FUNDING THE COST OF CARE

Funding the cost of long-term care is a significant problem for the middle and working classes – and the problem is only getting worse as our population ages. By stripping away legitimate Medicaid planning options, various state governments are trying to herd people towards long-term care insurance as the solution to the cost of care. But will the States’ efforts accomplish their ostensible goal or will these efforts simply leave people with no solution to a growing problem?

Among elder care professionals, it is often said that paying for long-term care services is inherently a problem of the middle and working classes – which, by the way, are the classes in which the vast majority of Americans find themselves.

The rich can afford to pay for the cost of their care without significantly diminishing their worth. The poor don’t have to worry about paying for the cost of long-term care, because they already qualify for Medicaid or charity care programs.

But individuals in the middle or working classes must impoverish themselves paying for the cost of long-term care – which could easily be as high as $80,000 a year. Every year, hundreds of people ask me to help them qualify for Medicaid, while preserving a portion of their assets for the benefit of their spouse or children.

While many planning options exist, few offer a pain-free solution to the problem. Inevitably, Medicaid planning techniques involve divesting oneself of assets, and when a person gives away their money, they lose a sense of control over their own lives. People do not easily enter into a plan for Medicaid; it is only when faced with crushing long-term care costs that they find themselves on my doorstep.

And, as painful as Medicaid planning may be, many States are trying to limit a person’s options under the law. While there are significant questions as to the legitimacy of the States’ efforts, the States do have the ability to throw-up difficult and costly barriers to the Medicaid program.

Many state government officials talk about long term care insurance as if this product were the solution to the problem of funding long-term care. A common refrain from these government officials goes like this: “If people couldn’t plan for Medicaid, they’d purchase policies of long-term care insurance and pay for their own care.”

Of course, this argument ignores several, significant realities. Of greatest importance is that people don’t plan for long-term care because people don’t think they’ll ever need long-term care, not because they think Medicaid will be there to save the day. No matter how many statistics you spew at people about the large percentage of people who will require long-term care if they live to age X or Y, people tend to believe that they will be in that percentage of people who never require long-term care.

It’s called optimism, and Americans have it in abundance. We encourage optimism, but when people get old and have the potential of being a “drag” on government budgets, it would seem as if some state officials want to punish people for being optimistic about their future by taking away their options.

Assuming that the government could convince people that they might need long-term care services someday, there are other problems with long-term care insurance. For example, the premiums are very costly – often costing over $3,000 a year – too costly for middle and working class people to afford. As I write this article, I’m listening to CNBC, a financial news channel. One of the big topics today is the President’s intention to propose a prescription drug feature to the Medicare program.

People can’t afford to pay for their prescription drugs and the government currently can’t afford to pay either, but somehow, people are supposed to pay for the cost of long-term care insurance. If people can’t afford to pay for their prescription drugs, how are they going to pay for long-term care insurance?

Another problem with long-term care insurance is that many people are uninsurable because of age or physical/mental health. What about these people?

A real solution to the problem would be for the government to back a health insurance program that pays for long-term care – similar to private long-term care insurance. The program could be part of the Medicare program and funded through taxes in the form of payroll deductions.

Yes, the “t” word. Death to any politician. And that, my friends, is the real problem of paying for long-term care. But it is a problem that some session of the federal government will have to address – someday.