March 2010 Archives

President Obama has signed health reform, including the CLASS Act, into law. Now, his administration needs to turn a law into an insurance product people will buy.

It won't be easy. No other country has tried to create a voluntary public long-term care insurance program, which is what CLASS is. The challenge will be to design a policy that provides a respectable benefit at an affordable premium. The fear is that only those who need the coverage will buy, driving up premium prices and driving out young and healthy buyers.

CLASS supporters had hoped to make some changes in the law Obama signed this week through the so-called "fixes" bill now being considered by the Senate. But in the end, they chose not to. Instead, the Department of Health and Human Services will try to make some adjustments through regulation and backers are likely to try to quietly slip in some legislative changes in a few months.

Here are some of the key issues administration officials would like to address:

The work requirement: The law makes insurance available to part-time workers. Actuaries fear this would allow many already-disabled people to enroll in CLASS, driving up premiums. As a result, this work standard may be toughened up.

Gaming: Analysts fear some people will game the system by dropping in and out of the program. To prevent this, the administration may limit people's ability to enroll, drop coverage, and re-enroll. 

Marketing: Administration officials believe CLASS will require a major marketing campaign to succeed. They are looking for the money to do this.

Premiums: The new law sets a fixed premium based on your age at enrollment, and that premium generally doesn't increase. But in an effort to encourage more young people to enroll, some suggest setting a very low initial premium that would rise slowly each year.

One senior HHS official says that, for now, four elements of CLASS seem etched in stone. On one hand, policies must provide cash benefits and coverage must be guaranteed to the broadest possible population. On the other, political realities demand the program be voluntary and based on a system of premium support, rather than mandatory and funded by taxes. Within those constraints, the administration will be challenged to build a functioning insurance program.            

The health reform bill passed by Congress last night includes big changes in the way we pay for long-term care, both at home and in nursing facilities. The reforms will give the elderly and disabled far more flexibility in the way they get care and, at the same time, begin turning long-term care from largely a welfare program to an insurance system.

The biggest change is the Community Living Assistance Services and Supports (CLASS) Act. It would, for the first time, make voluntary long-term care insurance available to all Americans, give those unable to care for themselves a lifetime cash benefit they could use to help make their lives--and the lives of their caregivers--a bit easier.

But CLASS is not the only major change. The new law will also make it easier for the poor to receive home care benefits under Medicaid. It would ease paperwork requirements for states that want to offer such assistance and provide more federal money to help pay for Medicaid home and community care.

The bill also takes modest steps aimed at coordinating care for those very poor and frail who are eligible for both Medicare and Medicaid--a population that often faces multiple, and complicated, chronic diseases. Finally, the new law will provide additional federal money to train health professionals and health aides in geriatric care.

It remains to be seen how all of this will work. There are major questions about the CLASS Act: What kind of  benefit package can it offer for a premium price consumers will be willing to pay? Will young and healthy people enroll in the voluntary program, or will the insurance end up covering only those with the greatest need--a recipe for unsustainably high premiums? How will private insurance respond? Will carriers create policies to wrap around government insurance, much like Medicare Supplement (Medigap) works today? Or will they try to cherry pick the least risky customers, leaving the government with the tab for the costliest buyers?

Similarly, the Medicaid home care reforms fall far short of the ideal. Medicaid would still only be required to provide nursing home care. Home care would remain optional for the states. And the House "fixes" bill would delay additional federal funding for these benefits from next fall until October, 2011. This could be critical since many states are currently slashing their home care benefits in the face of severe budget pressures.     

The new law takes only modest steps and is flawed in some important ways. But it is making the biggest changes in long-term care since the creation of Medicaid more than a half century ago. And for those of us caring for our parents, most are long overdue.         

It is tough enough to age in America if you are white and middle-class. You struggle with the loss of physical vigor, social connections, and independence. You face difficult financial challenges and profound changes in your relationships with family.   

Now, imagine aging if you are out of the cultural mainstream of the U.S. Imagine if you came to America as an adult 40 years ago. Your children may be fully adjusted to life in the U.S, but you are not. Or imagine if you came here in old age to be with your now-Americanized adult children. You must face aging in a place where food, culture, and language are entirely unfamiliar. Most of all, you are living in a society where your expectations are turned upside down.

In your home country, children may have been fully expected to care for aging parents. After all, that is how you cared for your parents. But those obligations may no longer exist for your children.  

The other day, I had the opportunity to meet with a group of young journalists who are all writing about aging in these communities: Vietnamese, Syrian, Pakistani, Indian, Mexican, and even Native American. I was struck by how similar their stories are. Close-knit families torn apart by the American culture. Aging parents unable to comprehend children who have no time to care for them. Adult children who can't understand--or meet--their parents' expectations. Medical and long-term care systems that are utterly unfamiliar. 

Limited resources add to the stress. There are some programs geared to these communities scattered around the country. But they are few and often woefully underfunded. There is a wonderful Korean senior center in the Virginia suburbs of Washington, D.C. Despite the obvious benefits to the Korean community, the center struggles to remain open and today operates only two days a week.

Just as these elders face extra problems, so do their family caregivers. The National Alliance for Caregiving has taken a close look at the striking diffferences among white, African-American, Asian-American, and Hispanic caregivers. It is worth checking out.  

As we think about redesigning long-term care in the U.S., we cannot forget about these populations.    

A typical couple would have to save nearly $200,000 to pay for their out-of-pocket medical costs from the time they are 65 until they die, according to an important new study by the Center for Retirement Research at Boston College. Add in nursing home costs, and they are likely to need $260,000.

But that's only part of the story. About 5 percent of 65-year-old couples will face catastrophic medical and long-term care costs exceeding $570,000, according to researchers Anthony Webb and Natalia Zhivan.They estimate those expenses would have exhausted the total financial assets of 85 percent of all retirees even at the peak of the stock market in 2007.

These conclusions are similar to prior studies by others, including Paul Fronstin at the Employee Benefit Research Institute. But they are nonetheless hair-raising. It is especially important to keep in mind that these costs are for people who already have Medicare. Indeed, those expenses include premiums for Medicare Part B and Part D (the drug benefit), Medicare Supplement (Medigap) insurance, retiree health insurance. and copayments for services not fluly covered by Medicare.  

Lots to chew over here, especially as we think about health reform, the CLASS Act, and the need for private long-term care insurance.    

Mike Vitez at the Philadelphia Inquirer has done a great story on palliative care at a community hospital. Mike weaves the deeply touching story of Mary Tole, a 74-year-old woman who spent two months in the suburban Philadelphia hospital with an undiagnosed illness. She spent much of that time in an intensive care bed in a coma. 

Mike describes how the hospital's palliative care team and Mary's family struggled with how much treatment she should get, or whether she should be allowed to die as comfortably as possible. He also talks about the cost of her care--$775,000--Medicare's role, and Mary's out-of-pocket expense: $900.

This piece is an excellent antidote to all the foolishness and misinformation in the debate over "death panels" last summer. There is no more difficult or complex subject than end-of-life care. And Mary and her family still struggle to confront what happened to her, and what they will do when she again faces such a medical crisis.

As individuals, as family caregivers, and as a society, we need to address this issue head-on, and recognize there are no simple answers. Mike's story helps us do that. 

Congress made a horrible mistake when it allowed itself to be bludgeoned into dropping a provision of health reform that would have allowed Medicare to pay doctors to discuss end-of-life issues with patients.Mary's story is an example of the price we all pay for not having that conversation.