The Future of Long-Term Care: What Is Its Place in the Health

Reform Debate?Howard Gleckman

Tax Policy Center

June 16, 2009

Remember: This is About People

The Challenge

• Deliver the most appropriate care to a highly vulnerable population

• Design a financing system to support this care without busting the budget

• Make it work for today’s frail elderly and disabled—and for 77 million Boomers

What Is Long-Term Care?

• Personal Care for disabled and frail elderly• 10 million need it• 85% is delivered in the community• We spend $230 billion for paid care• And $375 Billion for informal “free” care• Free= financial, emotional, physical

burdens

WHO PAYS?

Medicaid

• A Vast improvement over pre-1965

• Provides benefits for the low-income elderly and disabled

• Targets assistance to those in society who most need it

BUT…

• You Pay ‘til you’re broke, then Medicaid

• Wide variation in benefits by state

• In the bulls eye in economic downturns

• Obligated for SNF care only

• Home care is optional Underfunded, limited benefits, long waiting lists

Stein’s law

Everyone Into the (Risk) Pool

• Private Long-Term Care Insurance

• Valuable estate planning tool for some

• Not a policy solution

Why?

• Too Expensive

• Too complicated

• Why buy if you’ve got Medicaid?

The Real Crisis of the Uninsured

• Health Insurance: 250 million covered

• LTC insurance: 7 million covered

SOLUTIONS

• DELIVERY ….BUT HOW?

• FINANCING:TIME FOR A MANDATE?

DELIVERY

• COORDINATE CARE

• MAKE IT AVAILABLE AT HOME

• Infrastructure: Not just personal aides, also housing, transportation, food, good medical care

• But don’t break the bank

FINANCE

• DO WE REALLY NEED MEDICAID?

• THREE ALTERNATIVES:

• ENHANCE PRIVATE LTCi

• CREATE NEW SOCIAL INSURANCE

• PUBLIC/PRIVATE MIX

ENHANCED LTCi

• Sell like Medigap

• Expand tax incentives

• Expand Partnership Program

• More Government Marketing

• EACH MAY HELP, NOT THE ANSWER

Social insurance

• International Model:

• France, Germany, Japan, Korea

• Nearly everyone but the UK & US

Medicare Part E

• HOW DO YOU TAX?

• Income tax surcharge (Burman/Johnson)

• Payroll tax surcharge (ala Germany)

• VAT—probably with health reform• • BUT…WILL AMERICANS PAY A NEW TAX?

Public/Private

• Government as First Payer (CLASS Act)

• Government as Secondary/Catastrophic: Galston; Tumlinson & Lambrew; Bishop

CLASS Act

• In the HELP bill

• Benefit: Cash, $50+ daily for life

• Auto enroll w/ an opt-out

• A premium, not a tax

• $65, or is it?

• Plus Private Insurance

Catastrophic

• Personal responsibility w/ low-income subsidy

• True catastrophic coverage

• Mandatory insurance or savings?

MODELS FOR FINANCING REFORM

If not now, when?

• HELP bill Will include CLASS Act, home care, workforce

• Workforce will pass, limited support for others

• Waiting for Obama