Thinking About Health

By Trudy Lieberman, Rural Health News Service

Funded by a grant from The Commonwealth Fund and distributed through the Nebraska Press Assoc.

How will we pay for long-term care?

The New Year’s Day resolution of the fiscal cliff impasse dealt a final blow to the much maligned CLASS Act, part of the 2010 health reform law that would have established a program for people to begin pre-funding the costs of their eventual long-term care. The Act was dead anyway. A year ago the Obama Administration determined it was technically unworkable and said it would not go forward with it.

That the CLASS Act, whatever its flaws, could disappear with hardly a murmur from the public reflects how little thought we as a country have given to the looming problem of caring for an aging population.

About 70 percent of those over age 65 will eventually need some kind of long-term care like help with bathing and dressing. Some portion will need care in an expensive nursing home. The government estimates that nursing homes now cost on average $72,000 a year—an impossible sum for most families to pay.

The fallback for them has been state Medicaid programs that pay for more than 40 percent of all long-term care. As anyone who has used Medicaid to pay for a loved one’s care knows, the process of making yourself poor enough to qualify—which means spending most of your assets and income on care before the state pays—is difficult, demeaning, and sometimes results in diminished income for a spouse who is still at home.

States face real challenges funding Medicaid, according to the Kaiser Family Foundation, which predicts those now spending the least on long-term care “will probably be faced with the greatest increase in demand.” About 13 percent of the U.S. population is over age 65 (13.6 percent in Nebraska), and that number is expected to climb. By 2020, some 55 million people will be over 65.

More people will need help. Will they get it from long-term care insurance?  This product has been around for about three decades. The market has never grown substantially, and some big, well-known companies no longer sell policies.

For one thing, people who have conditions that might land them in a nursing home someday such as diabetes and early signs of dementia most likely will be turned down and will not be able to buy insurance.

For another, policies are expensive—around $3,500 a year for policyholders in their 60s. Because many companies underpriced their products when they first sold them, they are now hiking premiums making them unaffordable even for people who bought them years ago. The best advice still is that if you have a policy, try to keep it, or you will have spent a lot of money for nothing.

“Private long-term care insurance has failed.” We tried it. It didn’t work. We should try something else,” says John Rother, who heads the National Coalition on Health Care, a nonprofit that works to achieve affordable, high-value health care. Rother used to be AARP’s chief lobbyist.

He says it’s “scary” to think how inadequate our public policies are when it comes to the assistance an aging population will require. Rother argues we need to engage the public through community discussions and personal stories about how older people are adapting or having trouble adapting to a decline in physical or mental function. Some groups like the older poor and younger working class people who are seldom asked for their input need to have a say in the discussion. In fact, voices of ordinary people have been decidedly absent in the Beltway debate.

Politicians have narrowly framed the current fiscal debate in terms of austerity measures and cutting benefits instead of framing it in terms of what services the elderly will need, who will give them, and how they should be financed. That frame must change if we are serious about wanting seniors to have an acceptable quality of life.

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