I was recently in Austin, Texas, for a few days at the annual conference of the Academy of Special Needs Planners and picked up an issue of the local newspaper, the Austin American-Statesman. A full-page ad on the back page of the first section trumpeted “Priority #1 for Texas Legislature: Fix Texas Senior’s Medicaid Nursing Home Funding.”
Paid for by the Texas Health Care Association, the ad detailed $58 million in Medicaid cuts in 2011 and $51 million in Medicare cuts this year, as well as a shortfall of almost $1 billion in what’s needed in the next two-year budget for the state. It describes the choices facilities will have to take to cut costs, which will necessarily affect the care they provide to seniors and younger disabled residents of nursing homes in Texas.
The fact is that Medicaid, a health care program for the poor, is the primary source of payment for nursing home and other long-term care services in the country. According to the Kaiser Family Foundation, Medicaid paid 43% of the $240 billion spent in 2009 on long-term care services. Medicare paid 24%, individuals contributed 19%, and private insurance — both long-term care insurance and Medigap policies — covered just 7% of the cost. (Click here to read the entire fact sheet.)
With taxpayers through Medicaid and Medicare paying two thirds of all long-term care costs, providers are being squeezed as never before by budget constraints at both the state and federal levels. Legislatures are more reluctant than ever to raise taxes for any purpose. And long-term care services must compete for other needed government services, including education, law enforcement and transportation.
We and other elder law attorneys contribute to the problem to some extent by helping clients qualify for Medicaid (MassHealth in Massachusetts) coverage of long-term care. We do this because these costs can be so high that most families cannot afford them and because they fall unpredictably, with some families incurring many years of costs and some none at all. Most elder law practitioners would support a system that raises more money broadly to pay for these services.
The Affordable Care Act attempted to take a step in this direction with enactment of the CLASS Act, Senator Ted Kennedy’s last legislative achievement. However, it passed with a fatal flaw which is that it was voluntary. The only reason that the ACA has a chance of success is that it’s mandatory. The problem with voluntary insurance plans is adverse selection. Only those people who are most likely to need the benefit will sign up. With most insured also being beneficiaries, such insurance plans fail either because they don’t have enough money to pay claims or premiums must be set so high that few can afford them.
The all-too-predictable result in the case of the CLASS Act was that Health and Human Services ultimately determined that it could not make the program work.
What we need for today’s seniors and the 76 million baby boomers heading towards retirement and future long-term care is a broad-based, universal program to cover the basic minimum of long-term care costs, whether at home, in assisted living, or in a nursing home. More affluent seniors may supplement the publicly-covered care to pay for private rooms and other amenities. But just as there is no reason any American should be without health insurance, all Americans should also be entitled to dignified care when they are old and frail.
