) their utilization of long-term care services; and 3) their sources and levels of payment for long-term care services.
The Brookings/ICF Long-Term Care Financing Model was developed rising components of two models: 1) the ICF Pension and Retirement Income Simulation Model (PRISM) which simulates the future family structure, income, and assets of a representative sample of individuals; and 2) the ICF Long-Term Care Financing Model which simulates long-term care utilization and the sources of financing for long-term care for individuals age 65 and over.
As shown in Figure A5-1, the Brookings/ICF Long-Term Care Financing Model consists of six major components:
Population Data Base--Using enhanced data from the May 1979 Current Population Survey, this data base contains data on a representative sample of individuals of all ages in 1979. The 1977 database was selected because it had been enhanced by the Social Security Administration so as to contain Social Security earnings histories for each individual.
Income Simulator--Using PRISM, the second part of the model simulates labor force activity, family structure, income, and assets for each individual. The model is linked to macroeconomic forecasts so that its long-term estimates of labor force participation and wages are consistent with economic trends. The model estimates retirement income not only from private sector, defined benefit pension plans, but also public pension plans, private sector defined contribution plans, IRAs, and Keoghs. The model also simulates the assets of individuals, including the value of home equity. These estimates are made for each year for each individual until the individual dies.
Disability of the Elderly--The third part of the model uses probabilities estimated primarily from the 1982 National Long-Term Care Survey and the 1977 National Nursing Home Survey to simulate the disability of persons age 65 and over. This part of the model simulates entrance to disabled status and recovery from disability.
Utilization of Long-Term Care Services--The fourth part of the model uses a set of probabilities to simulate the likelihood of entering a nursing home and length of stay. For non-institutionalized persons, it also simulates the likelihood of using non-institutional services.
Sources and Levels of Payment--The fifth part of the model simulates- the sources of payment and the level of expenditures for each individual receiving institutional or non-institutional long-term care services. This part of the model incorporates the provisions of Medicare and Medicaid and models the spend-down of individuals onto Medicaid.
Aggregate Expenditures and Utilization--The sixth part of the model accumulates Medicare, Medicaid, and private expenditures and utilization for the simulated individuals for each year of the simulation.
This model operates on individual records from the population data base. It simulates changes in the status of each individual in the data base in each year using estimated probabilities. The output of the model is a longitudinal data file for each individual, which contains data for each year on marital status, labor force activity, income, assets, disability status, and use of long-term care services.
The model uses a Monte Carlo simulation methodology. This approach simulates changes in each individual's marital, employment, retirement, and disability status from one year to the next using probabilities which depend upon the demographic and economic characteristics of the individual. Each of these changes in status are called “events”. PRISM simulates each of these events for an individual by drawing a random number between zero and one and comparing it to the probability of that event occurring for an individual with his or her socioeconomic characteristics. For example, assume the probability of death for a 53 year old male is .01 (i.e., one out of every 100 men age 53 is expected to die). If the random number drawn for a 53 year old man is less than or equal to .01, then the individual is assumed to die. If the number drawn lies between .01 and 1.0, then the individual is assumed to live.
The following section presents a brief overview of the key features of PRISM and the other parts of the Brookings/ICF Long-Term Care Financing Model.
The ICF Pension and Retirement Income Simulation Model (PRISM) is a dynamic microsimulation model which simulates the distribution of income from both public and private sources for families through the year 2030. The sources of income modeled by PRISM include earnings from employment, social security, private and public employer retirement plans, individual retirement accounts (IRAs), and the Supplemental Security Income (SSI) program. PRISM also calculates State and Federal income taxes to estimate disposable income levels. A flow chart of the model is shown in Figure A5-2.
PRISM simulates the distribution of the sources and levels of retirement income for a representative sample of the population. The model's primary objective is to simulate how income from these sources will be distributed among households of various socioeconomic groups. This allows analysts to simulate not only the distribution of income under current policy, but also the impact that policy changes or economic trends may have on various segments of the population.
The model is designed so that it can easily accommodate a wide range of changes in policies or economic trends, such as changes in social security benefits, real wage growth, or labor force participation. One of PRISM's unique features is that it can be linked with macroeconomic forecasts to ensure that its estimates of labor force participation and earnings (on an age/sex basis) are consistent with the projected aggregate growth of the economy.
As shown in Figure A5-3, the Brookings/ICF Long-Term Care Financing Model simulates disability of the elderly, their utilization of institutional and non-institutional services, and the methods of financing these long-term care services.
To simulate long-term care utilization, the model first simulates disability for persons age 65 and over using probabilities developed primarily from the 1982 National Long-Term Care Survey and the 1977 National Nursing Home Survey. Using these probabilities and probabilities of recovery from disability, the model simulates disability for different age, sex, and marital status groups.
The model then uses Monte Carlo simulation techniques to simulate on an annual basis whether or not each individual enters a nursing home or starts using non-institutional services. If an individual is simulated to enter a nursing home or use non-institutional services, the model probabilistically simulates the length of stay or the length of time the individual uses non-institutional services.
The model then simulates the sources and levels of payment for long-term care services using the simulated utilization patterns. For example, for each individual who enters a nursing home, this part of the model simulates whether: 1) Medicare will pay for any services; and 2) whether the individual will pay for nursing home services using Medicaid private resources, or both. This part of the model also accumulates long-term care costs by source of payment.
The model is based on a large number of assumptions concerning demographic and economic trends which are described in detail in a draft documentation report (ICF, 1986). Virtually all of the key assumptions relevant to the simulations discussed in this report are consistent with the Alternative 11-B assumptions of the Annual Report of the Board of Trustees of the Federal Old Age and Survivors insurance and Disability Insurance Trust Funds. Major assumptions are discussed in the context of simulation results in the body of this report in Section D: Special Analysis, of Chapter III.
| FIGURE A5-1: Brookings/ICF Long-Term Care Financing Model |
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| FIGURE A5-2: PRISM Flowchart |
 |
| FIGURE A5-3: Flowchart for Utilization of Long-Term Care Services |
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