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LTC Bullet: Dr. Feelgood's LTC Prescription

Friday January 8, 1999


Last Monday, President Clinton and Vice President Gore unveiled an "historic long-term care initiative to support family caregivers and help address growing long-term care needs." All week long, praise for this plan from interest groups and advocates has filled the newswires and airwaves. The Center for Long-Term Care Financing has a different, somewhat contrarian opinion of the proposal. Here it is in the form of an op-ed article. We hope you like it.

Dr. Feelgood's LTC Prescription
Stephen A. Moses, President
Center for Long-Term Care Financing

What if you needed a root canal, but your dentist prescribed novocaine instead? You'd feel better for awhile, but sooner or later you would writhe in agony, lose the tooth and blame the doctor. President Clinton's new long-term care plan is like that: great short-term politics, but terrible long-term public policy.

The White House correctly diagnosed a huge and growing problem. American families already strain to provide 70 percent of the long-term care that five million of their loved ones need who are unable to perform the normal activities of daily living. As the baby boom generation ages and declines, the emotional and financial cost of providing this care will gradually progress from today's crisis to a genuine catastrophe in the future.

Does it follow that the best medicine for this problem is a richer transfusion of public financing? No! For decades, government expenditures for long-term care have increased dramatically while the proportion of these costs paid by individuals out of pocket has declined radically. With every good intention, Uncle Sam has anesthetized the public to the risk of long-term care with an overdose of fiscal analgesia.

The new Clinton plan would add $1.24 billion per year to an already burgeoning government investment in long-term care. From 1990 to 1997, the bill to taxpayers for home health and nursing home care shot up from $31 billion to $69 billion, an increase of 123 percent. In the same period, private out of pocket costs for the same services edged up from $26 billion to $33 billion, an increase of only 27 percent. Put another way, the proportion of long-term care costs paid by the government jumped from 48 percent to 60 percent while the proportion paid by patients shrank from 40 percent to 28 percent. As public financing of long-term care increases and private spending decreases, the sense of urgency people feel about the need to plan early and insure fully for the risk of long-term care goes down. Consequently, very few people purchase private long-term care insurance and most Americans sense correctly that the government pays much of the cost of long-term care.

We can find a far better way to meet the long-term care financing challenge. Instead of spending more of our scarce public resources on current consumption, we should invest the money wisely toward a longer-term solution. The Clinton plan acknowledges the wisdom of this approach by targeting $10 million to educate Medicare beneficiaries about the risk of long-term care and by investing $15 million to urge Federal employees to buy private long-term care insurance. Unfortunately, the Clinton plan spends the remainder of its $6.2 billion on tax credits to subsidize immediate spending. It would be much smarter to expend that money on tax credits or true deductibility for private long-term care insurance. This tack would gain the government some real long-term leverage on the problem. As wise as this approach is, however, it would not ameliorate the terrible burden faced by families and caregivers who are already suffering.

The best strategy is to provide a fully collateralized, government-backed line of credit on the estates of all Americans who need long-term care. That would empower them to purchase redcarpet access to top quality home care, assisted living and nursing home care in the private marketplace. The fact that they would have to pay this loan back out of their estates and inheritances would strongly encourage new generations of the aging and their heirs to plan ahead for long-term care and purchase private insurance while they are still young, healthy, and affluent enough to afford it. Getting middle class people to take responsibility for themselves in this way would relieve the currently unsupportable burden on Medicare and Medicaid to provide home health and nursing home care for the needy AND the middle class. The Center for Long-Term Care Financing in Seattle, Washington has published a white paper that explains this proposal more fully ("LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle").

Since 1965, the United States government has pumped ever more money into long-term care each year through Medicaid and Medicare. Nevertheless, America's long-term care service delivery and financing system remains fragmented and dysfunctional. We still face severe and worsening problems of access, quality, reimbursement, discrimination and institutional bias. Under these circumstances, would it be callous to suggest that the government should stanch the hemorrhage in long-term care spending and target our meager public resources more wisely? Only as callous, I think, as the dentist who heals your tooth with an unpleasant surgical procedure instead of injecting an endless stream of painkillers.

*The Center's latest policy report "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle" can be purchased for $24.95 by clicking here or by calling us at 206-447-1340.*