LTC Bullet:   Playing the Government Reimbursement Game

June 5, 2001


In a recent Seattle Times editorial (5/29/01) titled, “Hot Dogs or Senior Care, Vendor Needs a Fair Deal,” Michael Reichert, President of Catholic Community Services of Western Washington, analogizes Washington State’s home care providers to hot dog vendors at a ball game.  To wit, both have many hidden costs that must be met to bring their product to market.  Catholic Community Services contracts with the State of Washington to provide home care to low-income seniors.

In the case of home care providers, Reichert explains, the state’s reimbursement or “vendor” rate wasn’t enough to cover costs last year.  “As a result, says Reichert, “we—and virtually every other nonprofit home-care provider agency in the state—were forced to either withhold services, raise additional funds or apply previous financial reserves to cover the deficits.”

How should we address this problem?  More taxpayer money, of course.  According to Reichert, “Home-care agencies deserve just and fair payments that cover the actual cost of delivering services.  Instead, we’re doing charity work for the state so it can meet its obligations to our citizens. . . .  The state should be required by its citizens to adequately fund this work.  Think of the ‘vendor rate’ as your gauge of caring,” suggests Reichert.  “The problem is we’re getting stiffed.”  Coincidentally, the editorial reveals, Washington State’s home care industry is now asking the state legislature for a raise in the “vendor rate” for the next biennium.

Concludes Reichert, “If you think about it, it’s really quite simple.  When you buy a hot dog, you fund the vendor and then some.  But, when it comes to care for our elderly and disabled, shortchanging has become the order of the day.  It’s time to pay the piper:  With the ‘Graying of America,’ the number of our elders needing home care will only escalate.  The current shortsighted ‘penny-wise’ policy will undoubtedly become tomorrow’s folly.”

CLTCF Comment:  Mr. Reichert’s analogy of home care providers to vendors at a ball game doesn’t hold because of one critical distinction.  Ball game vendors don't depend on the state for survival.  These vendors rely on market forces to determine what they can reasonably offer at competitive prices.  Most LTC providers, on the other hand, are overly dependent on government reimbursement that will never pay enough to assure top quality care at the most appropriate level for all who need care. The solution for providers is not to plead for more taxpayer dollars just to tread water, but to promote more private financing options that actually cover the cost of care and may even allow for investing in staff and facility. 

Moreover, the more providers depend on government reimbursement, the greater the likelihood their future will be influenced by political decisions beyond their control.  Conversely, less dependence on public money (and more reliance on private financing) will result in greater insulation from shifting political winds.  All the more reason providers should promote savings, investment and insurance for long-term care.  More people planning ahead and taking responsibility for their care will result in more private dollars flowing directly to providers.   In turn, fewer people relying on welfare for long-term care will reduce pressure on public coffers which elected officials can then use to fund high-quality care for a limited needy population. 

Source:  Michael Reichert, “Hot Dogs or Senior Care, Vendor Needs a Fair Deal,” Seattle Times, May 29, 2001, p. B-5.  Online at