Struggling to afford the next big health care crisis: Chronic and long-term care
Editor's note: This is an expanded version of the story appearing in the April 2016 Senior Voice print edition.
The next big health crisis is the battle over chronic care and long-term care. Patient advocates, policy experts and lawmakers call it the “silent crisis” – one that potentially will affect every American family: the inability to plan and pay for long-term care.
Some modest bipartisan cooperation to find a solution is emerging, despite it being a contentious election year. A bipartisan group of senators are trying to find actual solutions to the chronic care issues at the same time as think tanks and activists are floating long-term care solutions. Lawmakers in the House of Representatives held a hearing recently focusing on what could be done to help solve long-term care problems.
But what is clear is that this is going to be a difficult path to reach consensus. As Rep. Frank Pallone, D-N.J., suggested at a House Energy and Commerce Subcommittee hearing recently, people don’t realize how difficult financially this problem could be for millions of folks.
"The fact that both public and private insurance plans provide so little in terms of long term care benefits means these costs are left to be shouldered by the elderly, the disabled and their families," Pallone said. The burden falls on people, not the government, to pay for long-term care, at least until they have exhausted their savings.
Only 11 percent of elderly Americans have long-term care insurance coverage. William Scanlon, a senior consultant at the National Health Policy Forum, told lawmakers that with
Medicaid only supporting those who are poor enough to be eligible, millions of middle-class families are left struggling.
Senators on the Senate Finance Committee are working together across party lines to try to find a way to help seniors with chronic conditions by improving the coordination of care to find healthier outcomes at lower costs. At the same time, activists, lobbyists and lawmakers are looking at potential solutions to funding long-term care programs.
The chronic care effort in the U.S. Senate comes amid the predictable partisan battles over the future of the president’s health care law. At a recent hearing on failures of nonprofit “co-op” health insurers set up under Obamacare, Sen. Ron Wyden, D-Ore., the ranking Democrat on the Senate Finance Committee, working with Sen Finance Committee Orrin Hatch, R-Utah, pointed to the chronic care project as a hopeful sign of things to come.
What makes the bipartisan efforts remarkable is that lawmakers are actually working together to make improvements in programs created by the politically-radioactive Affordable Care Act, at the same time as Republican efforts continue to try and dismantle the law altogether. Working to find a genuine solution shows the difference between campaign rhetoric and lawmakers who are in office to actually govern.
What’s helping is that the senators are focused on little-known parts of the health care law dealing with reforming Medicare’s payment system to reward quality health outcomes rather than simply the number of health services provided. These issues have been less controversial
than the broader health law’s provisions like the individual mandate requiring everyone to have health care.
Last December, the Finance Committee’s working group released a document with a range of options to consider making Medicare’s coverage of chronic conditions smarter. One idea would expand the Obamacare’s “Independence at Home” pilot project, which gives Medicare financial incentives for teams of doctors to work together to provide for coordinated care for a patient at home. If all goes well, it would save money and improve care at the same time.
Lawmakers are also trying to improve Accountable Care Organizations (ACO), another Obamacare provision, where groups of doctors come together to coordinate care and are
financially rewarded when they lower costs while hitting quality benchmarks. The Committee is also looking into a series of ideas to encourage the use of telehealth – using technology to provide health care remotely.
Also working toward the same goals on the issue of long-term care, three different policy groups have studied the issue and all come to the same conclusion –– that a universal long-term care insurance program may be the best answer. The bold proposal being floated would significantly change the way the federal government finances long-term care at a time when the already-costly problem is about to skyrocket in costs with millions of baby boomers moving into retirement.
These working groups’ proposals come at a time when experts say many, perhaps most Americans will not be able to personally pay the costs of the long-term care they might need. That leaves the burden on their children and government programs such as Medicaid to pick up the large financial slack.
The Long-term Care Financing Collaborative is a project of Convergence, a Washington D.C.-based non-profit founded in 2009 to address pressing social and policy issues. About half of all people over the age of 65 will need such care before they die, and the typical recipient will need that assistance for two years at an average total cost of $140,000. The collaborative, which includes former state Medicaid directors, health care insurance companies and scholars from the Brookings Institute among others, concluded that what is needed is the creation of a universal catastrophic insurance program similar to Medicare.
The idea is not to create a one-size-fits-all model. They propose creating an insurance alternative to Medicaid for many middle-income people who now impoverish themselves paying for both long-term care and related medical expenses. It would give financial aid to people with high levels of care needed over long periods of time, after taking into account their lifetime income. But a program like this would require contributions from all working Americans and could come in the form of a payroll tax, an income tax or another revenue stream.
In theory, long-term care insurance should be able to cover a lifetime of risk. But in most cases, that kind of insurance often costs far beyond what most people can afford. So the collaborative focused on the greatest need – those who require a high level of personal assistance
for many years.
Urban Institute senior fellow Howard Gleckman, who was one of the collaborative's founders, suggests that once a person was certified as having a high level of need, they’d pay for care over, say, the first two or three years. They could use savings, home equity or private insurance to cover that initial period. After that time, they’d receive public insurance – perhaps $100 a day – for life. They could get benefits in cash or to reimburse their costs. A universal plan might boost taxes by about $300 a year (or less than $6 a week) for a middle-income worker.
The group’s idea is for a hybrid public/private insurance approach to prevent gaps between Medicaid and the private market and at the same time to better protect millions of
seniors and their families from the risk of being impoverished by long-term care needs.
Another idea floated by the collaborative is to “modernize” the long-term care safety net that is already provided by Medicaid for people with limited incomes who aren't able to save in
advance for the care they will need, and for people whose assets end up being depleted by their care costs.
Other key recommendations from the group include a series of private initiatives and public policies that would revitalize the current long-term care insurance market — which currently covers less than 10 percent of people over the age of 65 — so that more people are protected from the financial risk of needing such care. Long-term care insurance can prove to be too expensive for many people, is difficult for some to understand and is offered by considerably fewer companies than it had been in the past.
Several of the groups that have studied this issue also stress the need to give families and communities more support so people can get long-term care at home and won’t need to move into an institution.
The SCAN Foundation recently studied these issues as well, and among its ideas were changing the private insurance models to develop lower-priced policies that provide a better
distribution strategy for protecting against long-term costly support; finding a way to address catastrophic needs; and redefining Medicaid’s role, by strengthening and broadening the safety net.
Facing the political reality
But all of these studies and ideas don’t take into account the political reality. These proposals are complete non-starters in a Republican-controlled Congress. That is even more so, in an election year, and even more than highly unlikely given the heat generated so far by the
2016 presidential campaign.
This Congress has tried nearly 60 times to repeal President Obama’s Affordable Care Act, which mandated that all Americans have some form of health insurance or pay a tax
penalty. Add into its dislike of Obamacare, the Republican Congress’ disdain for virtually any proposed White House policy initiative and you have a problem. Now layer on top of that the fact that almost all of these long-term care ideas would expand or reform the social safety net and all could potentially require a great expansion of federal dollars.
Is passing these proposals a political long shot? “Yeah it is,” Gleckman told CNBC. "But it's a big problem, and it's a problem that we've got to fix," he added.
While the collaborative includes people from across the political spectrum, they talked about a lot of ideas and ways to fix things but “what we discovered is you couldn’t fix this with half measures. … It’s not that we didn’t take politics into account. But there’s no other way to do it,” Gleckman said. No matter who’s in the White House or which party controls the next Congress, “this problem is not going to go away.”
Ironically, the problem is already a government-paid problem. About half of the 3.8 million people who get long-term care services and support from Medicaid are 65 or older and they cost the program between $75 billion and $80 billion annually already. That number is going to grow exponentially over the near future. That makes up about 30 percent of Medicaid’s budget.
Meanwhile, another group, the Bipartisan Policy Center, endorsed recommendations for less sweeping changes to combat long-term care cost issues. But the proposals also head in the same direction. These ideas have gotten the support of former Senate Majority Leader Tom Daschle, D-S.D., former Congressional Budget Office director Alice Rivlin, a Democrat, and former Health and Human Services Secretary and one-time Wisconsin Republican Gov. Tommy Thompson.
The Bipartisan Policy Center’s recommendations included linking long-term care insurance to retirement benefits; limited long-term care benefits through Medigap and Medicare Advantage, a Medicare respite benefit for unpaid caregivers; and tax credits for paid long-term services.
A third group, LeadingAge, an association of 6,000 not-for-profit organizations that represent those who provide long-term services, has also recently suggested that a universal long-term care program has the greatest potential for addressing the costs of long-term care.
Also contributing to this report were CNBC, The Hill; USA Today, Forbes, MedPage Today.