FUNDING LONG TERM CARE: A CALL FOR REFORM

The Long-Term Care Task Force of the National Academy of Elder Law Attorneys (NAELA) recently published the White Paper. The purpose of the White Paper is to analyze the problems that exist in the current long-term care structure of the United States and to present recommendations for possible solutions to those problems.

NAELA recognizes that funding the cost of long-term care is inherently a problem for America’s middle class, who must bankrupt themselves in order to qualify for Medicaid. The wealthy can self-insure the cost of long term care. The poor already qualify for Medicaid, but it is the middle class who must impoverish themselves, depleting their life savings, before Medicaid will cover the cost of their care.

Only 7% of long-term care is funded with private insurance. Several factors prevent long term care insurance from being available to the masses: (1) lack of public awareness, (2) the cost of the premiums, (3) confusion over the various options. 73% of Americans incorrectly believe that Medicare is primarily responsible for funding long-term care, which, in turn, dilutes their perception of the need for insuring against the cost of care. Premiums for long-term care insurance for a 79-year-old individual can range from $3,967 to $7,740 per year, depending upon the company and the coverage options chosen; by the time people realize the need for long-term care insurance, they are unable to afford the premiums. Finally, the various coverage options make it difficult for the layperson to choose a policy that is right for them.

What NAELA proposes is a restructuring of the Medicare and Medicaid system. Recognizing that the need for long term care will only increase dramatically in the near future, NAELA calls for the establishment of Medicare Part D. Medicare Part A pays for hospital care. Part B pays for physicians. Part C, also known as Medicare+Choice, is a managed care health care system, which must provide at least the coverage provided under Parts A and B.

The proposed Part D would fund the costs of long-term care. Under the proposal, every individual who works the requisite 40 quarters would receive a pool of money – e.g., $200,000 – which could be used as needed to fund long-term care. There would be a $10,000 deductible. Once the deductible was met, Medicare would pay 80% of the reasonable costs of long-term care.

NAELA also calls for the utilization of long-term care managers to assess the beneficiary’s condition, implement the care plan, monitor the services being provided, and make reassessments and discharge planning when appropriate. To qualify for Medicare Part D, an individual would have to be unable to perform at least two of the activities of daily living (e.g., clothing, bathing, eating, transferring, toileting, continence) or suffer from a cognitive impairment. The individual would need to be 65 years of age or older.

Since funding the Medicare Part D trust will take time, NAELA suggests that Part D benefits be phased in over a period of twenty years, with one-half of the benefits being available in ten years and the other half being available after twenty years.

NAELA also recognizes the inefficiency inherent in the current structure of the Medicaid system. Medicaid, a federal-state program is often more mismanaged than properly managed and the appeals procedure available to rejected Medicaid applicants is often fraught with due process violations. Medicaid rules vary from state to state, are often self-contradictory, and are understood by only a chosen few. By contrast, Medicare, a wholly federal program, is administered with a coherent set of rules.

With the dramatic increases in life expectancy that occurred last century and with the aging of the Baby Boomer generation, our country will see large increases in the need for long-term care. The problems in our methodologies for funding such care can no longer be ignored.