The Shift to Private Administration of Long-Term Care

There has been a well-documented shift in publicly funded long-term care (LTC) from a predominance of nursing homes to a more balanced array of options including home- and community-based services (HCBS), such as in-home personal care and assisted living. Research shows this shift to be cost-effective and that care recipients and their families view it as enormously beneficial. However, there has also been a shift in the administration of HCBS from state and local nonprofit aging networks to for-profit HMOs administered mainly by large insurance companies. A recent paper examines this shift, whether it has been beneficial, and likely trajectories of the change.

The primary rationale for the shift is that for-profit HMOs can sufficiently reduce costs and generate efficiencies to an extent that both a) avoids decreases in access to or quality of care and b) provides a satisfactory profit margin to shareholders. This rationale has largely been endorsed by state and federal policymakers. However, evidence suggests that LTC is more cost-effective when administered by a non-profit aging network. Four studies of Florida’s HCBS programs found that the HCBS administered by a non-profit aging network achieved outcomes similar to HMO administered programs, but at costs 25 to 40 percent lower. Unfortunately, even though this data is available, the Florida legislature continues to approve conversions to HMO-managed situations.

The authors suggest that this tendency toward greater HMO administration will continue for ideological rather than evidence-based reasons. While the authors suggest a decline in non-profit administration of HCBS is likely because of political climates at the state level, they suggest that this will likely not happen in a uniform manner nationwide.

The above trends, along with the potential impact of lobbying efforts by HMOs, could lead to an “erosion of public control of LTC services.” Shareholder pressure to achieve greater profitability may also increase the likelihood for HMOs to reduce services provided, producing a greater reliance on informal care, such as family assistance. On the other hand, should poorer and/or less efficient care in HMO-managed situations gain greater public attention, the authors also see the possibility of a backlash against the trend of HMO corporatization from the aging advocacy community.

Polivka L and Luo B. Neoliberal long-term care: from community to corporate control. The Gerontologist. (2017). DOI:10.1093/geront/gnx139

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