What if all Americans could buy government long-term care insurance starting as soon as they got their first jobs? For a maximum monthly premium of $65, they could get a lifetime benefit of $50-to-$100-a-day. They could purchase additional private insurance if they wanted it, but they’d always have basic coverage to help pay for care at home or in a nursing facility. The insurance would be available both for people in their old age and for younger people with disabilities.
That’s the idea behind the proposed Community Living Assistance Services and Supports (CLASS) Act. Its main author, Senate Health, Education, Labor and Pensions Committee Chairman Edward M. Kennedy, D-Mass., has vowed to include the measure in any broad-based health reform bill passed by Congress this year. He's starting by making it part of his own overhaul bill, due to be introduced within days.
But Kennedy faces a tough battle. Not only does he have little support from Republicans, but even key Democrats have been reluctant to back the measure. The Obama White House has been silent on the issue. “It is like pushing a rock uphill,” laments a top Kennedy staffer.
Their quarrel is not with the proposal itself. Rather, faced with the immense complexity and huge cost of health reform, most politicians are unwilling to confront yet another difficult issue. Even AARP, the seniors' lobby, has been slow to publicly embrace the plan, fearing controversy could endanger overall health reform, its top priority. “Long-term care reform is going to happen,” says one veteran health lobbyist, “just not this year.”
Kennedy is trying to solve a very big problem. It is becoming more and more difficult for families to pay for the personal assistance that frail older people and those with disabilities need to maintain their best possible quality of life. This care, while often low-tech—help with eating, bathing or getting to the bathroom—isn’t cheap. A private room in a nursing home costs more than $75,000 a year, or more than $200 a day. A home health aide costs an average of $19 an hour. With the average retiree owning less than $100,000 in financial assets, those costs are well beyond almost everyone’s means. Medicare, the federal program for the elderly, doesn’t cover long-term care.
Private long-term care insurance could help families hedge their risk against these catastrophic costs, but only about seven million Americans have this coverage. For most people, it is too expensive and too complicated. Besides, who wants to think about their frail old age? As for younger people, the idea that they may need long-term services as a result of an accident or illness never seems to cross their minds.
Medicare, the health program for seniors, pays for very little long-term care. So, many people who need long-term services end up on Medicaid, a government program that was supposed to provide health care for younger mothers with children. Today, this state-federal program pays for more than 40 percent of all long-term care services. And those costs—more than $100 billion last year--are putting immense pressure on both state governments and Washington.
Kennedy’s solution is for everyone to buy into a national insurance program. Starting at 18, every worker would be automatically enrolled in a payroll deduction plan, unless they chose to opt out of the program. The money would be put aside in a special fund until people needed it. Once they did, benefits would be paid in cash so they could decide how they wanted to spend the money. For instance, they could use it to put ramps and grab-bars in their house, hire a niece to care for them, or help pay the cost of a nursing home.
The Kennedy plan is not perfect. Some will object to the very idea of government insurance. If too many young people choose not to buy the insurance, then premiums for everyone else would rise, making the plan less attractive. And while Kennedy anticipates that private companies would sell extra coverage to supplement the government plan, many insurers insist they are not interested in sharing this risk with Uncle Sam.
Still, Kennedy’s bill could be a valuable starting point for an important debate over how to pay for long-term care supports and services. The betting is it won’t be settled this year. But as the Baby Boomers age and the costs of long-term care become increasingly untenable, this issue is not going away, despite the fervent wishes of some politicians.
Howard Gleckman, a senior research associate at the Urban Institute, is author of
Caring For Our Parents and a frequent writer and speaker on long-term care issues.