October 2009 Archives

It was a good day for supporters of the CLASS Act, the national long-term care insurance program that has been on the edges of the health reform debate. A version of the measure was included in the House Democratic reform bill introduced today by Speaker Nancy Pelosi. The decison all but assures the long-term care proposal will be included in the final House bill.

However, CLASS is running into new roadblocks in the Senate, where a consensus bill is still being written by Democratic leaders and President Obama. Key Democrats, including Kent Conrad of North Dakota and Ben Nelson of Nebraska, have turned sharply critical of the plan, especially because Congress would count premium revenues as a way to help pay for broader health reform. At the same time, big private long-term care insurance companies are stepping up their efforts to derail CLASS. One strategy: Delay passage by calling for a government study of long-term care financing needs.

The CLASS Act would make government long-care insurance available to all workers over 18. No one could be excluded because of pre-existing conditions. All workers would be automatically enrolled, although they'd have the option to opt-out.

Those with disabilities would receive an average minimum cash benefit of $50-a-day for life once they showed an inability to care for themselves. The premium for this coverage is uncertain. In earlier versions, the proposal set a target of an average premium of $65-a-month. Recent estimates by the Congressional Budget Office assume premiums would average around $120-a-month.    

However, the House version gives broad authority to the Secretary of Health and Human Services to design policies, including flexibility to set both premiums and benefits. For the poor, Medicaid would continue to provide assistance beyond the CLASS benefit. Others could purchase private insurance to supplement the government policies.

In recent weeks, nearly all advocacy groups for seniors and the disabled have lined up behind the measure. They see it as a major step towards giving those who need long-term care, either at home or in nursing homes, important financial resources. But the insurance lobby is hardening its opposition, fearing CLASS coverage would further damage an alrready-weak private market.  

Lots of buzz about the Oct. 20 Chapter 11 bankruptcy and sale of Erickson Retirement Communities, one of the nation's premier developers of Continuing Care Retirement Communites. CCRCs are campus-like settings that promise lifetime care for seniors, from independent living to assisted living to nursing home care.

These facilities operate on several different business models but Erickson, like many others, requires a hefty, refundable, entrance fee (often hundreds of thousands of dollars). Residents also pay an additional monthly fee depending on their level of need. For instance, an independent living apartment may run $2,000 per month, while a nursing facility stay may cost $300 per day.

In the Erickson model, the entrance fees are fully refundable but only after a resident leaves their apartment and it has been reoccupied. Residents never own their units, but are instead buying lifetime access to the comunity's services. The fees serve as, in effect, an interest-free loan to the operator. Erickson Communities has 23,000 residents in 19 states. 

CCRCs have been under tremendous pressure in the current economic downturn. Their business model relies on new residents selling their homes and using the proceeds to the pay their entrance fees. With the collapse of the real estate market, fewer upper middle-class seniors have been able to sell. At the same time, highly-leveraged CCRC operators are being squeezed by impatient lenders. According to Erickson's bankruptcy filing, available here, the firm was driven into Chapter 11 by its bankers.

The consequences to residents are unclear. Erickson says their entrance fees are safe, but what happens if a current occupant dies or moves and a new resident is allowed to move in with a lower entry fee? Jay Hancock at The Baltimore Sun takes a good look at this issue. So does the Wall Street Journal's Anton Troianovski.

These problems highlight the complexity of resident agreements with CCRCs, arrangements many seniors simply do not understand. I am also concerned with the quality of care and services residents will receive as operators of these facilities face growing financial pressures. This is especially important for those living in the assisted and nursing facilities in the communities. 

The Erickson bankruptcy is likely to accelerate questions that lawmakers have been asking  about CCRCs. The U.S. Senate Aging committee has been investigating the business model for the past several months, and is likely to hold hearings on CCRCs sometime next year. 

Elder abuse is one of those issues we prefer to not talk about. And, in truth, there is much we don't know about it. For instance, even the most basic data on how often abuse happens are notoriously unreliable. Yet, we know it occurs. And far too often.

Financial scams, sometimes orchestrated by trusted advisers and friends; physical abuse by caregivers; physical abuse of caregivers (I can't tell you how many stories I've heard about people being assaulted by the person they are caring for); and often-brutal psychological abuse. It all happens, and it is time we get it on the table. 

There is now a new national campaign to do something about elder abuse. The National Council on Aging and others have begun the Elder Justice Now! campaign to raise awareness and push for federal legislation to combat the problem. To learn more about the issue, and what this group would do about it, check out their website  http://elderjusticenow.org/  

I spent yesterday morning at a Kaiser Family Foundation panel discussion on the CLASS Act, the national long-term care insurance program being considered as part of health reform. The panelists, who included Senate Health Committee aide Connie Garner and a number of advocates for long-term care reform, were upbeat about the possibility that CLASS will be included in a final health bill. However, the idea still faces opposition from big private insurers.

Connie said the proposal continues to evolve, to satisfy both substantive and political concerns. However, its basic form remains unchanged: People would be able to participate as soon as they begin working, enrollment would be automatic, but they could choose to opt-out. Once they need care, they'd be eligible for an average minimum cash benefit of $50-a-day for life. The benefit would increase both with care needs and inflation.

It looks like the premium would now average about $120-a-month, twice what sponsors of the bill had first hoped. However, neither premiums nor benefits would be fixed in the legislation. Instead the Secretary of Health and Human Services would be given broad flexibility to design coverage.

While people would have to be actively working to be eligible for the insurance (a provision actuaries say is important to keep premiums relatively low), employers would not be required to offer a payroll deduction plan. This exemption could make enrollment complex and hold down participation.

We'll know within the next week or so whether CLASS will be included in the combined Senate bill. If it is, it will be a major step forward for the measure, which is already in the House version of health reform.     

When family caregivers are under a lot of stress, the chances increase that their loved ones will have to move to a nursing home. That's the conlusion of an important new study by my Urban Institute colleagues Brenda Spillman and Sharon Long.

That conclusion may seem obvious to caregivers, but Spillman and Long back it up with some hard data. They found that when family members suffer physical strain, lack of sleep, or financial pressures, their elders are far less likely to be able stay at home. Their research squares with what I saw over and over again with the families in my book Caring for Our Parents.

One family, Steve and Judy Dow of Burlington, Vermont were trying to care for Steve's mom, Judy's parents, and raise two high school kids while working full time--Steve as a contractor and Judy as a public school teacher. It finally became too much, especially with Steve's mother who suffered from severe dementia, and the couple made the decision to move her into an assisted living facility.

There are lots of other reasons why chronically ill seniors are no longer able to stay at home, including their own declining health. But Brenda and Sharon conclude that if severe caregiver stress could somehow be eliminated, nursing home admissions could be cut by more than 70,000. 

Finding ways to reduce these crushing levels of stress is not easy, but this research, which expands on the results of some earlier studies, shows why it is important to try.