By Mark Miller
CHICAGO, July 9 (Reuters) - Eighty-four days and counting. That’s the time remaining that a new Congressional commission has to come up with solutions for one of the country’s most vexing problems: how to properly fund long-term care.
The Commission on Long-Term Care is an offspring of the January deal that averted the so-called fiscal cliff mix of tax hikes and spending cuts. Back then, Congress and the White House agreed to kill the Community Living Assistance Services and Supports Act (CLASS), which would have provided a public option for long-term care insurance under Obamacare. The consensus is that the math on CLASS did not work - but there is also widespread agreement that our current approach to financing long-term care is broken.
The new panel was created to recommend improvements to how we finance and deliver long-term care to an aging population. The panel is composed of 15 nonpolitical healthcare experts, with nine appointed by Democratic legislators and the White House, and six by Republican lawmakers. It is operating on a tight time frame with a limited budget, and just managed to convene its first meeting in late June.
The odds of a breakthrough are small, but the clock is ticking on the need for solutions. Long-term care services support the medical and nonmedical needs of people with chronic illnesses. It’s hardly restricted to older people, but demand for long-term care services will explode as the baby boom generation ages. Meanwhile, we currently cover care with a patchwork quilt of funding mechanisms that is full of holes.
The strapped Medicaid program pays for about half of all long-term care, but only for patients who spend themselves down to indigent levels or receive Social Security disability payments. Medicare - the primary healthcare insurance program for Americans over 65 - covers only 100 days of skilled nursing care or rehabilitation if it is ordered by a physician.
Meanwhile, the commercial long-term care insurance market is imploding. Carriers have been dropping out of the market, and policyholders have been hit with waves of double-digit rate hikes; policy prices are 20 percent higher this year than in 2012, according to the American Association for Long-term Care Insurance.
The commission’s chairman, physician and public health expert Bruce Chernof, acknowledges that the group will have difficulty reaching consensus on solutions, considering the politically polarized climate in Washington. The left wants to use government-sponsored social insurance programs like Medicare or Social Security to finance long-term care, while the right prefers private-market approaches.
“The most likely range of solutions is somewhere in that hybrid space” that includes both public and private solutions, he said in an interview.
Chernof is chief executive officer of The SCAN Foundation, a nonprofit focusing on healthcare issues for seniors. He thinks the best the commission will be able to do is “crystallize what the problem is as it exists today, and put out a clarion call to take next steps.”
There is a shred of good news: The SCAN Foundation and others have been identifying promising reform ideas for further research and debate. Here are three of the best ones I have seen.
- Simplify insurance options. Research shows consumers have trouble understanding their long-term care coverage options. This could be remedied through regulation that would present consumers with a standardized, limited set of product options. Medicare supplemental policies - Medigap - offers a successful model for this approach.
- Offer the coverage as an option in private Medicare plans. More Americans might opt to add long-term care insurance if it were offered as part of Medicare Advantage, which is a privatized managed-care option as an alternative to standard Medicare. Premium costs could be reduced, SCAN researchers suggest, through lower selling costs - and because Advantage plans are responsible for managing seniors’ chronic conditions and would have an incentive to keep them out of nursing homes.
- Add long-term protection to our social insurance programs. Universal, mandatory-participation insurance pools offer a highly efficient way to insure against long-term care needs. Social Security and Medicare both fill the bill, and either could be used to offer a basic level of coverage to all Americans. “The virtue of using social insurance is that everyone would be covered,” says Joshua Wiener, an expert on long-term care issues at research and consulting firm RTI International.
A premium (or tax) would be charged to all Americans, but rates would be low due to universal participation, he adds. Without brokers or advertising costs, overhead would be low, too - and no one would be denied coverage due to health conditions.
Expansion of social insurance programs looks highly unlikely in Washington’s current political climate, but innovation by states could set the stage for change. Hawaii’s legislature is weighing a proposal that would require limited long-term care insurance funded through premiums.
“If you look back a decade, it didn’t look like we were close to health reform,” argues Lee Goldberg, vice president for health policy at the National Academy of Social Insurance. “But then Massachusetts passed something that became a model.”