Long-term care threatens to sap seniors’ savings

AARP is an Atlantic grantee.

by Bob Moos

Kay Paggi has been the bearer of bad news more times than she cares to remember.

The senior-care coordinator has helped hundreds of Dallas families find long-term care for frail parents. Almost always, they think Medicare will pick up most of the tab, the same as it does for hospital stays and doctor visits.”They’re shocked when I tell them that Medicare doesn’t pay for long nursing home stays,” she said. “All of a sudden, they have this look of horror as they realize their parents will have to foot the bill. Those retirement nest eggs go poof.”

Over 20 years, Paggi has seen many seniors spend almost their last dollar on personal care at home or an assisted-living community before turning to a nursing home and ultimately relying on Medicaid, the health care program for the poor.

“Our system of paying for long-term care in this country is broken,” she said. “Unless you have a big family or thick wallet, you’ll run into trouble in old age.”

As lawmakers debate how to pay for acute care for 46 million uninsured Americans, advocates for older or disabled adults are urging the Obama administration and Congress to discuss long-term care’s financing problems, too.

Possible reforms range from providing more federal money for home care to creating a national insurance pool that would protect people against long-term care expenses.

“It doesn’t make sense to figure out how to pay for the hospital care of a heart attack victim but overlook the day-to-day problems of someone living with congestive heart failure,” said Howard Gleckman, a senior research associate at the Urban Institute and author of Caring for Our Parents.

Long-term care includes everything from help with bathing, dressing and household tasks to assistance with taking medications. It may be provided by family members or paid caregivers in the home or at a facility like an adult day care center or nursing home.

Ten million Americans require long-term care. But by 2030, 37 million boomers will be living with more than one chronic condition such as arthritis or diabetes, said Larry Minnix, president of the American Association of Homes and Services for the Aging.

Health care and long-term care go hand in hand, experts say.

“If the chronically ill forget to take their medications or they can’t get to their doctors’ offices, their health will deteriorate, and they’ll wind up back in the hospital,” said James Swan, professor of applied gerontology at the University of North Texas.

Lawmakers won’t wring savings out of the health care system without managing chronic illnesses effectively, and that will mean making long-term care more accessible and affordable, he said.

Boomers coming

The nation’s long-term care system is at risk of collapsing when aging boomers need help in a decade or two, experts warn.

Medicare covers short nursing home stays and some home health care, but those services are intended mainly for patients recovering from illnesses or injuries. The federal health care program isn’t set up to meet the day-to-day needs of the chronically ill.

Nor is private insurance expected to become the primary means for financing long-term care, though its role will grow. High premiums will remain a big hurdle for many, said Diane Rowland, executive vice president of the Kaiser Family Foundation.

For a 60-year-old individual, annual premiums for a typical policy average $2,329, according to Kaiser and the Avalere Health consulting firm.

For a couple the same age, premiums average $3,096 a year.

Most long-term care is provided by unpaid family members who often make personal sacrifices. The typical caregiver is a middle-age daughter who must quit her job or scale back her hours to look after a parent at home.

Paid care can quickly exhaust life savings. The median cost of a private room at a Dallas nursing home is $54,750 a year, while the median charge for an assisted-living community is $33,456, according to Genworth Financial.

As older or disabled adults have spent their way into poverty, Medicaid has become the anchor of long-term care and now accounts for almost half of the $200 billion that the government, private insurers and individuals pay for such help each year.

“Medicaid was supposed to act only as a safety net for the poorest, but it has become the single largest source of financing for long-term care,” said Doni Van Ryswyk, manager of the North Central Texas Area Agency on Aging.

Medicaid could stretch its dollars by caring for more people at home instead of in nursing homes, said Elaine Ryan, vice president of government relations for AARP.

“It would be a win-win for Medicaid and its beneficiaries,” she said.

Medicaid could care for three people with home and community-based services for what it spends on one nursing home resident, according to the AARP Public Institute.

“And nine of 10 older adults prefer to remain in their homes anyway,” Ryan said.

In Texas . . .

Texas has done better than other states in shifting to home and community-based programs, but many people still must wait one to two years for the care because of state budgetary pressures, said Lue Taff, director of the elder support program at the Senior Source in Dallas.

Though Texas and other states are required by law to provide nursing home beds to eligible Medicaid recipients, they have the discretion to limit their home and community-based services.

As part of health care reform, advocates are pressing Congress to give states a bigger federal match so that they can afford to expand in-home programs and lessen the need for more expensive nursing home care.

The American Association of Homes and Services for the Aging, a trade group, is also urging lawmakers to create a national insurance pool that would pay for itself. Workers would contribute to the fund through payroll deductions and receive a cash benefit if they became disabled.

“For essentially the price of a cup of coffee each day, people could have an average long-term care benefit of $75 a day,” Minnix said. “If such an insurance program were in place and everyone participated, Medicaid’s costs would be cut in half.”

The national pool’s success would depend on how many workers participated, experts say.

“You’ve got to make any such insurance pool mandatory for it to be affordable,” said Joshua Wiener, director of aging research for the RTI International think tank. “Otherwise, only the people who know they’ll need the coverage will buy it, and the premiums will be too high.”

Supporters say workers would be automatically enrolled in the fund, though anyone could opt out. That would spread the risk across a broad population and keep premiums low.

Minnix said the disabled could use the cash benefit to pay for any services they needed. Workers who wanted additional coverage could buy private insurance.

Past debates over long-term care have been stymied by disagreements over whether it should be financed with public or private money, said Judith Feder, professor of public policy at Georgetown University.

“That rhetoric obscures the facts,” she said. “We already have a mixed public-private system, and we always will. The real choice is whether to keep today’s dysfunctional system or create something that won’t buckle under millions of aging boomers.”