What do the Long Term Care Industry and the Interstate Highway System have in Common?
They exist in their current, super-sized form largely due to historical redirection of taxpayer money & resources by government. This has resulted in considerable tradeoffs in our society.
The US Interstate Highway System is a marvel of engineering and a massive accomplishment. The system, authorized by the Federal Aid Highway Act of 1956, was signed into law by President Dwight D. Eisenhower, and created a system first envisioned by President Roosevelt in 1939 as:
“special system of direct interregional highways, with all necessary connections through and around cities, designed to meet the requirements of the national defense and the needs of a growing peacetime traffic of longer range.”
The system now comprises a network of highways that spans the United States, connecting major cities, towns, and rural areas - and this system was designed to create a more effective way for people and goods to travel across the country (as well as facilitate military transport purposes).
Although interstate highways existed prior to the federal interstate project, they were a patchwork, and good were transported by rail, but also waterways and barges (which were often slow and inefficient).
Additionally - the highway system was designed to facilitate travel by citizens, which again, prior to the highway system was accomplished primarily by the pre-existing patchwork of highways and backroads, but also by rail.
For those of you that know history, and more importantly, basic logic of economics - which is merely the study of tradeoffs, ultimately, at it’s core, may be aware that the introduction of the US interstate highway system essentially was a gigantic policy choice foisted on the American people.
And there was some ferocious debate about this at the time, with concerns raised about the cost of the project, the tension between federal and state authority, and of course - industry. Trucking companies were concerned about existing business models being overturned. Railroad companies were concerned about losing freight traffic to trucks.
In addition, local businesses were opposed to the construction of highways that would bypass their communities, fearing that this would harm their economies, which in the end turned out not to be a totally unfounded fear:
The US Interstate Highway System Costs and Benefits
"The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups"
- Henry Hazlitt, ‘Economics in One Lesson’
In the end, according to some estimates - the Interstate Highway System has cost us (in todays dollars) apparently a very modest 535 billion to build initially.1
But then, after you add in the cost of maintenance since it was built - the final cost is likely in the trillions. But - in the current era of multi-trillion-dollar national debt and trillion-plus annual budgets in the United States, this doesn’t perhaps register, even then. What’s a few trillion dollars amongst friends these days?
But costs aren’t just about money spent, money out of pocket.
Related to this whole overarching idea of tradeoffs is the idea of opportunity costs. In other words, what if the US had chosen differently, and instead of imposing a single solution on the entire country with the interstate highway system, we had chosen to, say, revitalize our what-was-at-the-time aging *railway* system? Or we plowed additional monies into improving and modernizing our waterway system? Or all of the above?
To be sure, the interstate highway system has been probably by many measures extraordinarily useful to the USA and it’s economy - according to Reason Foundation’s Director of Transportation Policy, the system generates nearly three-quarters of a billion dollars of economic value to the US economy per year.
But like I said earlier - we’re talking about tradeoffs here. We’re talking about the “road less travelled” - pun intended.
The fact is, the USA could have chosen differently. Instead of a huge outlay of dollars initially and since for highways, we could have done a massive expansion of the US rail system. We could have built bike lanes. We could have expanded water travel. We could have had a mass transit system that interconnected states with each other, one that we might not be able to imagine today. We could have done all of these things, and perhaps more!
But because of the apparently degraded political lobbying power of the rail industry, and competing interests of the oil & gas industry of the time, as well as the burgeoning automobile industry - we got the interstate highway system, and that alternate reality no longer exists. That alternate reality is our opportunity cost.
We also live in a world now dominated by automobiles. It’s part of the US culture, it’s been weirdly woven into our sense of independence as a culture (although when we’re stuck on the interstate at 5pm crawling through trough rush hour traffic we’re sometimes not so sure).
The US Long Term Care Industry
I’ve talked a little bit about the history of LTC in the United States before. Much like there was a functioning system of interstate roadways in the US prior to the funding and construction of the Interstate Highway System (but just smaller, more modest and peacemeal), the same could be said for the US system of institutional elder care in the US prior to around the 1930s.
Before the 1930s or so, older adults relied extensively on family care to a degree thats much less common today, with American households much more commonly comprised of multigenerational living situations.
There were few dedicated long-term care facilities, and those that existed for people of more limited means were operated with no government regulation & with little resources by charitable organizations and religious institutions. For those who could afford it, private nursing homes were an option, but many families couldn't afford the cost.
This all started to change quickly with the passage of the 1935 Social Security Act - which we all know from our history books was a landmark piece of social welfare legislation, and opened the floodgates for direct government spending on long-term care. Eskildsen & Price (2009) in their fascinating article “Nursing home care in the USA”, in Journal of Geriatrics and Gerontology International, go on to say:
“After World War II, the next event that promoted growth in the nursing home industry was passage of the Hill-Burton Act in 1946. Its main effect was to improve the nation's hospital system, but it also promoted nursing home expansion, as many former hospital buildings were converted for extended care. In 1965, President Lyndon Johnson signed the Medicare and Medicaid programs into law. These programs continue to be the main source of health insurance for adults over the age of 65 years…”
So as you can see, there was also a very significant choice that was made in the United States in terms of the LTC industry, beginning with the Social Security Act (1935), the Hill-Burton Act (1946), the Medicare and Medicaid programs (1965), and later (as I discussed in detail in my previous article) the OBRA act of 1987.
All of these things were choices we made collectively - moving away from care provided overwhelmingly by families, but also by the patchwork of institutional care provided by charities or the private market. Instead, the USA chose nursing homes.
Now, much like the US interstate, nursing care has a lot of benefits, right?
It’s efficient. All the medical care grandma or grandpa needs is right there. Doctors, nurses, physical therapy, etc.
Across all 50 states, it’s regulated - so at the very least, despite how you may feel about particular regulations (*cough*MASKMANDATES*cough), you know that there’s a uniform set of standards applied to the care given to older folks who end up in these places.
Regarding regulation - all nursing homes have a pretty strict set of standards when it comes to penalizing places that abuse residents, or overprescribe or improperly prescribe antipsychotics or tranquilizers. Since the 1980s - use of physical restraints on nursing home residents have been strictly curtailed.
But, there have been many costs….
Getting old is now culturally known as the time to be terrified of getting “put in a home.”
We all culturally understand in the USA that getting old is taboo in a way. US is notoriously youth-obsessed. Instead of multigenerational homes, we now have a national industry we’ve created, of these funny buildings where we take our old people and segregate them away from the rest of society.
Because of this, there’s a permanent sense of separation between the old and the young that happens with nursing homes. They become removed from society. And of course COVID has made this all worse now.
I sketched out above where there’s an alternate reality - one where we didn’t fund a massive US interstate highway and instead, perhaps, spent the same amount massively expanding US mass transit.
What kind of an alternative world would we be in now? Would we be so married to our cars? What would the world energy situation be like? How would US cities look? What would the world geopolitical situation look like?
The same could be said for the US long-term care industry.
What if instead of massively funding / subsidizing & expanding long-term care in the US, we funded a massive expansion of services to help keep older adults in their homes with their kids and grandkids?
What if we had re-envisioned nursing homes from the start (which were just repurposed hospitals initially, anyways)? What would this all look like?
We Need to Re-Envision Long Term Care in the USA
The fact is that even prior to the Great Coronapanic that started in 2019 - there was signs the US long term care industry was crumbling. The private long-term care insurance market has basically collapsed. The current system of Medicaid funding for long-term residential care is highly inadequate and leaves a lot of people (aside from those Medicaid was designed for, the very impoverished) liable for very, very expensive nursing care that can often easily financially wipe out middle class families.
Finally, my personal view is that the Coronapanic has dealt a death blow to the US long term care industry. I don’t think it’s coming back - it’s now in a state of inexorable decline.
We now have utterly brutal nursing shortages that don’t look like they are resolving. Nursing home residents continue to exist in a dystopian state where mandated, 24/7 masking is the norm everywhere, and there are still signs of COVID pandemic fear everywhere (testing, snap lockdowns, etc).
Any and all of these measures could be re-imposed at a moment’s notice by federal agencies that continue to be obsessed with community transmission totals and make quality of life issues permanently a tertiary issue - at best.
There is a great, great need to radically re-envision care for the elderly in this country and I think it’s high time we start doing it. In my next article (perhaps two) - I’m going to try and start doing that.
Let’s imagine some new possibilities together.
Warning - I’m not a historian, but I do love history, so anyone that’s an expert in American economic history of this period can rightfully rap me on the knuckles.
Excellent article!
In my home care agency, we care for people in thier homes. We are licensed by the state and licensure regulations vary state to state. Our clients (not patients, we are non-medical) may be living alone, with or without family nearby or a spouse is struggling to care for thier loved one. We funded by the family, long term care insurance, or certain veteran benefits. For low income individuals on Medicaid - or Medi-Cal for those of us in California there is a government funded program for in home support.
Assisted Living is also non-medical, funded by the family, and is a residential environment with meals and activities. That industry is booming.
We are all limited by staffing shortages.
I'm looking forward to your next installment(s) about how to re-envision long term care. Personally, I advocate for more family involvement. This is what gives our lives purpose.
A lot of things - actually most things - that we think "just happened," didn't.
I just saw The Big Short, a movie about the 2008 meltdown. Pretty good except they forgot to mention one thing: government policies that pushed subprime lending. It was all the fault of Wall Street, you see. Rather a large omission.
I plan to die before I go into LTC.