In This Next Phase Of Health Reform, We Cannot Overlook Long Term Care

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It is becoming apparent that President Trump and the 115th Congress cannot start over with health care reform. Whether you love, begrudgingly support, or fervently hate the Affordable Care Act (ACA), a clean slate is not possible. First, ACA implementation is well underway and has benefited many patients and providers alike. Second, it is unlikely that Republicans in Congress can fully repeal the ACA without a 60 vote, filibuster proof super majority in the Senate. Starting over entirely with health reform is just not feasible.

Trying to address every problem facing the health care system at once is a tall—if not impossible—order. History has taught us that U.S. health reform is an incremental process. With the focus of Congress once again turning to health reform, we have an opportunity to fix the problems with the ACA, and find solutions to health care challenges that the ACA failed to address.

A Growing Need

Long-term care for America’s growing elderly population is a critically important issue for Congress to address in health reform proposals currently taking shape. While the ACA’s insurance expansion focused on providing coverage for the uninsured, the law’s progress on long-term care has been minimal. The ACA tried to address long-term care (LTC) by creating a voluntary system of LTC insurance, but the ill-fated CLASS Act was ultimately determined to be financially unviable and abandoned.

Although policy solutions have been elusive, the need for long-term care is constantly growing. According to current estimates, over two-thirds of elderly Americans will need LTC assistance at some point in their lives. Between 2014 and 2040, the portion of Americans over age 65 is expected to increase from 14.5 to 21.7 percent. At upwards of $60,000 annually, long-term care costs can quickly exhaust personal savings.

As policymakers throughout our history have debated health reform, these efforts have almost entirely centered on questions of medical coverage. They ask which benefits to cover, how much the coverage should cost, and how we can ensure people are not locked out of coverage because of their health status. We must take the same approach to LTC, examining the availability and affordability of services. LTC services include nursing home care and in-home care, as well as what is often referred to as “long-term services and supports” (LTSS). LTSS include assistance with daily activities, such as eating, bathing, dressing, doing laundry, paying bills, and taking medications.

Current Republican health reform proposals appear to do little to push the ball forward on long-term care. As Congress considers proposals to reduce federal spending on Medicaid, they should carefully consider the role of Medicaid in financing LTC.

Source: National Health Expenditures Data, 2015. Centers for Medicare and Medicaid Services. Long-term care spending includes spending on nursing home and continuing care retirement communities, home health care, and residential and personal care.

Medicaid’s Role

Few Americans know that Medicaid is the largest single payer for LTC in the United States. Because of the high costs of LTC, Medicaid is no longer the safety net just for individuals with very limited savings. Medicaid has become the de facto long-term care safety net in the U.S. health system. Individuals who are forced to spend down their life savings on LTC can, and often do, qualify for Medicaid coverage. As illustrated by the chart above, Medicaid pays for 43 percent of national LTC costs. Medicare also pays for some nursing home and home based care, but only for a short duration following a hospitalization. If you exclude these short term Medicare payments, Medicaid’s share of ongoing LTC costs is even bigger – upwards of 60 percent of all LTC costs. Medicaid also covers two-thirds of all nursing home costs in the United States.

LTC is a costly aspect of Medicaid, accounting for 6 percent of Medicaid enrollees and 40 percent of Medicaid spending. Many aging individuals will turn to family members for assistance, which can place a significant physical, emotional, and financial strain on these family caregivers. Only 7.2 million Americans had LTC insurance coverage as of 2015. Individuals who anticipate needing LTC insurance are more likely to purchase private LTC insurance, leading to an imbalance in the marketplace of individuals utilizing benefits and individuals paying in premiums. As a result, few insurers have been willing to stay in the marketplace and LTC insurance premiums increased by 54 percent between 1995 and 2015.

Existing evidence on feasible options for financing LTC are sparse. Many states have implemented “Long-Term Care Partnerships,” which enable individuals to qualify for Medicaid coverage as soon as they have exhausted their private LTC insurance policy. Other current options include combined life insurance and LTC insurance policies, which reduce life insurance payouts depending on LTC utilization, or life settlements, which allow individuals to sell their life insurance policy once they reach a certain age. State and national policies to support family caregivers are limited in scope and often underutilized.

Key Recommendations

A solution for sustainable and affordable LTC that meets the needs of America’s aging population must be included in the next iteration of comprehensive health reform. In the past several years, a number of promising strategies to address LTC have been proposed. Congress and the Trump Administration should give these recommendations full consideration:

1) Stabilize The LTC Insurance Market

Strategies to encourage the purchase of private LTC insurance policies would require changes to both federal and state law. Some promising strategies include: creating a lower cost, more limited benefit package LTC insurance product which could be purchased by retirees; allowing employees to use retirement account funds to pay LTC insurance premiums without a federal tax penalty; and encouraging employers to offer LTC insurance plans to employees by lowering barriers to automatic enrollment and protecting plan sponsors in the event that too many employees choose to opt out of coverage. For those with significant LTC needs and high costs, a universal, publicly funded catastrophic benefit plan could help reduce Medicaid and out-of-pocket spending by families.

2) Strengthen Provision Of LTC In Medicare And Medicaid

Currently, the Medicaid statute pays only for LTC in an institutional setting. States need special permission in the form of a waiver or other authority to deliver care in an individual’s home or community. Over the past few decades, Medicaid spending on LTC has shifted from majority-institutional to majority home and community-based services (HCBS). Policymakers could encourage states to offer care in the community, either by changing the Medicaid statute to place HCBS and institutional care on equal footing, or by making it easier for states to get permission to deliver care in the community. Traditionally, only Medicaid has had the authority to offer HCBS to beneficiaries. HCBS costs less than institutional care, but some argue it raises overall state spending, because it encourages state Medicaid programs to serve more individuals than it would have in an institutional setting. However, HCBS also helps individuals with disabilities to live more integrated lives in their communities, and results in better outcomes, such as patient and caregiver satisfaction. Additionally, a proposed pilot program would allow Medicare to offer HCBS to beneficiaries.

3) Support For Family Caregivers

Over 17 million Americans currently provide LTC assistance to an elderly family member. Family caregivers provide LTC services at little or no cost to public programs. However, the cost of family caregiving can be felt in other areas, such as reduction or loss of work productivity or increased risk of illness and injury. Absent a comprehensive strategy for LTC financing and delivery reform—or to complement such a strategy—supporting family caregivers should be considered. The recent Institute of Medicine (IOM) report on family caregiving calls for increased support for current family caregiver programs, such as the National Family Caregiver Support Program (NFCSP). Experts recommend further study on expanding tax credits for LTC expenses and assessing the cost of employee family caregiving responsibilities on employers.

Whatever path “repeal and replace” takes, health reform will continue to seek strategies to provide health care coverage and access to all Americans, improve the affordability of health care and prescription drugs, reduce fragmentation and waste, and increase price and quality transparency. These have always been the bipartisan goals of U.S. health policy, and finding common ground is not only achievable — it is imperative. This time around, we urge policymakers not to overlook the looming crisis of aging and long-term care.


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