Time to get it right

With no comprehensive program designed to provide long-term care insurance, a panel of experts who convened in March agreed that comprehensive reform has about a five-year window for implementation in order to sufficiently meet the needs of baby boomers.
After that, it could be too late, if one of the goals is to create a system that doesn’t rely so heavily on Medicaid to pick up the tab. In 2011, direct spending on long-term care services topped $211 billion and Medicaid picked up the tab for 62 percent of that cost.
“Our reliance on Medicaid to fund LTSS (long-term services and supports) raises concerns about whether we can reasonably expect this program to continue in its dominant financing role when the baby-boom generation moves into the later part of old age …”, noted a recent study of the LTSS market by Avalere Health.
The big problem will come in the next five years, as the first baby boomers begin to hit their late 70s, a time when many will start needing LTSS services. In all, it is estimated that more than 70 percent of people will need some form of long-term care in their lifetime.
“This demographic shift will produce rapid increases in Medicaid spending. It is not clear if the state and federal tax revenues that fund Medicaid will be sufficient, at their current levels, to cover the spending growth,” the Avalere report concluded.
Congress did try to create a program to address this coming need: the Community Living Assistance Services and Supports (CLASS) Act, a voluntary LTC insurance program that was included in the Affordable Care Act. It came under a withering attack from congressional opponents soon after health reform was passed as too expensive and was repealed as part of the fiscal cliff deal effective Jan. 1, 2013.
But as CLASS was being repealed, Congress recognized the need to address the problem and created a bipartisan commission that will recommend ways to create an affordable system for meeting the formidable need for long-term care in the future.
And there is a lot of work to be done. Currently, fewer than one in 10 people in the U.S. have some form of private LTC insurance, noted Anne Tumlinson, senior vice president in Avalere’s long-term care group and author of the report.
“The private insurance market (for long-term care) doesn’t work for a lot of reasons that are both related to demand: people don’t want to buy it – it is too expensive – and supply,” Tumlinson said.
According to Bruce Chernof, MD, president and CEO of The SCAN Foundation, the way long-term care is provided in this country hasn’t progressed with the care that is provided today and also hasn’t developed a method of financing a more significant portion of the costs outside of public programs.
“The reality is that many people will live with substantial functional limitation and needs,” said Chernof, who was named in February to serve on the long-term care commission. “And if we choose to do nothing to develop a more comprehensive approach to both the provision of services and the payment mechanisms, we simply are going to fall back on public programs. Medicaid will become the backstop for much of this, which the state and federal governments will have to shoulder and that means taxpayers.”
Unfortunately, there have been a number of roadblocks over the years to making meaningful change in the current system, Chernof noted. Among these are a lack of understanding of the general public about how many people will need LTC in the future, a misperception that Medicare will pay for these services when people are older and a wide gap between what the public perceives LTC services cost and their actual costs.
“We have framed the debate in a way that doesn’t engage policy makers, doesn’t engage politicians and doesn’t engage the general public, so there isn’t a lot of pressure,” Chernof noted. “Finally, we are still operating off an old solution set. Now is a really important time to think through a new set of solutions that learn from both the successes and the challenges in the public sector and in the private sector.”