On April 19, the House Ways and Means Subcommittee on Health held a hearing on long-term care (LTC) services. In a press release announcing the hearing, Chair Nancy Johnson (R-CT) stated, “As the Baby Boom generation ages, increasing strain will be placed on our system of long term care. We must find new and innovative ways to encourage individuals to prepare for their long term care needs. It is important for us to develop a thorough understanding of how the current system is financed, how care is delivered, and what challenges we face in helping individuals plan for their long term care needs.”
Douglas Holtz-Eakin of the Congressional Budget Office (CBO) described how demographic trends would affect long-term care in the future: “According to estimates by the Bureau of the Census, the number of elderly people (those age 65 and older) in the United States will increase by two and a half times between 2000 and 2050. The share of the population claimed by the oldest seniors, those age 85 and older and those most likely to use long-term care will reach about 5 percent by 2050, more than triple the 1.5 percent share they had in 2000. By comparison, the proportion of the population accounted for by working-age people (ages 20 to 64) will grow by only about 35 percent by 2050.” He added, “Smaller families, lower fertility rates, and increasing divorce rates may make donated LTC services less common in the future…At the same time, the rate at which women participate in the labor force will probably continue to grow, at least until 2010, further reducing the availability of donated care. Those family-related trends, in sum, could further stimulate the demand for formal, or paid, services.”
Explaining that most government spending for long-term care is provided through the Medicaid program, Dr. Holtz-Eakin stated, “Medicaid generally pays for services provided both in nursing facilities and in the home, although the specific benefits that the program provides differ from state to state, as do patterns of practice, the needs and preferences of beneficiaries, and the prices of services. In total, Medicaid’s expenditures for long-term care for elderly people since 1992 have grown at an average annual rate of about 5 percent. CBO estimates that in 2004, Medicaid’s payments for institutional care for seniors, including both state and federal expenditures, totaled about $36.5 billion.” He noted that there are a number of “drawbacks” to relying on Medicaid for long-term care: “As a means-tested program, Medicaid requires eligible applicants to rely on out-of-pocket spending until they use up all of their savings. In addition, because Medicaid generally pays lower fees for services than those paid by private payers, beneficiaries may not receive the same quality of care that private policyholders receive. In some states, moreover, Medicaid might not be as flexible in the types of services it covers as private insurance would be…Those drawbacks to Medicaid’s coverage are balanced by features that some people might consider advantageous. Medicaid is free from the perspective of the beneficiary. In addition, Medicaid has a defined-benefit structure that is, it covers a specified set of services. Private insurance, by contrast, only ensures that a policyholder will have a specified monetary benefit to pay for care. It does not guarantee that the money will be sufficient to pay for desired services.”
American Geriatrics Society President Meghan Gerety said that the current long-term care system “is not well designed to provide ongoing support [to] chronically ill, functionally impaired persons. A woman reaching age 65 can now expect almost twenty additional years of life, but over five of those years are likely to be spent with some degree of disability, and she has a 40 percent chance of spending some time in a nursing home.” She added, “Our nation’s system of long term care is neither integrated nor comprehensive, but rather a fragmented patchwork of payers, providers and settings, government and private programs, and formal (paid) and informal (unpaid) caregivers. This mix of programs provides varying services and often has confusing and differing eligibility criteria, enrollment processes, access points and financing systems. Access to long term care varies significantly from state to state and from payer to payer. Today, we face the challenge of modernizing care to include proven methods, accommodate consumer expectations, incorporate new technologies, and maximizing the partnership between private and public sources of funding.” Dr. Gerety explained that long-term care insurance “is not yet a viable option for many Americans. Private options tend to be less appropriate for those with modest means. Tax incentives for private long term care insurance primarily benefit the higher income. Additionally, premiums are often unpredictable over the long term. Long term care insurance premiums often increase dramatically as individuals age, meaning that people drop their policies just when they need them most. In fact, as a baby boomer and a geriatrician I have neglected to purchase long term care policy because it is of limited value.”
Testifying on behalf of Genworth Financial, Buck Stinson expressed his support for private long-term care insurance, which “allows people to pay certain, smaller payments now in order to ensure that they can afford the long-term care coverage they likely will need later in life, instead of taking the financial risk of losing their life savings in order to become eligible for government programs.” He added, “In addition to ‘sharing the risk’ with others to mitigate the costs, long-term care insurance often allows policyholders more choices and greater quality of care. For instance, the market has evolved from nursing home-only to one that offers flexible care options and numerous consumer protections. Most policies allow customers to choose between in-home care, assisted living facilities and nursing homes, encouraging the individual and their families to customize his or her care needs. In addition, policies offer the services of a local care coordinator that meets with a policyholder at the time of claim to help craft a plan of care and identify local care providers.” Addressing potential congressional action, Mr. Stinson stated, “There are several policies that could make a great impact on both America’s long-term care needs and the federal budget. Financial incentives, most notably in the form of some level of tax deductibility, would most likely produce the greatest stimulus for more Americans to better plan for their future health needs. Public education and greater cooperation between the public and private sectors could also make a very significant contribution to easing the pressures that are currently building.”
A professor and dean of the Georgetown Public Policy Institute, Judy Feder argued that more federal funding would be needed to address future long-term care needs, stating, “Expanded public financing for long-term care could take a variety of forms and by no means need eliminate private contributions. One option, modeled on Social Security, would be to provide everyone access to a ‘basic’ or ‘limited’ long-term care benefit, supplemented by private insurance purchases for the better-off and enhanced public protection for the low-income population. Another option would be establishment of a public ‘floor’ of asset protection a national program assuring everyone access to affordable quality long-term care at home as well as in the nursing home without having to give up all their life savings as Medicaid requires today.” Finally, Dr. Feder said that “because Medicaid serves the neediest population and, in the current budgetary environment is at risk, my highest priority for expenditure of the next federal dollar would be responding to this call (along with supporting more home care and better quality care) with more federal dollars to Medicaid.”
