Once again, the Democratic primary debate on October 15 devoted considerable time to candidates’ competing proposals for expanding access to Medicare. But once again, the debate failed to address one of Medicare’s biggest flaws—the lack of long-term care coverage for our country’s rapidly growing elderly population.
Some of the candidates’ Medicare proposals would go a long way towards fixing this problem, while others would not. But since this critical issue didn’t come up, the debate did nothing to dispel widespread public misconceptions about Medicare and long-term care.
A large share of American adults assume that Medicare will pick up the tab if they become unable to care for themselves through chronic illness or age-related disability and need care at home or in a nursing home or assisted living facility. In a 2013 survey, 44 percent of people 40 or older believe that Medicare provides such coverage, while a different survey found that 7 in 10 baby boomers think the Affordable Care Act covers long-term care.
In reality, Medicare has never paid for long-term care. Back in the 1960s, when Congress was first debating the creation of the program, conservatives opposed to universal health care managed to split government support for health into two separate programs. Medicare would cover doctor visits and hospital stays for the elderly, while Medicaid would help states pay for health care for the poor, including both medical and long-term nursing care. This political compromise helped the legislation to pass because it did not force states with low spending levels to adhere to higher nationwide standards.
But in this compromise, long-term care benefits remained means-tested, available only to those defined as “poor” by state standards. This system remains in place today, with the perverse result that only the poor have any access to public funding for long-term care. As a result, citizens must impoverish themselves to qualify for long-term care through state Medicaid programs.
As a volunteer ombudsman in a nursing home, I have seen firsthand the consequences of this perverse system. Patients in need of long-term care must deplete any assets they may have accumulated and divert any pension or social security income they may receive to pay for nursing care before state Medicaid funding kicks in. As a result, these involuntarily impoverished residents feel powerless and dependent, and they often experience high rates of depression. They also are stripped of the ability to access important health care services that are not covered uniformly by state Medicaid programs, such as dental, vision, and hearing aids.
Long-term care is expensive, and most families are not financially prepared for the burden it could impose on them. Current estimates are that between 50 and 70 percent of Americans over 65 will need long-term care at some point in their lives. The median cost of nursing home care is over $100,000 in many parts of the country, while the median annual cost of a home health aide is over $50,000. Overall, half of people over 65 will incur long-term care costs, and 15 percent will incur more than $250,000 in costs. No wonder three out of four Americans over 40 are not confident they will have the financial resources to pay for needed care as they age.
Private insurance has proven to be completely inadequate to address long-term care needs. Firms started offering long-term care policies in the 1990s, but most found that it was impossible to estimate costs or set affordable premiums. Between 2000 and 2014, the number of insurers offering stand-alone long-term care insurance policies dropped from 125 to fewer than 15. Insurers can still deny long-term care coverage based on pre-existing conditions, with the result that 14 percent of long-term care applicants aged 50 to 59 are denied coverage due to health issues and 45 percent of applicants aged 70 to 79 are denied.
The Affordable Care Act initially included long-term care insurance, thanks to a strong push from Senator Ted Kennedy before he died in August 2009. Under his plan, participation would be voluntary, and the program was to be financed entirely by premiums paid by those who enrolled. As with many private insurance plans, the Kennedy program proved unworkable because of an inability to predict future costs with sufficient accuracy to allow reasonably affordable premiums. The Obama administration abandoned the plan in 2011 and Congress repealed it in 2013.
A “public option” to buy into a Medicare-like program, as several Democratic presidential candidates have proposed, would not address the long-term care gap in the existing government program. A similar “buy-in” option could be offered for Medicaid, and some states are exploring this option, despite strong opposition from the Trump administration, and to date no state has a Medicaid buy in program covering long-term care.
Both the Trump administration and Senator Amy Klobuchar are exploring tax credits to lower the cost of long-term care, but given the high cost of care, such credits are likely to be too modest to either revive the private insurance market or meet rapidly rising care costs.
What’s needed to remedy this defect in today’s Medicare system is a robust “Medicare for All” program. While earlier “Medicare for All” plans were silent on long-term care, two major 2019 plans have accepted the challenge. A Senate bill sponsored by Bernie Sanders and a House bill sponsored by Pramila Jayapal both include coverage for long-term care. The Senate bill in its current form covers long-term care only in the home or community settings, such as adult day care centers. The House bill also provides coverage for nursing homes. Both are a vast improvement over the current approach to long-term care.
As the 2020 campaign unfolds, candidates should be asked to define their solutions to the elder care crisis. Any health care reform that ignores this problem cannot be considered truly universal health care.
The European Union has declared that “Everyone has the right to affordable long-term care services of good quality, in particular home-care and community–based services.”
In the United States, the richest country in the world, we should demand nothing less for our own citizens.
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Steve Quick, an Institute for Policy Studies Associate Fellow, is a former Chief Risk officer at the Federal Deposit Insurance Corporation and Chief Economist for the Joint Economic Committee. He has also served as a volunteer ombudsman in a Virginia nursing home.