Remappingdebate.org - republished with permission
Failing to make long-term care affordable
The unavailability of affordable long-term care insurance — which is not covered by Medicare — is the most important risk factor in causing seniors not to spend, according to the economists who have studied the matter. It is even more important than medical expenses, they say, because these are usually covered at least partly by insurance or government benefits.
Private long-term care insurance is a small and capricious market, said Joe Caldwell, director of Long-Term Services and Supports Policy for the National Council on Aging: only about 10 percent of Americans over 50 are currently insured, and their plans are prohibitively expensive for all but the wealthy and subject to sharp and sudden rises in premiums. Medicaid provides relief only insofar as it keeps those already poor from total destitution, stepping in to provide long-term care once a senior has less than about $2,000 in assets. With nursing home costs averaging around $70,000 a year, the expense can “wipe out most people’s assets within a year or two,” Caldwell said. “It’s not pretty.”
The Community Living Assistance Services and Supports (CLASS) Act, originally part of Obama’s health reform plan, would have created a voluntary public long-term care insurance program. After it was enacted, however, the Obama administration (via Health and Human Services) came to the conclusion that it was financially untenable, and that portion of the Affordable Care Act was defunded and later formally repealed by congress. But the CLASS act, Caldwell said, actually had several workable strategies to become financially feasible, many developed by Health and Human Services itself — strategies that Caldwell believes were ignored in the overall drive to compromise on the extent of the Affordable Care Act.
A congressionally mandated commission recently released a report describing the dire state of long-term care in the United States but, Caldwell said, offered no detailed financing solutions. “The biggest issue is that we as a country haven’t figured out a way to finance long-term care… especially one that doesn’t force you to become poor,” Caldwell said. “Most other industrialized countries have realized this is an issue and done something."
Promoting a different kind of fiscal cliff?
During last year’s fiscal cliff fiasco, President Obama floated the idea of a so-called chained Consumer Price Index, ostensibly as a means to measure more accurately how much the costs of retirees rise each year. The idea has come up repeatedly since then. The proposal would result in lowering the cost-of-living adjustments seniors receive each year. Social Security Works, a coalition of groups opposing cuts, argues that chained CPI, among other things, understates the role of medical costs in the budget of retirees and calculates that the average retiree would lose $14,000 between age 65 and 85.
The proposal, however, has been backed by several think tanks on the center and center-left, including Third Way, the Center for American Progress and the Bipartisan Policy Center. Some of these think tanks also support other ways of scaling down senior benefit programs, like expanding means-testing for Medicare, often on the premise that such measures would affect only wealthier seniors. Remapping Debate contacted these three think tanks (along with No Labels, a Michael Bloomberg–funded “non-partisan” group) to discuss the broader economic and social consequences of such plans. All either declined to comment or did not respond to requests.
The idea that benefit programs are the prime culprit in a reckless drive toward unsustainability is the bedrock of so-called bipartisanship. It is central to the philosophy of the Simpson-Bowles commission and its advocacy offshoot, Moment of Truth Project, which wrote in an August letter to the House Ways and Means Social Security subcommittee: “We strongly believe in the importance of bringing long-term entitlement spending under control.” The premise also has an adherent in President Obama. At a press conference shortly before the president introduced a budget proposal in April, for example, he said (citing Medicare specifically) that he was “prepared to take on the problem where it exists: on entitlements."