KFF designs, conducts and analyzes original public opinion and survey research on Americans’ attitudes, knowledge, and experiences with the health care system to help amplify the public’s voice in major national debates.
The 2003 Kaiser Family Foundation Health Insurance Survey examines the public’s level of satisfaction with their insurance coverage, their expectations of health insurance, the role of costs and other factors in health insurance decision-making, and attitudes toward employer-sponsored coverage. It also explores people’s opinions about several alternative health insurance plans that are currently under consideration and explores how they might respond to these new options.
In 2000, Congress passed a landmark law that gave states the option of extending Medicaid coverage to certain low-income women with breast or cervical cancer. In California, approximately 10,000 women have been assisted by this program. This policy brief, “Hearing Their Voices: Lessons from the Breast and Cervical Caner Prevention and Treatment Act (BCCPTA),” reports on the impact of this program on low-income women in California, using focus group analysis.
The report was prepared by researchers at the George Washington University School of Public Health and Health Services and the Kaiser Family Foundation and is one of the first to look at this program from the perspective of the women it serves.
Now I’m going to read you a list of some stories covered by news organizations in the last month or so.As I read each one, tell me if you happened to follow this news story very closely, fairly closely, not too closely, or not at all closely.(First,) how closely did you follow this story…?
Total Closely
Very Closely
Fairly Closely
Total NotClosely
Not too Closely
Not at all Closely
DK/ Ref.
Military action and peace keeping efforts in Iraq
88
63
26
11
6
5
*
Campaigns for the 2004 U.S. Presidential Election
78
48
29
22
13
9
*
The recent hurricanes that hit Florida and other states in the Southeast
92
65
27
8
6
2
*
An FDA study on the link between antidepressants and the risk of suicide in children
52
27
25
47
18
29
1
Reports of former President Bill Clinton’s heart bypass surgery
46
17
29
53
28
26
1
The start of a federal racketeering trial against large tobacco companies
28
12
17
71
25
46
1
A survey reporting an increase in the cost of employer-sponsored health insurance premiums
51
25
27
47
21
26
1
Stories about the 2004 U.S. presidential candidates’ proposals for making health care more available and more affordable
70
36
35
29
17
13
*
Reports on the debate over the importation of lower cost drugs from Canada and other countries
67
34
33
33
19
14
*
The withdrawal of the drug Vioxx from the market because of a study finding it increased the risk of heart attack and stroke
60
34
27
39
19
20
1
The nationwide shortage of flu vaccine
81
53
28
18
11
7
*
Survey by Henry J. Kaiser Family Foundation, Harvard School of Public Health. Methodology: Fieldwork conducted by Princeton Survey Research Associates, October 14-17, 2004 and based on telephone interviews with a national adult sample of 1,202.
During the past three years, has the amount of money you pay directly each month or have deducted from your paycheck for your health insurance premiums gone up a lot, gone up a little, stayed the same, or gone down?
Based on those who are insured (n=1,080)
31
Gone up a lot
39
Gone up a little
22
Stayed the same
2
Gone down
6
Don’t know/Refused
Was this a major problem, a minor problem, or not a problem for you and your family?
Based on those whose insurance premiums have gone up in past three years (n=781)
26
Major problem
42
Minor problem
32
Not a problem
*
Don’t know/Refused
Survey by Henry J. Kaiser Family Foundation, Harvard School of Public Health. Methodology: Fieldwork conducted by Princeton Survey Research Associates, October 14-17, 2004 and based on telephone interviews with a national adult sample of 1,202.
I’m going to read you a list of things that some people worry about and others do not.I’d like you to tell me how worried you are about each of the following things.(First,) how worried are you about…?
Are you very worried, somewhat worried, not too worried, or not at all worried?
Very worried
Somewhat worried
Not too worried
Not at all worried
DK/Ref.
a.Having to pay more for your health care or health insurance
47
31
9
12
1
b.Not being able to afford the health care services you think you need
38
26
16
21
*
c.The quality of health care services you receive getting worse
30
28
16
26
1
d.Not being able to afford the prescription drugs you need
35
25
16
23
1
e.Being the victim of a violent crime
19
27
27
27
1
f.Being the victim of a terrorist attack
23
33
22
21
1
g.Your income not keeping up with rising prices
46
25
11
17
*
h.Losing your savings in the stock market
22
18
12
46
1
i.Not being able to pay your rent or mortgage
27
16
17
39
1
Item J based on those who are employed (n=746)
j.Losing your job
18
15
21
46
*
Item K based on those who are employed and insured (n=674)
k.Having to stay in your current job instead of taking a new job for fear of losing health benefits
19
13
16
51
1
Items L-M based on those who are insured (n=1080)
l.Losing your health insurance coverage
29
20
18
33
*
m.Your HEALTH PLAN being more concerned about saving money for the plan than about what treatment is best for you
** Based on those who are employed with health insurance coverage only.
*** Based on employed only.
Survey by Henry J. Kaiser Family Foundation, Harvard School of Public Health. Methodology: Fieldwork conducted by Princeton Survey Research Associates, October 14-17, 2004 and based on telephone interviews with a national adult sample of 1,202.
Sharp increases in medical liability insurance premiums in recent years, and the withdrawal of some insurers from this market have focused the attention of health care providers, patients, and policymakers on reform of the medical liability system. Of additional concern is that the fear of liability causes physicians to practice medicine in ways that raise costs. The key issues being debated this election season are how to assure the availability of affordable liability coverage in the future while maintaining access to care, and the impact medical liability has on rising health care costs. There are varying opinions of how medical liability reform should be addressed, including whether it should remain a state issue or be addressed at the federal level, and, if so, how.
Background
According to a recent study on medical liability by the Congressional Budget Office (CBO), medical liability insurance premiums for all physicians nationwide increased an average of 15 percent between 2000 and 2002. Those for some specialties rose even faster, with premiums for obstetrician-gynecologists increasing an average of 22 percent and those for internists and general surgeons growing an average of 33 percent during the same period. The same study indicated that malpractice costs account for less than 2 percent of health spending and that significant reductions in these costs would only modestly affect overall health spending growth. Concern has also been raised over spending related to the practice of defensive medicine. However, based on existing research and its own analysis, the CBO found that savings from reducing this practice would be “very small.” 1
Premium hikes have also varied substantially from one area to another. In a 2003 survey of seven states, the General Accounting Office (GAO) found that “premium levels varied greatly not only from state to state, but…even among areas within states.” 2 For example, it found that the largest professional liability insurer in Florida raised annual premiums for general surgeons in Dade County by 75 percent between 1999 and 2002 (to $174,300), while the largest such insurer in Minnesota hiked premiums for the same specialty during the same period by 2 percent (to $10,140). Outside Dade County, the Florida insurer’s annual premium rate for general surgeons for 2002 was $89,000.
This surge in premiums is only the latest episode in an insurance cycle that produced similar increases in the second half of the 1970s and again in the mid-1980s. These upswings in premiums are thought by most experts to be caused by higher-than-expected financial outflows from insurers, lower-than-expected financial inflows to them, or a combination of the two.
A number of factors may increase liability insurers’ spending, including growth in the size of pay-outs to patients, an increase in the number of lawsuits, the rising cost of health care for injured parties, and increased premiums for reinsurance (insurance that they purchase from other companies to protect themselves against extremely costly cases).3 While evidence on the role played by most of these factors is mixed, the available data suggests that the costs of malpractice lawsuits have risen significantly over time. For example, CBO has determined that average pay-outs to patients and average legal defense costs per case have both risen at annual rate of 8 percent between 1986 and 2002.4
Aside from premiums, the main factor affecting the financial inflows or revenues of liability insurers is income from the investment of their reserves. While agreeing that other factors play a role in determining liability premiums, the GAO has found that lower-than-expected investment income for 15 large insurers between 2000 and 2002 probably played an important role in their rate-setting.5 Likewise, an analysis by the American Academy of Actuaries also found that liability insurers’ investment income decreased as a percentage of premiums between 1995 and 2001, and it suggested that each one percent decrease in interest rates would require insurers to increase premiums 3 to 4 percent to offset the reduced investment income.6
Another factor contributing to the current round of premium hikes is that a number of insurers have withdrawn from the market, thereby limiting competition on premiums as well as the number choices for coverage available to physicians. In 2001, the St. Paul Company, which provided about 10 percent of all medical malpractice insurance nationally, withdrew from the market altogether. Some physician-owned insurance companies have also exited the market or restricted where they offer coverage.7
In response to current and past surges in premiums, many states have refashioned their laws governing medical liability lawsuits, which have traditionally been a state issue. As of October 2002, 28 states had adopted limits on the amount of non-economic damages (pain and suffering) that can be awarded to an injured party.8 California led the way with the adoption of the Medical Injury Compensation Reform Act of 1975, (MICRA) which, among other things, capped such damages at $250,000. Similar legislation is pending in most of the states that have not yet acted. California also has approved a referendum rolling back premiums on many types of insurance (including medical liability insurance) and instituted state regulatory review of proposed premium increases.
Options for Assuring Access to Affordable Liability Coverage
Federal limits on liability lawsuits. Although there are a number of policy prescriptions for remedying the problem of rising medical liability insurance premiums, most of the attention in Congress has focused on legislation that would limit medical malpractice lawsuits and awards. Preferred by most Republicans, such legislation has been passed twice by the House of Representatives in the past two years. While Republicans in the Senate have tried to bring similar legislation up for consideration, most Democrats (joined by two Republicans) have blocked these attempts.
The House-passed legislation, which would not limit damages for any economic losses (such as medical costs and lost wages) sustained by a patient, would:
cap non-economic damages (pain and suffering) at $250,000;
limit punitive damages to cases involving malicious intent to injure or deliberate failure to avoid unnecessary injury;
This new fact sheet summarizes Tennessee’s proposed waiver amendment to its TennCare program, which was submitted to the federal government in September 2004. The Kaiser Commission on Medicaid and the Uninsured is closely following waiver activity to provide information on how these waivers are impacting the uninsured and affecting Medicaid and SCHIP and the coverage provided to low-income beneficiaries.
More than 50 million individuals, or roughly one in five Americans, have a disability. Diverse in health-care needs, levels of functioning, goals, and life circumstances, many count on Medicaid and Medicare to provide coverage for a range of health and long-term services and supports. While people with disabilities are relatively heavy users of healthcare services, they often receive these services much less frequently than is recommended. Health issues that are important to people with disabilities span a wide range, but center on access to health insurance, coverage for essential services including prescription drugs and long-term services, and the financing of Medicaid and Medicare, given the critical role that they play in the lives of people with disabilities of all ages.
Background
People with disabilities have a wide range of conditions including physical impairments such as blindness and spinal cord injury; severe mental or emotional conditions; and other serious and disabling conditions including cancer, cerebral palsy, cystic fibrosis, Down syndrome, mental retardation, Parkinson’s disease, multiple sclerosis, autism, and HIV/AIDS. Relative to the general population, those with disabilities have lower incomes and are far less likely to be employed. People with disabilities are also much more likely to have fair or poor health, to be limited in their activities of daily living, and to reside in nursing homes or other institutions. Some people with disabilities can obtain private health insurance, either from an employer or by purchasing it on their own, but significant gaps exist. Many people with disabilities do not work at jobs that provide access to employer-sponsored coverage, while individual insurance policies for persons with less-than-perfect health are too expensive, or not offered at all. Policies may also severely limit or exclude core disability services, such as prescription drugs, mental health services, rehabilitation services and personal care services.
Public programs—Medicare and Medicaid—play a major role in assuring healthcare for people with severe, permanent disabilities. Medicare provides health coverage to over 6 million non-elderly adults with permanent disabilities, in addition to 35 million seniors. Adults are eligible for Medicare if they receive Social Security Disability Insurance (SSDI), but must wait over two years before they can enroll. Medicare covers basic physician and hospital services, but does not currently pay for prescription drugs or long-term services. Beginning in 2006, Medicare will begin to provide prescription drug coverage.
Medicaid is the nation’s primary program serving people who cannot obtain or afford private health coverage. The program provides coverage for over 50 million Americans, including 8 million people under age 65 with disabilities, 5 million seniors, and 38 million adults and children in low-income families. Medicaid covers a broad spectrum of services, ranging from physician care and prescription drugs to behavioral health and support services that are often critical to enabling individuals with disabilities to work or remain in the community. Medicaid is often the only source of public financial assistance for long-term services, including institutional care. Long-term services provide assistance with activities of every day life, such as bathing and dressing, using the toilet, preparing meals, or managing finances. Low-income Medicare beneficiaries rely on Medicaid to fill in many of Medicare’s gaps, including prescription drugs and long-term care.
Major Issues of Importance to People with Disabilities
Health Coverage
Medicaid and Medicare both play a pivotal role for people with disabilities, but millions fall outside their reach because coverage is often restricted to the poorest and most severely disabled. Recent policy efforts have focused on targeted improvements. For example, some states now guarantee continued access to Medicaid under “buy-in” programs that enable people with disabilities to become competitively employed without fear of losing health coverage. In addition, a few states have extended Medicaid coverage to people who have certain progressive conditions, such as HIV/AIDS or multiple sclerosis, for whom early treatment could slow the progression of disease. Other targeted proposals being discussed include permitting states to expand Medicaid coverage for children with disabilities in families with slightly higher incomes (up to about $40,000 a year) and eliminating the Medicare two-year waiting period for people with disabilities under age 65.
Broader efforts to expand health coverage to the nation’s uninsured could help improve coverage for people with disabilities. Some have proposed subsidizing the purchase of individual health insurance plans. This strategy is likely to be of limited help to people with disabilities unless policies are offered to people with chronic conditions, premiums are affordable, and benefits are sufficiently broad. Broader insurance market reforms may be needed if the individual market is to address the needs of people with disabilities. Others have proposed expanding Medicaid and SCHIP to cover more of the low-income uninsured and shoring up the employer-market by providing federal financing for high-cost cases. Building on Medicaid and SCHIP would capitalize on the prominent role that public programs currently play for people with disabilities, but would work only if sufficient funding were provided by the federal and/or state governments to assure adequate benefits.
Prescription Drugs Under Public Programs
Access to the right medicines enables people with disabilities to participate in the workforce and in their communities, and, in some circumstances, may make the difference between life and death. However, affording prescription drugs can be a daunting challenge. In the absence of drug coverage under Medicare, Medicaid has played an essential role in helping low-income people with disabilities have access to a broad range of medicines.
Beginning in 2006, Medicare will begin offering new prescription drug plans. For Medicare beneficiaries who have multiple health conditions and take numerous prescription medications, critical issues will include whether the drug benefit is adequate in providing all of their needed medications and whether it will do enough to lower their drug costs. Low-income beneficiaries (generally those with incomes less than about $14,000/year) will be able to sign up for help in paying premium and cost-sharing requirements for the new plans, but efforts will be needed to let people know about this assistance and to facilitate enrollment.
For those who currently rely on Medicaid, Medicare will take over drug coverage and Medicaid coverage of prescription drugs will end. A critical issue for these “dual eligibles” will be how this transition from Medicaid to Medicare is handled, whether there are gaps in coverage, how much out-of-pocket spending is required, and how readily individuals and physicians will be able to challenge or appeal denials of prescribed drugs.
Coverage of Long-Term Services and Supports
Finding ways to assure adequate access and financing for long-term care services is an important policy issue for people with disabilities, as well as the broader population. The aging of the population and growth in the number of people under 65 with disabilities will increase the demand for long-term care services. Most long-term care is provided informally through family and friends, often at a considerable emotional, physical, and financial toll. When ongoing needs surpass caregiver’s capacities, nursing home or community care costs can quickly exceed most people’s financial resources. Medicaid is the nation’s primary program that pays for long-term services, but is generally available only to those who are poor or have exhausted their resources paying for care. Medicare does not generally cover long-term services, and private insurance for long-term care is not typically available or affordable for people with disabilities.
In the current fiscal environment, there is little discussion of expanding Medicare to cover more long-term services or developing a new national long-term care program, although proponents view a social insurance program, like Medicare, as the best way to share the risk that we all face for needing long-term care. Others support private sector solutions by changing the tax laws to provide greater incentives for individuals to purchase long-term care insurance and employers to offer long-term care insurance as an employee benefit. Proponents believe these actions could lessen future pressure to publicly finance long-term care, but others doubt that private long-term care insurance will be affordable for low or middle income Americans. More modest proposals would provide a tax deduction or credit to caregivers.
Some support strengthening Medicaid’s ability to serve low and middle income people with disabilities by increasing the income and asset guidelines that states employ or developing partnerships that are more affordable to the government and to families because they link private coverage with a public safety net. These options build on state long-term care systems, but recognize that given Medicaid’s role as the sole program to help with long-term care bills, rules that require impoverishment may be too severe and, in some cases, undermine the ability of people to stay in the community. Despite their appeal, public-private partnerships are limited to a handful of states and enrollment is low.
Reversing Medicaid’s “institutional bias” by promoting more home- and community-based alternatives is also an important goal of the disability community. Recognizing that most Americans do not want to be in nursing homes or other institutions, states have increasingly taken steps in their Medicaid programs to provide more community-based services. The 1999 Supreme Court decided, in the case of Olmstead v L.C., that unjustified institutional isolation of people with disabilities is illegal under the Americans with Disabilities Act (ADA). Unfortunately, progress has been slow and waiting lists for community services are often long. While community-based options are often less expensive than institutional care, some policymakers are reluctant to propose new programs or expand existing programs, fearful that overall costs will increase if more people seek assistance. The Administration has supported several “New Freedom” demonstration programs that have focused on supporting community services and providing greater consumer direction over services and individual budgets in the community by approving “Independence Plus” waiver programs. The Administration also supports “Money Follows the Person” legislation to support the transition from the nursing home to the community. In addition, some have called for modification of the Medicare homebound rules to permit individuals to participate more fully in community life.
Financing Medicaid and Medicare
Looking forward, the financing of both Medicaid and Medicare will be an important and challenging issue for policymakers. Medicaid is financed by the federal and state governments, but state resources have been strained in the last several years as economic conditions deteriorated. The future financing of Medicaid is a central issue for people with disabilities as more people at younger ages survive with significant needs and disabilities and the population in the United States continues to age. The recent period of fiscal stress has rekindled interest among states and at the federal level in restructuring federal Medicaid law, particularly with respect to the way the program is financed and the relative role of states and the federal government. The outcome of discussions about restructuring the program will have significant implications for state budgets, Medicaid beneficiaries, and the ability of the Medicaid program to continue to serve as a critical safety-net program.
Medicare will also face significant financing challenges in the coming decades. The number of beneficiaries is projected to grow from 41 million today to 76 million by the year 2030. To assure that financing is adequate to pay for benefits, policymakers are examining alternative options. Proposals to make Medicare financially solvent include: restructuring the Medicare program along the lines of the Federal Employees Health Benefit program, cutting the growth in Medicare payments to doctors, hospitals, and health plans, increasing beneficiary premiums and cost-sharing, and raising the age of Medicare eligibility.
Assessing Candidate Positions
Health coverage provided by public programs is an issue of crucial significance to people with disabilities, often meaning the difference between life and death. Many individuals with disabilities say their ability to lead active and independent lives is inextricably linked to their access to needed services, medications, and social support. These issues will play out as the future of public programs is debated, as the new Medicare drug law is implemented, and as the need for long-term services continues to grow. The following questions could be useful in understanding how the candidates propose to address some of the major areas of health policy affecting people with disabilities.
How would your plan to expand health coverage affect people with disabilities? Would benefits be comprehensive and coverage affordable?
How would you ensure that individuals with a disability or those supporting a disabled dependent do not lose their coverage when returning to work?
What strategies should be implemented to eliminate Medicaid’s institutional bias and increase the availability of services in the community?
Should Medicaid and Medicare financing be restructured? If so, how?
Millions of elderly and disabled Americans need long-term care services and supports. The aging of the population in the United States over the next several decades is expected to increase the demand for long-term care services. The number of elderly persons in the United States is projected to increase dramatically, both as a percentage of the population and in absolute numbers, due in part to the aging of the baby boom generation and to increased life expectancy. Further, long-term care services are vital to individuals with disabilities under the age of 65 that may require a lifetime of care. Thus, identifying ways to ensure adequate access and financing for long-term care needs is an important policy concern.
Background
What is “long-term care”?“Long-term care” refers to a broad range of medical, social, personal care, and supportive services needed by people who have difficulty taking care of themselves due to chronic illness or disability, whether physical or mental. The need for long-term care is often measured in terms of the extent to which an individual needs help or supervision in performing basic “activities of daily living” (ADLs) such as bathing, dressing, using the toilet, eating, or performing household tasks such as preparing meals or managing money.
Who needs long-term care and where is it provided?Although the need for long-term care is greatest among the very old (i.e., those over age 85), individuals of all ages may need long-term care services. In 2000, an estimated 9.5 million people in the U.S. needed long-term care services, including 6 million elderly and 3.5 million who were under age 65. 1 Most people who need long-term care services do not live in nursing homes. Instead, they are cared for in the community, living in their own homes, with relatives, or in non-institutionalized settings such as assisted living facilities. Four out of five adults who received long-term care services relied solely on unpaid help. 2 Only one out of five received paid in-home help or were cared for in nursing homes or other institutional settings. 3 However, the chance of eventually requiring long-term nursing home care is high. For people who turn 65 in the year 2010, it is estimated that 45 percent will require some nursing home care, one-third will spend at least three months in a nursing home, and nine percent will spend five years or more. 4
How much does nursing home care cost and how is it paid for?The average daily cost of a private room in a nursing home in the United States exceeds $70,000 per year, or $192 per day. 5 Rates vary across the country, with the highest rates in Alaska (more than $200,000 per year) and the lowest rates in Louisiana (about $36,000 per year). The average length of stay in a nursing home for current residents is 2.4 years. As described below, most long-term care services (including extended stays in nursing homes) are not covered by Medicare, and few people have private long-term care insurance to pay for nursing home stays. As a result, most people who require nursing home care eventually exhaust their savings and become eligible for Medicaid, the federal-state program that covers the costs of health and long-term care services for the poor.
What is the role of Medicaid in financing long-term care?Medicaid is a major payer of long-term care services in the United States, accounting for 43 percent of total spending on long-term care in 2002. 6 It is also the major source of payment for three out of five nursing home residents. 7 In addition to nursing home care, Medicaid also pays for home- and community-based long-term care services. In general, federal law requires Medicaid programs to cover elderly and disabled individuals who have very little income and assets (generally up to $564 in income per month in 2004 for an individual and no more than $2,000 in assets). Federal law allows states to cover individuals at higher income levels, however, and most states do so. For example, most states provide assistance to the “medically needy,” defined as individuals whose spending for medical care is so great that it reduces their income to the level required to be eligible for Medicaid.
People in nursing homes who do not have sufficient financial resources or insurance to cover the costs of care usually “spend down” their assets until they become eligible for Medicaid. Once eligible, they are required to contribute all of their income toward the costs of their care, except for a small monthly personal allowance. The law also allows the spouse of an institutionalized person who remains in the community to keep specified amounts of income and assets to prevent the impoverishment of the spouse.
States are required by the federal government to pay for institutional care, but are not required to provide long-term care services in the community. However, all state Medicaid programs (except in the District of Columbia) have established programs under which some individuals who qualify for Medicaid financing of their nursing home care may instead receive assistance in home- and community-based long-term care settings. The number of individuals who can participate in these programs is limited, however, due to cost constraints. Some states have established lower income-eligibility requirements for their Medicaid home- and community-based care programs than for nursing home care.
What is the role of Medicare in financing long-term care?Medicare, the federal health insurance program for the elderly and disabled, primarily covers physician and hospital-based acute care services and does not play a large role in financing long-term care. However, because it is difficult to draw a bright line between acute care and long-term care services, Medicare does cover some services that could be considered long-term care. For example, Medicare covers up to 100 days of nursing home care for patients needing skilled nursing or rehabilitation services following a hospital stay. Medicare also covers home health services, without limit, but only while patients require skilled nursing care.
What is the role of private long-term care insurance?Unlike insurance for health care services, relatively few people have private insurance for long-term care. Long-term care insurance is similar to life insurance in that premiums are largely determined by age. People will pay lower monthly premiums for policies purchased when they are younger than when they are older. For example, in 2002, a 50-year old who purchased a long-term care policy providing three to six years of benefits and protected against inflation paid an average premium of $925 a year; that same policy purchased by an 80-year old cost an average $6,791 a year. 8 Because the market for long-term care insurance is relatively small, and few policyholders have qualified for benefits, only 11 percent of the nation’s long-term care spending in 2002 was covered by private long-term care insurance. 9 However, as a result of changes in tax policy, discussed below, more people are buying private long-term care insurance policies. From 1988 to 2001, the number of long-term care insurance policies issued each year more than doubled, from about 300,000 to more than 700,000. 10
Options for Addressing Long Term Care Needs
Although proposals to address the nation’s growing long-term care needs are not foremost among current national policy concerns, many policymakers have supported various private and public sector strategies which, the sooner implemented, could help avert some of the mounting pressures associated with a growing population requiring long-term care services. Among the proposals that have been discussed are the following:
Private Sector StrategiesMany people view long-term care as an individual and family responsibility that should be part of general financial planning for future health and retirement needs. According to this view, the government should provide incentives for personal savings and for the purchase of private long-term care insurance, and public financing of long-term care services should be targeted only to the most needy individuals.
In 1996, Congress enacted several provisions intended to encourage the purchase of long-term care insurance. Congress clarified that long-term care insurance would be treated like health insurance for tax purposes, which means that benefits received are not taxable and premiums may be counted as tax deductible medical expenses. In order to be qualified, a long-term care policy must provide coverage for minimum benefit levels and meet certain consumer protection standards.
Some policymakers have proposed additional changes in the tax laws to encourage people to buy long-term care policies, and to encourage employers to provide long-term care insurance as an employee benefit. Other proposals would amend the tax code to encourage individuals to set aside money through tax-sheltered savings accounts, such as individual retirement accounts (IRAs) and health savings accounts (HSAs), to pay for long-term care expenses. Still other proposals would provide tax deductions or credits directly to families to help offset the costs of caring for a dependent relative at home.
Other policymakers note that private options tend to be less viable for those with modest means and they focus more on options that would expand Medicaid or Medicare to help meet the long-term care needs of an aging populations. They believe that tax incentives for private long-term care insurance primarily benefit those who are better off, providing less help to lower and middle income persons. They are also concerned about the potential that two systems of care could emerge – one for those with personal wealth or long-term care insurance and another for those without financial means who are being supported by public funds.
Public-sector strategiesSupporters of public-sector approaches view long-term care as a collective responsibility since all persons are at risk for needing long-term care. According to this view, the risk can best be shared through a social insurance system, like Medicare, which is supported by taxes and benefits are available to all when needed. A social insurance approach could be established by adding coverage for long-term care services to the existing set of Medicare benefits, or by including long-term care coverage in a comprehensive, universal health insurance program. Alternatively, a more incremental approach would expand some of the long-term care services available under the Medicare program.
Another strategy would be to build on the current Medicaid program to provide coverage for long-term care services to those with modest incomes. This could be done by either allowing or requiring that states extend coverage to those with incomes greater than allowed under current law. More incremental public-sector approaches are generally aimed at removing the “institutional bias” of state Medicaid programs and encouraging more home- and community-based alternatives to nursing home care. The impact on government spending would depend on how many more people seek community-based care and what it would have cost to provide their care in more traditional ways.
Those who oppose expansions of either Medicare or Medicaid generally argue that such approaches would be too costly to the government, given the increasing demands on public programs that will already occur with the retirement of the baby-boom generation.
Assessing Candidate Positions
On long-term care issues, most candidates do not advocate solely for private- or public-sector solutions, but instead support a combination approach. President Bush advocates changes in tax policy which would provide incentives for families to purchase long-term care insurance and encourage savings through HSAs. He also would provide some financial assistance to family caregivers by allowing them an additional tax deduction, and supports allowing those requiring long-term care, especially younger, disabled individuals, to have more flexibility in how they use government assistance to obtain care. Senator Kerry proposes to invest new federal funds to help states improve nursing home quality, provide more home- and community-based care through state Medicaid programs, and provide financial support for caregivers. Included below are a series of questions to help evaluate candidate positions on long-term care issues.
What can be done to help families that are struggling with the cost of long-term care?
Should Medicaid or Medicare be built upon to help meet the long-term care needs of Americans? If so, what specifically could be done to accomplish this and how this be financed?
Should the government encourage people to buy long-term care insurance? If so, what kind of incentives should the government provide?
Should employers be encouraged or required to offer long-term care insurance as a benefit to their employees, like health insurance?
Should the government encourage people to save more to help meet potential long-term care needs? If so, what specifically could be done to accomplish this?
Prepared by Health Policy Alternatives, Inc
1 O’Brien, Ellen and Risa Elias, Medicaid and Long-Term Care, Kaiser Commission on Medicaid and the Uninsured, May 2004, p.1. 2 Ibid., p.2. (Georgetown University analysis of data from the 1994 and 1995 National Health Interview Surveys on Disability, Phase II)3 Ibid., p.2.4 Congressional Budget Office, Financing Long-Term Care for the Elderly, April 2004, p. 14.5 2004 MetLife Market Survey of Nursing Home and Home Care Costs, September 27, 2004.6 O’Brien and Elias, p. 2 7 Ibid., p. 4.8 Congressional Budget Office, p. 8.9 O’Brien and Elias, p. 3.10 Congressional Budget Office, p. 4
