WASHINGTON—The topic of long-term care isn't making the cut as part of otherwise excited discussions of potential health care reform in the next administration, according to political observers, advocates, and insurance representatives.
Sen. Ron Wyden (D-Ore.) said that although he's certain there will be movement toward overhauling the health system, long-term care (LTC) is not on the radar screen. “All of us have to make sure that long-term care is not the afterthought, the forgotten stepchild in the debate.”
Rep. Jim McCrery (R-La.) agreed that LTC is in danger of being overlooked. He called for leadership to avoid that policy mistake. The lawmakers and other health care leaders spoke at a meeting sponsored by the Brookings Institution.
Currently, the debate over how to finance long-term care is being silenced, yet nursing home and home-care spending shows no sign of slowing down. Medicaid is the primary payer for these services—and states are grappling with how to manage Medicaid budgets in an environment of declining tax revenues.
According to several recent studies, about half of nursing home and home-care costs are covered by Medicaid, with Medicare covering another 20%−30% of the bills. The Government Accountability Office estimated in a recent report that LTC cost $193 billion in 2004. Only about 10% was covered by private insurance, the GAO said.
There's also a huge burden borne by Americans out of their own pockets. Larry Minnix, president and CEO of the American Association of Homes and Services for the Aging, said that caregivers spend an average of $5,500 annually out of pocket on assistance for elderly and disabled family members. “It's an expensive national pastime,” he said at the forum.
Long-term care is an insurable event, he said, and yet it has not been treated as such, which has made Medicaid a “$100 billion problem and growing,” he said. “It's time to solve the problem and look at the downstream effects on Medicaid,” Mr. Minnix said.
Very few Americans have purchased private LTC insurance. Buck Stinson, president of the LTC division at Genworth Financial, told attendees that an estimated 7 million people hold private LTC policies. Genworth is the largest LTC insurer in the United States. Mr. Stinson noted that policies were attracting younger buyers—currently, the average age of a purchaser is 57—which should help spread the industry's risk and bring premium prices down. The average claimant is 80, and the claim is generally open for 2 years, Mr. Stinson said. The company is paying out $2.5 million a day, with 40% of claims made for Alzheimer's disease.
Policy makers and others often approach LTC financing as a problem facing all 300 million Americans, which “paralyzes the discussion,” Mr. Stinson said. But about one-third of Americans can cover the costs of LTC through prudent financial planning, he said. Another third will be strictly Medicaid eligible due to their incomes.
The target market for LTC policies is only about 13 million people—those who are in an income bracket where they might tip into Medicaid, but could stay out of the program if they had an alternative, Mr. Stinson said.
Mr. Minnix suggested a pay-as-you-go system with all workers, starting at age 21, paying premiums to a quasi-governmental LTC program. “People are willing to pay their fair share—they already are,” he said.
Sen. Wyden said that a voluntary contribution system would make LTC financing more palatable to the American public and to Congress, which is required to fund only budget-neutral programs. A voluntary system would generate “huge waves of support from both sides of the aisle,” Sen. Wyden said.
'All of us have to make sure that long-term care is not the afterthought, the forgotten stepchild in the debate.' SEN. WYDEN