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Are We Prepared to Cover Costs of Long-Term Care for Aging Population?

Policy experts cite need for more federal funding; Pallone proposes eliminating Medicaid-mandated paydown of assets

Connie-Garner,-Heather-Howard-and-Frank-Pallone
Connie Garner, longtime aide to U.S. Sen. Ted Kennedy; Heather Howard, former state health and senior services commissioner; and U.S. Rep. Frank Pallone Jr. (D-6th) discuss ow to fund long-term healthcare costs for older people.

About 70 percent of Americans will require long-term care – such as staying in a nursing home or receiving help from a home health aide – at some point in their lives, but experts say the current system isn’t ready to meet that need.

Potential solutions for how to fix what they describe as a chronically underfunded system exist, but there are formidable barriers to achieving them, beginning with the budget problems facing the state and federal governments.

Long-term care policy experts are beginning to rally around at least one point – there is a broad agreement on the need to shift industry lobbying away from fights over how to divide the currently limited funding toward an effort to build public consensus for a broad increase in funding.

That perspective emerged yesterday during a wide-ranging discussion led by U.S. Rep. Frank Pallone Jr. (D-6th) and Heather Howard, former state health and senior services commissioner and current Princeton University lecturer, at the Francis E. Parker Memorial Home, which provides nursing care, assisted living and adult day services in Piscataway.

In the current system, many residents must “spend down” their assets before they’re eligible for Medicaid, the primary program for funding long-term care.

Michael Ogg’s experience illustrates some of the problems with this system. Ogg spent most of his life savings to buy and renovate a one-story house after he had to retire from his university professor job due to the effects of multiple sclerosis. While he has been able to stay in this home for a decade thanks in part to long-term care insurance, he will see his insurance policy expire in two years and has had difficulty receiving Medicaid benefits.

Ogg said that any solution to the shortage of long-term care funding must respect the preferences of the people involved. . He said that many people with his level of disability – his condition is severe and he uses a wheelchair – would prefer to live in a nursing home, but he wants to stay in his house.

“We have to respect the choice of those people rather than just purely looking at dollars,” Ogg said.

Sarah M. Adelman, vice president of the New Jersey Association of Health Plans cited projections that an average of 10,000 Americans will turn 65 every day for the next 15 years, with those over 65 having healthcare costs amounting to three times more than people younger than 65.

“We have a (senior) population that’s increasing, we have healthcare costs that are increasing as we see at the federal level every year, extremely difficult budget pressures,” Adelman said.

But Americans’ knowledge of long-term care remains patchy. Fewer than 10 percent of 50-year-olds have long-term-care insurance, while roughly 80 percent of people that age believe that Medicare will cover long-term services. But Medicare only pays about 5 percent of long-term care, and Medicaid only covers it for people who spend down their assets.

“We have individuals who are not well situated for the financing of their long-term care services and we have a system that is not on track for sustainable finance,” Adelman said.

Pallone tried in 2009 to include funding for long-term care in the legislation that became the Affordable Care Act. He was largely unsuccessful and the one piece of the ACA that did address the issue – known as the Community Living Assistance Services and Supports (CLASS) Act – was later repealed.

“We’re kind of back to square one,” Pallone said.

The congressman said that he supports adding a section to the Medicare law – a proposed “Part E” -- that would fund long-term care.

“I don’t like the spend-down provisions” of Medicaid, Pallone said. “I think they’re very unfortunate.”

He added that relying on Medicaid for long-term care has weakened political support for funding these services, because “it’s perceived as a poverty program.”

Pallone pointed to several potential sources for federal funding, including lowering defense spending, increasing taxes and reducing tax breaks.

But he said a chief political challenge is convincing young people that long-term care could benefit them. “They don’t think they’re going to get older,” or have an accident or disability that would require long-term services, he said.

Connie Garner, a longtime senior aide to the late U.S. Sen. Ted Kennedy (D-Massachusetts), said it’s essential that long-term services be considered a benefit for residents of all ages. She added that college-age athletes readily understand the possibility of long-term disabilities, but policy advocates haven’t focused their efforts on young people.

“We don’t even let them own the issue to begin with,” said Garner, who helped craft the CLASS Act. It was designed to allow residents to voluntarily contribute insurance payments for long-term community living services, but wasn’t implemented. President Barack Obama’s administration cited concerns that not enough young people would contribute to the program. CLASS Act opponents ultimately repealed it, saying that it was unaffordable. Garner predicted that elements of that legislation would “evolve” and be included in future federal legislation.

The current fiscal constraints and political polarization in Washington makes federal action difficult, said Ashley Ridlon, senior manager of the Bipartisan Policy Center Advocacy Network, an organization launched by four former U.S. Senate leaders. The network is working on a set of recommendations on long-term care.

Ogg said his top priorities for improving long-term services are “money, money and money.” He added that the low pay and benefits of front-line long-term care providers is a major concern.

Service Employees International Union Local 1199 Executive Vice President Milly Silva echoed that point. Silva pointed to a link between the quality of long-term care and maintaining trained, skilled workers. But with workers being paid less than $22,000 annually, they actually can add to the costs of the healthcare system since they will depend on Medicaid themselves.

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