Most people age 65 and older and many people under age 65 with disabilities have Medicare insurance, but Medicare does not cover most LTSS; instead, the primary payer for LTSS is Medicaid. LTSS includes a wide range of paid and unpaid medical and personal care services that help with activities of daily living (such as eating, bathing, and dressing) and instrumental activities of daily living (such as preparing meals, taking medications, and cleaning the house). They are provided to people who need these services because of aging, chronic illness, or disability. These services include nursing facility care, adult day care programs, home health aide services, personal care services, transportation, and supported employment. They can be provided for weeks, months, or years, depending on health insurance and the individual's level of need. There have long been challenges in finding enough workers to provide LTSS to all people who need these services, and the COVID-19 pandemic has greatly exacerbated these challenges. As the population ages and medical and technological advances allow people with severe disabilities to live longer, the number of people in need of LTSS is expected to increase.
In 2023, the median annual cost of care in the U.S. is $116,800 for a private room in a nursing home, $64,200 for a nursing home, and $75,504 for a home care aide. Medicare provides home health services and skilled nursing home care under certain circumstances, but this program is considered a "post-acute" program and is not usually available to people who need services on an ongoing basis. The Medicaid program plays a key role in ensuring access to LTSS for eligible people, as most people have difficulty paying for LTSS out-of-pocket. In some cases, people become eligible for Medicaid only after they have exhausted their savings to pay for LTSS. In 2022, Medicaid paid for 58% of the $438 billion spent on LTSS in the United States (Figure 9).
LTSS can be provided in a variety of settings, which are broadly categorized into institutional and non-institutional settings. Services provided in non-institutional settings are called home and community-based services (HCBS) and may include home, adult day care centers, nursing homes, and group homes. Federal Medicaid laws require states to cover inpatient LTSS and home health services, but other types of HCBS are optional. Even in the absence of mandatory coverage of HCBS services, Medicaid LTSS expenditures shift from inpatient to noninpatient settings over time. In 2022, HCBS accounted for the majority of LTSS spending in the United States. This shift reflects beneficiaries' preference to receive care in noninstitutional settings and state requirements to provide services in the least restrictive setting resulting from the Olmstead decision. In 2021, 5.7 million people used LTSS services under Medicaid, of whom 4.3 million (75%) used HCBS only, 1.2 million (21%) used institutional care only, and 0.2 million used both (4%). Although overall, three-quarters of people who used LTSS under Medicaid were served exclusively in home and community-based services, this proportion varied across states (Figure 10). To qualify for Medicaid LTSS coverage, people must meet state requirements related to income, wealth, and functional limitations.