The Evolution of Nursing Home Care in the United States

Early 1900s:

Without a federal assistance program to help pay for the care of elderly or disabled, most states sent their impoverished citizens to "poor farms" or "almshouses." The homes were known for their dilapidated facilities and inadequate care, and states appeared to encourage the stigma as a motivating factor to keep people from relying on them. Some immigrant communities established organizations that helped newcomers and the aging instead of using public services.

1930s:

The New Deal helped promote the idea that elderly citizens should receive federal benefits on the basis of need. Social Security is now universal, and only tangentially needs-based.

1935:

The Social Security Act was signed by President Franklin Delano Roosevelt on August 14, 1935. The act provided matching grants to each state for Old Age Assistance (OAA) to retired workers. To discourage almshouse living, however, people living in public institutions were not eligible for the payments. That paved the way for the opening of a variety of private old-age homes, so that people could live in a care facility and still collect the Old Age Assistance payments.

1946:

The Hospital Survey and Construction Act, known as Hill-Burton, provided funding for constructing state-of-the-art hospitals. In the 1920s, hospitals began to be seen as "Houses of Hope," whereas before they were places where poor people recuperated or died. The Depression and World War II, however, limited the number of facilities that could live up to that ideal, so by the time WWII ended, there was an enormous backlog of need in almost every community for modern health care facilities.

1950s:

Significant amendments to the Social Security Act included a requirement that states must establish some form of licensing for nursing homes. They also lifted a ban on providing benefits to residents of public facilities and channeled federal moneys to health service providers.

1954:

A change in federal law provided grants for the construction of nursing homes "in conjunction with a hospital" in an attempt to raise the quality of care. The change meant that the physical construction of nursing homes began to be modeled after hospitals. It also transformed nursing homes from being part of the welfare system to being part of the health care system.

1960:

The first major nursing home scandals appeared in New York and elsewhere, uncovering noncompliance in staff and code requirements, and financial irregularities.

July 30, 1965:

Without a federal assistance program to help pay for the care of elderly or disabled, most states sent their impoverished citizens to "poor farms" or "almshouses." The homes were known for their dilapidated facilities and inadequate care, and states appeared to encourage the stigma as a motivating factor to keep people from relying on them. Some immigrant communities established organizations that helped newcomers and the aging instead of using public services.

"Thirty years ago, the American people made a basic decision that the later years of life should not be years of despondency and drift. The result was enactment of our Social Security program… Compassion and reason dictate that this logical extension of our proven Social Security system will supply the prudent, feasible, and dignified way to free the aged from the fear of financial hardship in the event of illness."
--President Johnson

1968:

Congress passed legislation known as the "Moss Amendments," which provided comprehensive legislation to improve nursing homes and raise institutional standards.

April 1969 :

In response to overwhelming costs sparked by the enthusiastic response to Medicare, the then-Department of Health and Human Services distributed "Intermediary Letter 371," stamping out much of the coverage for nursing homes the programs had initially allowed. The sudden change in policy left thousands of elderly and their families with bills they would never be able to pay off.

"From the time of Intermediary Letter 371 on, Medicare was no longer a significant factor in the nursing home industry. At great cost, with great confusion, and not inconsiderable pain to thousands of old people and their families, Medicare was finally doing, relative to nursing homes, what its sponsors had first intended - hardly anything."
— Bruce Vladeck, author, public health advocate

1971:

With most nursing homes across the country unable to comply with the standards set by the government, "the Miller Amendment" offered states an alternative to the costly changes. It established a new standard known as "intermediate-care facilities." This new classification meant the facility qualified for federal reimbursement, but did not require the same amount of skilled nursing or resources, thus costing the government less and lowering standards of care.

1972:

One of the largest pieces of legislation ever passed, Public Law 92-603, contained a number of reforms for nursing homes, including a new policy that Medicaid would reimburse nursing homes on a "reasonable cost-related basis," with the hope that the facilities would provide better care. Previously, most states used relatively arbitrary fee schedules.

Mid 1970's:

Nursing home scandals again broke across the country, demonstrating provider fraud and poor care. The scandals brought nursing homes into the political arena, but few changes were enacted.

1981:

Federal legislation known as the Boren Amendment required states to ensure "reasonable and adequate" provider reimbursement rates. A couple years later, federal courts found the amendment was indeed enforceable in court.

1985:

A report by the Institute of Medicine on nursing home regulation became the basis for legislation, contained in the Omnibus Reconciliation Act (OBRA) in 1987, that was the largest overhaul of federal regulations for nursing homes.

1990's:

In response to federal payment incentives, a new field of sub-acute care emerges to provide care for people released from hospitals who still need more care than found in intermediate-care nursing facilities.

1997:

After a period of particularly rapid growth in Medicare nursing home expenditures, the Balanced Budget Act cuts the amount of money Medicare pays nursing homes, triggering the bankruptcy of four or five large nursing home chains. The Boren Amendment is repealed.