Washington, D.C. – The demand for long-term care will more than double over the next 35 years and is a major financial challenge for individuals, families, and state and federal governments. Today, the Bipartisan Policy Center (BPC) released a first set of recommendations that call for increasing access to the private insurance market, improving public programs such as Medicaid, and pursuing a catastrophic insurance approach for individuals with significant long-term care needs like Alzheimer’s or a debilitating physical impairment.
BPC’s report, Initial Recommendations for Financing Long-Term Care, includes proposals to address the needs of America’s older population (65 and up), specifically middle- and lower-income individuals and families, as well as the millions of young people with significant cognitive and physical limitations. It was developed by initiative co-chairs, former Senate Majority Leaders Tom Daschle and Bill Frist, former Secretary of Health and Human Services and Governor Tommy Thompson, and Congressional Budget Office Director Dr. Alice Rivlin.
Here are the facts: In 2014, the average annual cost to live in a nursing facility was $87,600; the average annual cost for a home health aide was $45,800; and the average annual cost for taking part in a community-based adult day-care center was $16,900. In contrast, the average per-capita retirement savings among Americans age 62 and older was $20,000 in 2015.
With no national program to address the challenge of financing long-term care and a private insurance marketplace that is too expensive and inaccessible to most Americans, BPC’s recommendations are aimed at providing solutions for those Americans who are most at risk of bearing the financial costs of long-term care.
Middle-income Americans: Today, individuals who do not have private insurance must exhaust most assets and income to be eligible for Medicaid coverage of long-term care or rely on unpaid friends and family caregivers.
Recommendation: Make private long-term care insurance more accessible, more affordable and simpler by designing a new benefit structure and giving Americans the opportunity to purchase coverage using retirement savings through their employers or state and federal insurance marketplaces. Provide incentives for employers to enroll in insurance with an employee opt-out.
Lower-income Americans: Today, within many states’ Medicaid programs, long-term care is provided primarily in nursing homes. The availability of care at home varies tremendously by state and is often not available.
Recommendation: Give states incentives to improve their Medicaid programs so more care is provided in people’s homes. Create a new option for working individuals with disabilities that allows states to offer an innovative long-term care-only “buy-in” plan designed as a supplement to public and private health insurance.
Americans with long-term care needs: Today, individuals who need many years of intensive services (more than four to five years) and have no options for insurance coverage through the private sector must rely on personal resources and then Medicaid.
Recommendation: Pursue a public insurance approach for catastrophic long-term costs that does not increase the deficit and protects Americans from ruinous out-of-pocket costs.
“Today families and caregivers are becoming impoverished by the financial demands of long-term care,” said Senator Tom Daschle. “Since there is no single, comprehensive solution to solve this unsustainable situation, our strategy calls for a combination of actions that could help ease the extraordinary financial burdens Americans are facing. We agree that private insurance and state programs can’t meet the needs of those with significant long-term care costs. Therefore, we are committed to pursuing strategies toward creating a public catastrophic program.”
“For decades, Congress has sought solutions to help Americans of all ages cover the personal and financial cost of long-term care,” said Senator Bill Frist. “Members of both parties agree paying for LTC shouldn’t force people into poverty, but we haven’t agreed yet on a final policy resolution. We hope this first set of bipartisan recommendations will move the debate forward.”
“Neither government nor individuals alone can meet all the demands for long-term care financing,” said Secretary and Governor Tommy Thompson. “Our proposal includes policies that encourage states to expand care in the home. They are similar to the types of reforms I implemented as Governor of Wisconsin and Secretary of HHS.”
“Most Americans are unaware that long-term care costs are not covered by Medicare or private health insurance,” said Dr. Alice Rivlin. “It’s only when they need help that they learn they must exhaust their personal assets to get coverage through Medicaid. We believe our recommendations can help expand the long-term care private insurance market and make it more affordable, accessible, and simpler for all Americans.”
“We recognize our proposal will not solve every problem associated with this very challenging issue, but it’s a step in the right direction,” said Katherine Hayes, director of BPC health policy. “We are committed to working on this over the next year and developing sustainable approaches to help American families.”
BPC’s Long-Term Care Initiative will release a second paper in 2017 that will examine additional financing options including: adding a long-term care benefit to Medigap and Medicare Advantage, developing a tax credit for caregiving expenses, establishing a respite-care benefit with Medicare, and offering LTC insurance within retirement plans.
This initiative is supported by a grant from The SCAN Foundation- advancing a coordinated and easily navigated system of high-quality services for older adults that preserve dignity and independence. For more information, visit www.TheSCANFoundation.org.