With the average American life expectancy now reaching 78, a solution to the long-term care crisis is vital, yet faces the brutal headwinds of economic reality and political stridency.
Since the United Kingdom passed reforms that take effect in 2016, the United States remains the one major developed country that has not tackled long-term care financing head on.
And while aging countries throughout Europe and Asia have approached the issue as needed “social insurance” supported by federal governments – such as Germany’s payroll tax – Americans face a more shocking reality.
“It can’t happen here.”
So says Howard Gleckman, a national expert on long-term care.
“It’s just another issue that’s sort of swallowed up in this partisan madness that’s taken over Washington,” says Gleckman. “The Unites States is the outlier, and is now the only (developed) country without a social insurance program.”
How acute is the crisis?
In a recent survey of California voters 40 and over, almost half anticipated some type of long-term care needs for a family member within the next five years. Yet nearly half of those who will need it said they couldn’t afford even a single month of nursing home care, which averages nearly $7,000 a month; 73% said they couldn’t pay for over three months. Even costs for assisted living are still about half that — at around $3,300 per month.
Meanwhile, most Americans can’t afford long-term care insurance or don’t make it a priority; only about 10% currently have policies.
While Gleckman offers kudos to last year’s high-powered national Commission on Long-Term Care – which helped set the table “for when politicians are ready to deal with it” – he’s skeptical when that might actually occur in today’s divisive political sphere.
Dr. Bruce Chernof, who chaired last year’s commission, says it was impossible to come up with comprehensive financing solutions during its six-month timeframe, yet credits the 15 commissioners with bringing much needed attention to long-term care reform.
The commission’s recommendations focused on creating a comprehensive network of care for older adults.
Yet when releasing its recommendations a year ago, five dissenting commissioners raged that the commission never addressed the most critical issue: paying for it.
“What they did, it was kind of fluffy,” says Judy Feder, a commission member. “It was not very specific. And it certainly was not how to pay for that.”
Feder, a health policy scholar at Georgetown University’s Public Policy Institute, has devised a plan that has drawn plenty of attention: a catastrophic long-term care insurance plan whose benefits decline as income rises.
“No public insurance system can replace private resources or family care, but it can make those obligations manageable,” Feder told the commission during closing comments.
“We really do need some thoughtful solutions in the next couple of years, next five years, while Boomers are still working,” agrees Chernof, president and CEO of the Long Beach-based SCAN Foundation**. “There’s a need for a new generation of insurance products.”
Experts say the only valid solution is a partnership between governments and health insurers.
“The middle ground is you create a program that has elements of a public program and private insurance,” says Gleckman. In short, the government kicks in part of the cost to provide incentives for private insurers to offer more affordable products.
While the federal government stagnates in partisan gridlock, the actions of states may provide a key to reform.
“If there’s activity at the state to build momentum,” says Joanne Handy, president and CEO of LeadingAge California, “they can keep this vision alive.”
Many experts point to Minnesota as a prime example of cutting-edge expertise – not in paying for long-term care, but lowering costs.
The state has been targeting the care of older adults since the 1980s, when Minnesota had one of the highest percentages of nursing home placements in the country.
Budget cuts forced the state to transition care to more community-based services aimed at keeping older adults at home. Collaboration between state agencies, the legislature, and Minnesota governors underpinned this effort.
It paid off.
Minnesota recently scored the highest on this year’s national scorecard for long-term supports and services spearheaded by the Association for the Advancement of Retired Persons (AARP).
What is Minnesota’s goal for the future?
“Now that we have achieved significant reform in the delivery and quality of our long-term services and supports, we are turning more of our attention to the financing,” says Loren Colman of the state’s Department of Human Services.
Why are states so concerned about reform?
Because of two words that strike fear in the heart of state governments everywhere: “spend down.”
Spend down occurs when middle class Americans with moderate means spend their savings on care and wind up qualifying for Medicaid (Medi-Cal in California) and become a burden on the state’s expensive nursing home system.
California has its own experiment to prevent spend-down.
The California Partnership for Long-Term Care is aimed at middle class citizens to help them buy insurance and protect assets without succumbing to poverty. Yet the program has minimal participation, due in part to the insurance industry’s penchant for sudden, expensive rate hikes.
“What do you do it you’ve invested all this money and then get an 85% premium increase?” asks Handy.
There’s no shortage of brainpower working on the problem.
The national advocacy group LeadingAge has an advisory committee that has devised a handy guide outlining a wide spectrum of possible solutions.
Globally, the problem is just as acute, according to the World Health Organization and others.
“Other nations are addressing this issue,” says Feder. “They’re providing social insurance programs to manage this need. They’re well ahead of us in this regard.”
The Organization for Economic and Co-operation and Development reports that the percentage of older adults within its 34 developed countries will rise from 4% to 10% between 2008 and 2050. The need for caregivers worldwide is expected to double.
Gleckman says most of the European states transformed their welfare systems into social insurance: Instead of handouts, governments insured the elderly through taxation. Germany, he says, instituted a 2% payroll tax, with 90% of its citizens then choosing government-sponsored long-term care insurance over private insurance.
Options in these countries vary from cash payments to in-kind services – or a blend of the two.
Why have Europe and Asia tackled long-term care before the United States?
“We got older later than they did,” says Gleckman.
In the meantime, next year’s anticipated White House Conference on Aging is expected to address the topic.
“We were really, really pleased to see the White House Conference on Aging announced,” says Chernof. “It was a very powerful nudge forward.”
Still, despite all the brainpower and good intentions, don’t expect reform to happen any time soon, says Feder.
“Commissions are no substitute for political will.”
** The non-profit SCAN Foundation is a sponsor of the California Health Report.