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									           The Elderly's Private Insurance Coverage of Nursing Home Care
                                                             GAIL LEE CAFFERATA, PHD
                                                                                 calendar year 1977, NMCES provided detailed information
     Abstract: About 40 per cent of Medicare beneficiaries had                   for a sample of about 14,000 households in the civilian
private insurance coverage of skilled nursing facilities (SNF) in                noninstitutionalized population in 1977.6,7
1977. Data from the 1977 National Medical Care Expenditure
Survey show that among such persons, about 85 per cent had full                  Results
coverage of Medicare's Part A copayments for days 21-100 but only                      In 1977, 97.6 per cent of Americans aged 65 years and
15.7 per cent had maximum coverage of at least 365 days of care or a             older were covered by Medicare.2 Of these, about 40 per
benefit of $100,000 or more. The most comprehensive benefits are                 cent* had additional private insurance coverage of skilled
found among persons with middle or high incomes; more generous                   nursing facilities. Among the privately insured, the availabil-
first-dollar coverage is found in the North Central and South                    ity of coverage of nursing home care did not vary by age,
regions, and more generous maximums in the West. (Am J Public                    sex, racial background, education, income, or health status
Health 1985; 75:655-656.)                                                        of the insured person. However, there were significant
                                                                                 regional differences. Seventy per cent of privately insured
                                                                                 persons residing in the North Central region were covered
Introduction                                                                     for skilled nursing facilities, compared with slightly less than
                                                                                 60 per cent of persons residing in other parts of the country.
     Nursing home care accounts for approximately one-                                 The nature of private insurance benefits for care in a
fourth of all health expenditures made by or in behalf of                        skilled nursing facility (SNF) among persons with coverage
older Americans, ranking second only to hospital care as a                       should be examined in relation to Medicare. Medicare
source of health-related financial risk. Medicaid contributes                    completely covers the cost of the first 20 days of care in a
heavily toward the payment of these expenses, paying half of                     certified SNF (except for the Part A deductible which would
these costs in 1977.1 Other public programs, including Medi-                     generally be paid on a required prior admission to a hospi-
care, contributed less than 10 per cent, with direct payments                    tal). On day 21, Medicare copayments begin. Table 1 shows
and private health insurance payments responsible for 43 per                     that about 85 per cent of privately insured Medicare enroll-
cent. Despite the fact that two-thirds of older Medicare                         ees with SNF coverage in 1977 had full coverage of Medi-
beneficiaries are privately insured, and a majority of those                     care's Part A copayments for SNF. However, prior hospital-
were covered for care in a skilled nursing facility in 1977,2                    ization was a requisite for eligibility for SNF benefits for 85
private insurance paid only about 1 per cent of the costs of                     per cent of all privately insured Medicare enrollees with
nursing home care in 1981.3                                                      nursing home coverage and for 75 per cent, admission to a
     There are many reasons for the relatively low contribu-                     SNF must follow hospitalization by a specified number of
tions of both Medicare and private insurance to the payment                      days (data not shown). Thus, although private insurance
of nursing home expenditures including complex and restric-                      benefits for stays up to 100 days are quite extensive, the
tive Medicare claims criteria which are often duplicated in                      conditions under which a person becomes eligible for these
private insurance.45 Medicare, for example, restricts cover-                     benefits were largely the same as the conditions under which
age to skilled nursing care or skilled rehabilitation services                   a person qualifies for Medicare SNF benefits.
provided only in a certified skilled nursing facility. Interme-                        Although at least half of all privately insured noninstitu-
diate and custodial care are not covered, and coverage is                        tionalized Medicare enrollees had private coverage for at
limited to 100 days. Also, the beneficiary must require care                     least 100 days of SNF care (84.7 per cent of 60.8 per cent) the
for a condition recently treated in a hospital. Selected long-                   proportion with generous coverage of a long-term stay in a
term private insurance policies also have been shown to                          skilled nursing facility is much smaller. Table 1 shows that in
emphasize coverage of skilled rather than intermediate or                        1977, only 15.7 per cent of privately insured Medicare
custodial care, and to require prior hospitalization.5                           beneficiaries with coverage of SNF care had basic coverage
     Until now, little has been known about the distribution                     extending to 365 days or a major medical policy of $100,000
of short-term and long-term benefits for nursing home care in                    or more; 14.4 per cent had both full coverage of the Part A
the national Medicare population, the characteristics of                         copayments and a generous maximum defined here as 365
individuals and families covered, or the total coverage of                       more days of coverage or a major medical maximum of
those with more than one source of private insurance.                            $100,000 or more.
                                                                                       Table 1 also shows that full coverage of the Part A
Methods                                                                          Medicare copayments for days 21 to 100 is more common
     Data for this report derive from the National Medical                       among persons with middle or high incomes than among
Care Expenditure Survey (NMCES), sponsored by the Na-                            persons with poverty level or other low inconmes. Region and
tional Center for Health Services Research in conjunction                        place of residence were also associated with the level of SNF
with the National Center for Health Statistics. A national                       benefits. Only 52.7 per cent of Medicare enrollees with SNF
household survey of health care use and expenditures for                         benefits residing in the North East had full coverage of the
                                                                                 copayments in comparison with 87.1 per cent of persons in
                                                                                 the West, and nearly all persons in the North Central or
     Address reprint requests to Gail Lee Cafferata, PhD, Sociologist, Nation-
al Center for Health Services Research and Health Care Technology Assess-
ment (NCHSR), US Department of Health and Human Services, 5600 Fishers                *This figure, 40 per cent, reflects the fact that about two-thirds of older
Lane 3-50, Rockville, MD 20857. This paper, submitted to the Journal             Americans covered by Medicare were also privately insured and, of these,
October 18, 1984, was revised and accepted for publication January 29, 1985.     60.8 per cent had skilled nursing facility (SNF) benefits.


AJPH June 1985, Vol. 75, No. 6                                                                                                                              655
PUBLIC HEALTH BRIEFS

                      TABLE 1-Coverage of Medicare Part A Copayment for Days 21-100 In a Skilled Nuring Facility and
                               Maximum Benefit for SNF among Privately Insured Medicare Enrollees Age 65 (NMCES/Heaith
                               Insurance/Employer Survey: United States, 1977)
                                                                                          Per Cent with                                    Per Cent with Full
                                                          All Privately Insured           Full Coverage                                    Coverage of Part
                                                             Aged Medicare                   of Part A             Per Cent with             A Copayments
                                                           Enrollees with SNF             Copayment for             a Generous              and a Generous
                                                           Coverage (1,000s)               Days 21-100               Maximuma                  Maximum
                      Total                                        9,017                        84.7                     15.7                       14.4
                      Age (years)
                        65-69                                      2,701                        85.9                     13.0                       13.0
                        75-74                                      2,658                        83.6                     14.3                       12.7
                        75 or older                                3,658                        84.5                     18.6                       16.6
                      Sex
                        Male                                       3,588                        88.6                     15.7                       15.7
                        Female                                     5,429                        82.1                     15.6                       13.5
                      Family Incomeb
                        Poverty and other Low
                           Income                                  4,014                        79.7                     9.2                         8.6
                        Middle or High Income                      5,003                        88.6                    20.9                        19.0
                      Perceived Health Status
                        Excellent                                  2,644                        89.1                     19.3                       17.0
                        Good                                       3,661                        84.7                     12.6                       12.6
                         Fair or poor                              2,431                        80.0                     15.0                       14.4
                      Region
                        North East                                 2,264                        52.7                    18.8                        18.8
                        North Central                              3,958                        96.9                    13.6                        13.1
                        South                                      2,141                        96.4                    10.4                         8.7
                        West                                         655                        87.1                    34.2                       *25.8
                      Place of Residence
                        SMSA                                       5,785                        79.2                     17.0                       16.2
                        Other                                      3,232                        93.5                     13.0                       11.4
                          a)A maximum of 365 days or $100,000 ore more.
                           b)The definition of poverty line income follows that of the US Bureau of the Census for 1977, using family income within family size to
                      establish the poverty line. For the purposes of this report, the category poverty lvel and other low income includes incomes up to 2 times
                      the poverty line; middle or high income more than 2 times the poverty line income in 1977. The poverty line in 1977 for example, for a
                      family of two was $3,928.
                           *Relative standard error equal to or greater than 30 per cent.
                           SOURCE: National Center for Health Service Research.


Southern regions of the nation. Full coverage was also more                                          Human Services, National Center for Health Services Research, 1984.
common in non-metropolitan areas.                                                                 3. Gibson RM, Waldo DK: National health expenditures, 1981. Health Care
     Income and region were also associated with the likeli-                                         Financ Rev 1982; 4:1-35.
                                                                                                  4. Feder J, Scanlon W: The underused benefit: Medicare's coverage of
hood that a person had a generous SNF maximum. Those                                                 nursing home care. Milbank Mem Fund Q 1982; 60:604-632.
most able to pay for the costs of an illness were also most                                       5. Meiners MR: The state of the art in long-term care insurance. In:
likely to have generous maximums; twice as many persons                                              Conference on Long-Term Care Financing and Delivery Systems: Explor-
with middle or high incomes had a generous maximum as did                                            ing Some Alternatives. Washington, DC: Health Care Financing Adminis-
                                                                                                     tration, 1984.
persons with low incomes (20.9 per cent in comparison with                                        6. Bonham GS, Corder LS: National Health Care Expenditures Study,
9.2 per cent). Generouis maximums were more common in                                                Instruments and Procedures 1: NMCES Household Survey Instruments.
the West than in the South or North Central regions of the                                           DHHS Pub. No. (PHS) 81-3280. Washington, DC: Department of Health
nation.                                                                                              and Human Services, National Center for Health Services Research,
                                                                                                     1981.
                                                                                                  7. Cohen SB, Farley PJ: National Health Care Expenditures Study, Instru-
Discussion                                                                                           ments and Procedures 3: Estimation and Sampling Procedures in the
                                                                                                     NMCES Insurance Surveys. DHHS'Pub. No. (PHS) 84-3369. Washing-
     In view of the aging of the US population and the                                               ton, DC: Department of Health and Human Services, National Center for
extensive burden of care-giving on middle-aged daughters                                             Health Services Research, 1984.
and older spouses,8'9 the feasibility of increased private                                        8. Stoller ES, Earl LL: Help with activities of everyday life: sources of
                                                                                                     support for the noninstitutionalized elderly. Gerontologist 1983; 23:64-70.
insurance coverage of long-term care is now being ex-                                             9. Brody EM, Johnson PT, Fulcomer MC, et al: Women's changing roles
plored.10 These 1977 data suggest that expanding the market                                          and help to elderly parents: attitudes of three generations of women.
for affordable SNF insurance may require altering a market                                           Gerontol 1983; 38:597-607.
that in 1977 favored coverage of skilled rather intermediate                                     10. Meiners MR, Trapnell GR: Long-term care insurance: estimates for
                                                                                                     prototype policies. Med Care 1984; 22:901-911.
or custodial care, and short-term rather than long-term
financial protection.
                                                                                                                                ACKNOWLEDGMENTS
                                                                                                     Pamela Farley, PhD of the National Center for Health Services Research
                             REFERENCES                                                         contributed to this report. The author acknowledges the helpful comments of
 1. Gibson RM, Fisher GR: Age differences in health care spending, Fiscal                       Daniel Walden on an earlier version of this manuscript, and programming
   year 1977. Soc Secur Bull January 1979; 42:3-16.                                             assistance of Dale Ross of Social and Scientific Systems, Inc., Bethesda,
2. Cafferata GL: National Health Care Expenditures Study, Data Preview                          Maryland. The views in this paper are'those of the author and no official
   18: Private Insurance Coverage of the Medicare Population. DHHS Pub.                         endorsement by the National tenter for Health Services Research or the
   No (PHS) 84-3362. Washington, DC: US Department of Health and                                Department of Health and Human Services is intended or should be inferred.

656                                                                                                                                             AJPH June 1985, Vol. 75, No. 6

								
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