The Collapse of Long-Term Care Insurance
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Medicaid, meanwhile, currently the single-largest source of funding for long-term services, only kicks in at a point of financial ruin. But forcing people into penury to get assistance to feed and bathe themselves robs the elderly of dignity. Many are forced into nursing homes because they can no longer afford living on their own.
There’s no reason to believe any of these trends will reverse on their own. The cost of policies will continue to skyrocket, the amount those policies pay out will continue to drop, the number of people in need will continue to grow, and the number of applicants rejected will continue to increase in lockstep.
Long-term care is a market-breaker; there’s no meaningful way for it to conform to market principles, or to keep it from losing money. But the need for long-term care is an absolute certainty, and herding a huge percentage of our fast-aging population into the corral of bankruptcy is not a solution either.
Some policymakers are finally coming around to this reality. Washington state passed a long-term care social-insurance program last year, which reimburses at $100 per day for in-home care up to a fixed lifetime maximum that translates to one year of daily support. But as with any expensive and necessary public-health program, piecemeal solutions at the state level are not likely to be sufficient. It will take federal commitment to get it done.
Comment by Don McCanne of PNHP: Anyone who has had to deal with the financing of long-term care in the United States knows that it is a disaster. It is expensive and yet many who have developed a need for it do not have the funds to pay for it. In typical American fashion, we’ve tried to develop a market of private insurance plans that would cover long-term care. That has been a total failure. It is one more example of Kenneth Arrow’s lesson to us that markets do not work in health care.
For those individuals who absolutely require long-term care but do not have the funds to pay for it, Medicaid – a health financing program for those who live in poverty – is available. But, as Alexander Sammon states in The American Prospect article, Medicaid “only kicks in at a point of financial ruin,” and “forcing people into penury to get assistance to feed and bathe themselves robs the elderly of dignity.” The last thing a civilized society should do is rob the elderly and disabled of dignity. We have to find a solution.
Sen. Ted Kennedy fought for the Community Living Assistance Services and Supports (CLASS) Act, and it was included in the Affordable Care Act. Unfortunately it was converted into a financing gimmick by requiring voluntary premiums to be paid for ten years before any benefits would be paid out. It is more or less representative of the compromises that were made in putting together the patchwork of Obamacare, which explains why we continue to have so many health care financing problems (and will continue to do so under Biden’s proposed incremental tweaks). The Obama administration saw that CLASS wouldn’t work and so they made no effort to implement it.
In place of the Class Act, the Commission on Long-Term Care was established. Although they covered several aspects of long-term care, the really important one was how would it be financed? The politically diverse members of the Commission could not agree on a financing approach and thus they made no recommendation. In fact they voted 9 to 6 as to whether they would even submit the report as an agreement of the Commission. However, they did submit two alternative approaches that could be considered, even if not recommended by the Commission.
Approach A was basically financing long-term care through private options. That is essentially the disaster that we have now. They did suggest market and consumer-style gimmicks such as tax deductible long-term care savings accounts that would work for the wealthy, much like health savings accounts. But Approach A can be rejected flat out since markets have not worked and will not work to meet the need.
Approach B was to establish a social insurance program to cover long-term care, as has been successful in other nations. In fact, it is part of the single payer model of an improved Medicare for All.
For decades we’ve been discussing the disaster of financing long-term care, and now the answer is sitting right there in front of us: single payer Medicare for All. Would a public option work? Absolutely not. It would collapse just as the market for private long-term care plans has collapsed.
We need to start working on this in January, right after the inauguration.
Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction
October 22, 2020 at 1:58 PM #370760jwirrParticipant
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Totally agree. One point though – at least in my state MN in home care was established to keep the costs of nursing home care down by keeping people in their homes as long as possible and ending the days of “retirement” to the nursing home for the rest of my life. People are screened to see if they can be helped in any other way before they can be admitted to the much more expensive nursing home. The costs begin with the lowest being in home care to assisted living care to nursing homes.
I have in home care two days a week and I am hoping I will never need more after watching the mess nursing homes made during COVID-19.
I agree that Medicare for All is the best if our dear leaders ever really get serious about affordable health care.
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