Replacing the nursing home

Public Interest, Summer, 1997 by Peter Uhlenberg

The term "nursing home" hardly fits the American institution that houses 1.7 million feeble old people. First, no one who lives in a nursing home could possibly confuse it with a home. Sharing a bedroom 'with a sick stranger, being served institutional food on a fixed schedule, having no control over the design and furnishing of your room, and being cared for by indifferent aides contradicts the idea of home. Second, these institutions provide little professional nursing care for their residents. Residents in nursing homes receive attention from registered nurses for an average of nine minutes per day. The basic problem with nursing homes, however, is not the misleading name. Changing the name from nursing home to something else, as some institutions have done in recent years, does not change the experience of those forced to live in them. The fundamental problem is much deeper and more resistant to change. These institutions are costly, inhospitable structures, failing to meet the needs of the persons who must spend their last weeks or years of life in them because better alternatives are not available.

Rather than continuing down the path of trying to reform nursing homes through ever greater governmental regulation, it is time to phase out public support of the nursing-home industry. The 50 billion dollar annual subsidy of nursing homes coming from government could be redirected to support alternative arrangements that better meet the needs of the disabled elderly. A bold move to end government support of nursing homes could profoundly improve the quality of life for several million older Americans.

Who created the nursing home?

The modern nursing-home industry, involving the construction and operation of profit-making, medical-type facilities, was developed after World War II. In the mid 1940s, fewer than 200,000 persons resided in institutions of this type, but warnings about depersonalization occurring in nursing-home environments were already being sounded. Despite persistent criticism of conditions, however, the number of residents in these facilities continued to grow, in large measure due to perverse government incentives. Expansion of the nursing-home industry in the 1950s was encouraged by the Hill-Burton Act that provided public money for construction of non-profit nursing homes and by the Federal Housing Administration's guarantee of mortgage loans to proprietary nursing homes.

More rapid growth occurred after Medicaid was enacted in 1965. Medicaid regulations signaled the willingness of government to pay the full cost of long-term care for poor older persons in nursing homes, but not in other settings. The infusion of this new source of money provided a tremendous boost to the nursing-home industry; and government regulations that accompanied it set the model that nursing homes had to adopt. In addition, the deinstitutionalization of residents of mental hospitals, which began in the 1960s, further increased the supply of older persons who were candidates for nursing-home admission. Thus by the early 1970s, more than one million older persons were residing in nursing homes, and large-scale government support of the industry was firmly in place.

Cost and quality

Three big problems of nursing homes will not go away: excessive cost, poor quality of care, and dehumanization. Nursing homes are an expensive way to care for frail, older persons. The cost of residing in a middle-range nursing home for a year now exceeds $45,000. Because very few individuals have private insurance to cover long-term care, nursing-home expenses are paid out-of-pocket or through governmental funds. Nursing-home residents who are poor (or who can appear poor through deceptive Medicaid estate-planning techniques) qualify for Medicaid support. Those who do not must pay their own bills until they have spent down their savings and assets. Thus all but the very wealthy face the threat in old age of having to transfer their life savings to a nursing home and becoming wards of the state.

Nursing homes threaten the general public with financial disaster as well. The total cost of caring for the nearly two million persons now living in nursing homes is $80 billion annually. The government pays about 60 percent of this bill, which is increasing each year. From 1990 to 1994, while the size of the older population was growing at 1.6 percent per year, government spending on nursing homes (adjusted for inflation) was growing at 9 percent per year. But the older population in need of care will grow far more rapidly in the future, as the baby-boom generation grows older. Projections by the Urban Institute, using current nursing-home admission patterns, indicate that the number of persons in nursing homes could nearly triple between 1990 and 2030. If per-capita nursing-home costs continue to grow more rapidly over this period than the economy, as they have done for some time, society will face an immense economic burden.

Cost, however, is not the only reason why alternatives to nursing-home care must be found. A second problem plaguing the nursing-home industry is the poor quality of care provided. At the extreme are instances of physical abuse and theft of property. Of greater concern, however, is the routine experience of receiving what Bruce Vladeck, Administrator of Health Care Finance Administration, terms "unloving care."