Recently in long term care reform Category

The national long-term care insurance program called the CLASS Act will be included in the Senate Democratic leadership health reform bill that is expected to be released within the next day. The decision by Democratic leader Harry Reid to add CLASS to the bill is a huge victory for backers of the measure, which is already in the House-passed bill. However, many steps remain before the idea becomes law.

CLASS would provide a government-sponsored basic cash benefit to those needing long-term care services at home, in assisted living, or in a nursing facility. All workers would be automaticaly enrolled, although they'd have the right to opt-out of coverage. The design of the policies, including premiums and benefits, would be left to the Secretary of Health & Human Services.

The proposal is strongly opposed by many private long-term care insurance companies.   

In a Nov. 13 report, Chief Medicare actuary Rick Foster estimates that the CLASS Act--the proposed national long-term care insurance program--faces "a significant risk of failure" because few would buy the coverage, and those who do would likely have high long-term care expenses. This phenomenon, called adverse selection, would drive up the cost of premiums and further discourage healthy people from buying coverage.

The study will be very influential on Capitol Hill. Yet independent analysts say it is far too pessimistic. As one long-term care health economist told me this morning, "Actuaries lack imagination." For more on the pros and cons of CLASS, check out my Kaiser Health News column from this morning   

Foster projects only about 2.8 million people would purchase the voluntary insurance--about 2 percent of potential participants. One reason: He estimates the average premium would be a steep $180 per month. Because so few would buy insurance, Foster estimates that CLASS would do little to reduce Medicaid long-term care costs.

In addition, he projects that 10-year net revenues for the program would be only about $39 billion--a little more than half of an earlier Congressional Budget Office estimate. Most of that, he concluded, would be during the first five years when CLASS would be collecting premiums but not yet paying benefits (the program would require people to pay premiums for five years before becoming eligible for benefits). After 2025, he says, the program would lose money.

Foster's estimate of the number of people who would participate in CLASS is lower than CBO's and even lower than the insurance industry. Both projected about 5 percent would buy.

Privately, however, some long-term care experts think the participation rate could be as high as 20 percent, but only if average premiums could be held below $100 per month.

The Medicare study identifies the key challenge to the CLASS advocates. Many economists and actuaries believe a national long-term care program works best when everyone is required to participate. The premium for such a mandated program would be very low--perhaps averaging as little as $45 per month, according to several experts. Most industrialized countries--including Germany, Japan, and France--have already adopted such a system and consumers are very happy with it. Unfortunately, it is hard to imagine that Congress would enact such mandatory insurance as part of health reform.

I agree with those who think the actuaries are being overly-pessimistic and I believe participation in a well-designed program will be much higher than they project. But Foster, CBO, and the industry all identify real problems with a voluntary system. Thus, CLASS backers face a tough choice: pass a second-best program that runs the risk of failure, or come back again in a couple of years with a better plan. Welcome to health care politics, 2009-style.             

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.  

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.     

The other day, long-term care insurance gadfly Stephen Moses called me "an advocate of more government financing and an enemy of private LTC financing alternatives." I assume he said this because I believe that reforms such as the CLASS Act, which would create a national long-term care insurance system, would be a far better way to pay for this assistance than the costly and inefficient mess we currently have.

Today, far too many Americans pay for care out of their own pockets until they run through their financial assets, then they go on to Medicaid, a welfare-like government program. Medicaid pays for their care in nursing homes, where they don't want to be, or, if they are lucky, provides some limited home care benefits. Almost no one buys Steve's preferred alternative, private long-term care insurance, because they can't afford it, don't understand it, and don't want to think about it. 

While Moses runs what he calls The Center for Long-Term Care Reform, he is an outspoken opponent of nearly all actual proposals for long-term care financing reform (George Orwell, phone home). His blog is bankrolled by the insurance industry, and his favored solution is to push more people to buy private LTC coverage by limiting their eligibility for Medicaid. Dude, the Democrats won the election.

He and I agree that Medicaid is a poor solution for those who need long-term care. For many, the benefit is both parsimonious and inappropriate, and care is poorly coordinated for those chronically-ill "dual eligibles" who receive both Medicare and Medicaid benefits. In addition, Medicaid is breaking the back of state budgets and putting enormous fiscal pressure on Washington.

That's why I like the idea of a national insurance program. Properly designed, it would give people more choice in the care they receive, ease the cost pressures on Medicaid, and substitute the personal responsibility of broad-based insurance for the welfare-like Medicaid system. So how does this make me "an advocate of more government financing?"

The CLASS Act can, and should, be designed to be self-financing. People would pay market premiums and get, in return, a benefit. No taxpayer dollars involved. If consumers chose, they could buy additional private long-term care insurance to supplement the CLASS benefit, much as they buy Medicare Supplement (Medigap) coverage today. And to the degree they'd be covered by a national insurance plan, some people could avoid Medicaid. That means less government financing of long-term care, not more.

I'd go a step further and make the insurance mandatory, but as long as it is self-financed through premiums there would be no new government costs.  

Steve's rhetoric echoes the absurd claims of a "government takeover" of insurance that we hear from some conservatives in the broader health debate. This argument is even more ridiculous in the context of long-term care reform. Private insurance pays only 7 percent of long-term care costs. Medicaid pays nearly half. It has already "taken over" paying for most of this assistance. In the real world, if your goal is to get Medicaid out of the long-term care business, a broad-based, financially stable, self-funded national long-term care insurance program isn't a bad place to start.

Oh, by the way Steve, despite your deepest wishes, I don't think the CLASS Act is dead. Far from it. The proposal faces an uphill battle this year--no surprise there--but it remains very much alive.

In a bit of surprising news, Senate Finance Committee Chair Max Baucus (D-Mont) added some key long-term care amendments to his health reform bill. The provisions, first proposed by senators John Kerry (D-Mass), Maria Cantwell (D-WA), and Chuck Schumer (D-N.Y.) would all make home and community based care more accessible under Medicaid.

Currently, Medicaid is only required to provide long-term care in nursing homes. States provide limited home care services, but in most, the benefits are very limited. The amendments would make more frail seniors and younger people with disabilities eligible for home care, and provide financial incentives for states to expand these benefits.

Baucus also added a separate proposal that would allow hospice patients to receive full Medicare benefits. This three-year demonstration project would make it possible for hospice patients to get both hospice benefits and treatment for their terminal illness. 

Baucus added the changes as the Finance Committee began drafting its version of health reform.  

I am disappointed, but not surprised, that Congress' latest health reform effort does almost nothing to repair our tattered long-term care system.  

The massive health reform bill proposed today by Senate Finance Committee Chairman Max Baucus (D-Mont) touches nearly every part of the health system: Medicare, Medicaid, private insurance, hospitals, doctors, you name it. Except for one critical element. The proposal all but ignores the needs of the 10 million Americans who require long-term care, both at home and in nursing facilities, and the 40 million family members and friends who care for them.

In fact, the measure could end up hurting some of the poorest and most frail who rely on Medicaid for the long-term care services. I'll tell you why in just a minute.

The proposal does include some new incentives for people to buy private long-term care insurance through their workplace. For the first time, it would allow employers to include this coverage in what are known as cafeteria plans. The benefit for workers is they'd be able to pay their premiums with pre-tax dollars. That's a big advantage, especially for the highest earners.

However, the proposal also would cap the amount of a worker's annual pre-tax Flexible Savings Account contributions at $2,000. That means they would have only that amount to pay for health care deductibles, copayments, and other uncovered medical expenses. And it would leave them with very little to pay for long-term care premiums.

Baucus' proposal does not include the national long-term care insurance program known as the CLASS Act, although that idea is included in another bill that was approved over the summer by the Senate Health Committee. It includes only some modest provisions to better coordinate care for those with multiple chronic diseases, and it does nothing for hard-pressed direct care workers such as home health aides.

Finally, the Baucus plan does nothing to encourage states to provide Medicaid long-term care at home rather than in nursing facilities. And here is where it may make it even more difficult for those at home to get help from Medicaid. The Baucus plan would greatly expand the number of young mothers and children eligible for Medicaid. But states must pay half of those costs, and they would be only partially reimbursed by the feds. That means their Medicaid budgets, already stressed to the breaking point, will be squeezed even more. And where will they cut to make up their new costs? Home care expenses for the elderly and disabled--a costly benefit states are not required to provide--could well be a prime target.

Health reform will go through many more steps over the next few months. And long-term care reforms remain on the table. But by ignoring this critical issue today, Baucus certainly didn't help those efforts.           

I moderated two interesting panels today at a long-term care conference sponsored by Genworth, the big insurance company. The first panel included author and family caregiving expert Virginia Morris, National Family Caregivers Association president Suzanne Mintz, and Ancil Alexander, a home health aide who visits clients in the South Bronx. Virginia talked about the desperate need caregivers have for information, Suzanne discussed the needs paid and family caregivers share, and Ancil gave a powerful description of just how hard it is to care for clients with multiple chronic diseases, including dementia. Some of the stories Ancil told reminded me of what the families I met in Caring for Our Parents went through.

The second panel was made up of congressional staffers, all of whom work for lawmakers who have sponsored long-term care legislation that Congress is considering as part of broader health reform. The aides included Connie Garner of the Senate Health Committee, who worked for the late Ted Kennedy for many years on a plan for national long-term care insurance (the CLASS Act); Alison Bonebrake, whose boss, Senator John Kerry (D-MA), is sponsoring a bill to make it easier for Medicaid beneficiaries to receive home care; Anne Montgomery, senior policy adviser to the Senate Aging Committee; and others. 

As readers of this blog now, long-term care is very much on the bubble in the debate over health reform. With changes in the overall health system so controversial, many lawmakers have been reluctant to confront long-term care as well. Financing issues such as the CLASS Act; Medicaid reforms such as Kerry's; and measures to encourage doctors, nurses, aides, and others to take jobs caring for the frail elderly are all in the mix. Each addresses a critical problem for the 10 million Americans who need long-term care and the 40 million family members and friends who help them. But all must overcome a wall of indifference if they are to become law.

In that environment, I asked each of the Hill staffers whether it is better to address long-term care this year as part of health reform, or to wait for another year or two and consider these issues separately. Every one of the six staffers on the panel said the same thing: Do it now. Don't wait. Get as much long-term care reform as possible today.

It sounded like a pretty good message to me.

I got back last night from two days in St. Paul, Minn, where I worked with a few dozen deeply commited people who are looking for concrete solutions to the challenges of long-term care.

The program was sponsored by the Citizen's League, and it brought together nursing home executives, retired physicans, lobbyists, state officials, advocates for the elderly and the disabled, care professionals, and ordinary citizens. We spent the first day identifying critical long-term care problems, and the second developing solutions.

Among them: improving educational materials for those needing care and their families, creating healthy menus for those with disabilities, and a medical contact card that would include, among other things, advance directive information. The most far-reaching of the ideas: expanding safety net alternatives to traditional nursing homes.

This was the second in a series of three August workshops the League is running. Next week, it will look at long-term care financing issues. Soon, all these ideas will be refined by the Citizen's League staff, published on their website and, perhaps, soon come to fruition.

Before I headed back to Washington, I joined Kathryn Roberts, CEO of Ecumen, a big provider of nursing home, assisted living, and home care services, for an interview on Minnesota Public Radio. To listen, click here

This two-day workshop gave me the chance to meet some wonderful people and to learn a lot about long-term care in Minnesota. It was also the perfect antidote to the often nasty and rarely productive health care "town meetings" we've all be subjected to over the past few weeks. These are by no means easy issues, but with the right setting and a willingness to listen rather shout, it is remarkable how much we can accomplish.

It would be wonderful if other communities copied what the Citizen's League is trying to do.     

I'm off to St. Paul to particpate in a two-day workshop on long-term care sponsored by the Minnnesota Citizens League, a non-profit dedicated to finding common ground on important policy issues among business, government, community organizations, and individuals. The progam, entitled Creating Incentives for Personal Responsibility in Long-Term Care, has exactly the right goal: Finding community solutions to the challenges of caring for the frail elderly and those with disabilities. 

At a time when we are either ignoring these issues or have relegated them to screaming matches over fictitious "death panels," it will be a real pleasure to talk with others who are interested in long-term care services and supports. I'll tell you more about it after I get back.