Research Activities, January 2010: Health Care Costs and Financing: Medicare payment caps on home care add to the family caregiving burden, especially among lower-income families

Health Care Costs and Financing
Medicare payment caps on home care add to the family caregiving burden, especially among lower-income families

Home care services, rapidly increasing with the aging population, are typically provided by formal home care agencies and the patient's own family and friends (informal care). To reduce home care costs, Medicare put into place an interim payment system for home care services in 1997 that placed annual patient caps on reimbursing home care agencies. Such caps force patients to expand their use of informal care, concludes a new study. While high-income families can offset this burden by paying for home care services out-of-pocket, low-income families must rely more on informal care to offset the limited reimbursed home care services available. Thus, the caregiving burden falls heaviest on lower-income families.

Researchers examined data on unmarried elderly persons from the Asset and Health Dynamics Among the Oldest-Old Survey (1993-2000) and the Health and Retirement Study (1996-2000). Each person had to have at least one limitation that interfered with their daily living activities, such as eating, bathing, and dressing. Among low-income individuals, 58 percent reported using informal care over the prior month, averaging 15 hours per week. Only 48 percent of individuals above the Federal poverty line used informal care; their average was just 12 hours per week.

According to the researchers, a 62-percent decrease in home health services resulted in a 26-percent hike in the likelihood of informal care use plus a 38-percent rise in informal care hours. They caution policymakers to balance the financial costs of publicly funded home care or payment systems with the effect such changes may have on the informal care burden of lower-income families. Their study was supported in part by the Agency for Healthcare Research and Quality (HS17379).

See "Effect of Medicare home health care payment on informal care," by Ezra Golberstein, Ph.D., David C. Grabowski, Ph.D., Kenneth M. Langa, M.D., Ph.D., and Michael E. Chernew, Ph.D., in the Spring 2009 Inquiry 46, pp. 58-71

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Research Activities, January 2010: Health Care Costs and Financing: Medicare payment caps on home care add to the family caregiving burden, especially among lower-income families