Long term care is something most of us will need as we grow older.
We might develop chronic diseases, mobility issues, Alzheimer’s or other conditions that prevent us from fully caring for ourselves. (Long term care includes everything from assisted living to skilled nursing facilities to in-home care.) According to the Bipartisan Policy Center, 52% of adults reaching age 65 today will require long-term assistance with daily activities such as eating, dressing, and bathing during their senior years.
Unfortunately, this type of care is extremely expensive, and for many Americans, downright unaffordable. Most seniors simply don’t have the average $100,000 a year for a nursing home, $45,000 for assisted living, or $33,000 for in-home care.
“The out-of-pocket costs of such assistance can be catastrophic, and few people have the necessary resources…to meet this need,” concluded the report of a nonprofit working group called the Long-Term Care Financing Collaborative.
For some, private insurance has helped cover those costs. But long term care coverage isn’t cheap. The average premium today is $2,050 a year for a 55-year-old man and $2,700 for a woman of the same age — with premiums rising 25% to 100% annually. That is, if you can find a policy. Insurers are pulling out of the market in droves as lifespans and health care costs rise — and profit margins fall.
Many people mistakenly believe that Medicare covers long term care. (It does pay for the first 100 days of skilled nursing care following a hospitalization, but nothing more.) Medicaid — the federal health program for the poor — covers skilled nursing care for lower-income seniors, but does not pay for assisted living. Many middle-class seniors are forced to impoverish themselves by exhausting their hard-earned savings simply to qualify for Medicaid.
Families, too, make undue financial sacrifices to provide in-home care to seniors — by forgoing paying jobs or leaving the workforce early. “Retiring early to take care of an aging [family member] can have enormous negative consequences on caregiver retirement finances,” says the National Active and Retired Federal Employees Association (NARFE). A woman retiring early to provide a relative with long-term care loses an average $324,000 in retirement income, while a man loses $284,000, according to caregiver advocate and radio host Toula Wootan.
Under the circumstances, how can seniors and their families afford to pay for long term care when they need it? With private insurers retreating, government could step up and design a new program, as it did in 1965 when Medicare was enacted to address a lack of affordable, accessible health care coverage for older Americans.
“There’s a clear problem, but there aren’t any equally clear policy solutions,” says Paul Van de Water of the Center for Budget and Policy Priorities and a participant in the Long-Term Care Financing Collaborative. “As far as long term care is concerned, private insurance isn’t going to be the answer for most people,” he says. “You’re going to need some government intervention.”
A few forward-looking states have begun experimenting with potential pathways to universal long-term care. Under a bipartisan bill in Washington state, workers would pay less than 1% of their wages into a trust fund in exchange for $36,500 worth of long-term care benefits. Meanwhile, the state of Minnesota now enables issuers of Medicare supplemental insurance (also known as “Medigap”) policies to offer long-term care coverage at an additional cost.
Of course, a federal long-term care insurance program would be preferable to piecemeal efforts in the states. The U.S. Congress already tried — and failed — to design a sustainable federal long term care benefit. (See the ill-fated CLASS Act.) Fortunately, lawmakers are taking another swing at it.
In 2018, Congressman Frank Pallone (D-NJ) rolled out a discussion draft of a bill, the Medicare Long-Term Care Services and Supports Act, which would “establish a public benefit within Medicare, designed for everyone regardless of income or where they live, to provide long-term care services and supports.” (The proposal did not include a funding mechanism.) Now the chairman of the House Energy and Commerce Committee, Pallone is still working on a long-term care insurance plan — but has yet to introduce a bill.
Meanwhile, Rep. Richard Neal (D-MA), chairman of the House Ways and Means Committee, is exploring the issue. In June, he wrote a letter to the National Association of Insurance Commissioners probing the feasibility of including long-term care coverage in Medigap supplemental insurance — akin to what Minnesota enacted.
The fact that two powerful committee chairmen are brainstorming proposals is a sign that Congress is once again getting serious about this issue. But there clearly is no consensus yet on how to provide and fund a new benefit — and plenty of questions about what form it will take.
Front-end (‘first dollar’) coverage or back-end (which kicks in after a certain amount of time or expense)? Direct federal benefit or subsidized private benefit? Funded through premiums, new taxes — or both? These very legitimate questions can be resolved if our leaders have the political will. With millions of seniors and their families struggling to acquire — or provide — much-needed long term care, the time to act is now.