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

Reform Debate?Howard GleckmanTax 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