Cost of long-term care merits coverage, discussion

With the baby boomers aging into Medicare and heading into years when physical decline and disability gradually become more common, one thing seems certain: Long-term care will inevitably become a much more important topic of national discussion in the years ahead.

Judith GrahamJudith Graham (@judith_graham), AHCJ’s topic leader on aging, is writing blog posts, editing tip sheets and articles and gathering resources to help our members cover the many issues around our aging society.

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Two recent articles underscore the point. One is by Stuart Butler, director of the Center for Policy Innovations at the Heritage Foundation, a Washington, D.C.-based think tank. The other is by William Galston, a senior fellow in the governance studies program at the Brookings Institution, another think tank in the nation’s capital.

Both argue that a long-term care crisis is at hand and will only grow in scope as the baby boomers swell the ranks of older people who need assistance with household tasks (bill paying, shopping, cleaning), personal care (bathing, dressing, toileting) and custodial care.

“The growing cost of long-term care (LTC) is fast becoming a problem we can no longer ignore,” Butler writes.

The problem, in a nutshell: Hands-on assistance, the kind required for people who need long-term care, costs a bundle. A year in a nursing home goes for an average $75,000, Butler writes, while a year in assisted living costs $40,000. The vast majority of American families don’t have enough money saved to pay for this kind of care for a full year, much less longer.

Many people think that care in the home is a much cheaper alternative, but that isn’t so. For someone who needs 24/7 assistance from a home health aide that charges $20 an hour (usually that’s the agency fee, not the amount that lands in the aide’s pocket), the cost of full-time care is a whopping $175,000, Galston observes.

The only way to reduce that amount is to cut back on hours when aides are present. But that risks leaving vulnerable, needy older adults without someone who can help them get in or out of a chair or take them to the bathroom or prepare a meal or change a catheter.

The hope has been that long-term care insurance sold by private insurers would provide a solution. But, as Butler notes:

“LTC insurance is becoming hard to afford – and even to find, as private insurers pull out of the market. In part, this development is because low interest rates make it hard for insurers to build up reserves to cover benefits, forcing them to raise premiums, which discourages potential buyers. In addition, younger Americans rarely think of protecting themselves and their assets with LTC insurance.”

Initially, the Affordable Care Act tried to tackle the problem through a program known as the CLASS Act, which would have encouraged middle age adults to sign up (and pay) voluntarily for government-sponsored LTC insurance. But the finances didn’t work and it was axed.

Take these trends down to the personal level and this is what you get: Families across the country struggling to pay for care they or their elderly parents need to remain in their own home as they age and become more frail. And, let’s face it, untold numbers of people going without necessary assistance.

There’s yet another piece to this that has to do with Medicaid. Few people realize that there are no long-term care benefits of any substance under Medicare, the government’s health program for the elderly. What coverage exists can be found under Medicaid, the joint state-federal program for people who are poor that has, over time, become the nation’s de facto long-term care insurer to older adults.

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How much of an issue is this? As Butler notes, long-term care already consumes one-third of soaring Medicaid budgets, and that number will only grow in the years ahead as the boomers age. According to one study by Deloitte cited by Butler, “the LTC ‘ticking time bomb’ could push Medicaid up to 35% of state budgets by 2030, with half of that for LTC services.”

No one believes this is sustainable. “As the population ages, the tension within Medicaid between caring for the elderly and the health needs of poor and near-poor families will escalate,” Galston writes. States won’t be able to afford the expense, and policies enacted in Washington could compound the problem if they entail Medicaid cuts, as would happen under the Republicans’ block grant proposal.

So, where does that leave us? As indicated above, Butler suggests a serious national discussion of these issues is warranted. Galston goes further, laying out two policies that he suggests might address the coming crisis in long-term care. One involves a requirement that everyone purchase long-term care insurance or pay a penalty – given the outcry over the insurance mandate in the ACA, you can imagine how popular that would be. The second also involves a mandate that people contribute to a national long-term care fund or purchase private insurance. Again, imagine the response.

Covering these broad issues, their impact on families, and potential policy solutions will fall to reporters on the aging beat. You’ll find a tip sheet and resources on this web site, but there’s no substitute for that basic work of beat reporters: scanning the literature, talking to experts, and keeping your nose to the ground. I hope the articles mentioned here underscore the importance of this topic and provide useful background if you choose to investigate this topic in more depth.


One thought on “Cost of long-term care merits coverage, discussion

  1. Avatar photoLT Care Review

    The cost of long term care is something that I think that most of us avoid talking about until it is too late. The problem is that we either think that our existing insurance or Medicare will cover long term care costs, or that there is nothing that can be done about it right now so there is no use talking about it. The reality is that most insurance policies, including Medicare have limits to their coverage which impact how much long term care you will be able to afford. Talking about long term care costs, options and coverage is something that we all need to do. Pinterest is a great resource for information on long term care options, coverage and costs. Use it to conduct research for your discussions.

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