February 23, 2020

Washington Looking for Answers on How to Handle Long Term Care Costs

WASHINGTON — The fiscal cliff legislation passed last week killed off an unworkable long-term care insurance plan that was part of the 2010 Affordable Care Act. In its place, Congress created a study commission to come up with a solution to one of America’s most difficult and expensive health care problems.
While most Americans will need long-term care in a nursing facility or at home, hardly anyone has insurance for it. We rely instead on family members, personal savings and — after going broke — on Medicaid.
Medicare does not pay for it.
That’s a hard set of choices for care that, in the Dallas area, can cost an average of $185 a day.
Jeff Deriger, a long-term care specialist with Prescott Pailet Benefits in Dallas, says you would need to salt away $365,000 if you want to self-insure your risk of needing long-term care in a nursing home.
“Everybody has homeowner insurance, but the chance of your house burning down is like 1 in 12,000,” he said. “One in 2 will need long-term care.”
The federal government estimates 70 percent of those over the age of 65 will need some type of long-term care, while 40 percent will need care in a nursing home. (The Department of Health and Human Services maintains an information clearinghouse on this issue at www.longterm care.gov.)
The late Sen. Edward Kennedy fought to get long-term care coverage into the Affordable Care Act, where it was called the CLASS (Community Living Assistance Services and Supports) Act. It was intended to be a voluntary insurance program administered by employers and paid for by workers through payroll deductions.
Didn’t add up
Insurers were supposed to provide coverage to all who wanted it. But the numbers wouldn’t add up because of the likelihood that only those with known disabilities would apply, making the cost of premiums prohibitive — $250 to $300 a month, by some estimates.
The Obama administration shelved the plan in 2011 but did not want it repealed.
Republicans worried that the CLASS Act would be resurrected as a mandatory insurance program, where everyone was compelled to buy it — just like the Affordable Care Act’s health insurance mandate that was upheld by the Supreme Court.
In the jockeying over taxes in the fiscal cliff law, taxes for the wealthiest Americans went up, while the CLASS Act went down.
In most of the industrialized world, long-term care is an insurance benefit covered through payroll taxes. Britain and the United States are the exceptions.
Lost productivity
But U.S. taxpayers still pick up a significant part of the cost.
“The federal and state governments spend about $120 billion a year through Medicaid to care for these folks,” said Howard Gleckman, a long-term care specialist with the Urban Institute, a Washington think tank.
Relying on family members costs the country in lost productivity. Deloitte Health Care Solutions estimates that family long-term care givers provided uncompensated services worth $492 billion last year, while forgoing what they could be earning at a paying job.
About 7 million Americans had long-term care insurance in 2010, bought through their workplace or on their own, according to a study for the National Association of Insurance Commissioners.
Ed Fensholt of Lockton Benefit Services in Kansas City thinks there’s “zero chance” that Congress will create another social insurance program to cover long-term care. As for getting such insurance at work, the government isn’t doing much to encourage it.
“I don’t see that many employers sponsoring this on a group basis. Some, but not many,” Fensholt said. “Federal authorities allow a lot of these kinds of health programs to be paid for on a pre-tax basis. … But they don’t allow that for long-term care insurance.”
Deriger says employer-provided long-term care insurance could be more successful if employers provided a lean, basic plan that workers could beef up with their own money.
“A group benefit to employees could also extend to family members, including parents and grandparents if you want it,” he said. “It would be 10 to 40 percent lower than the premiums you’d get through shopping as an individual.”
The new federal commission has six months to come up with its recommendations.