Today, there are about 38 million Americans over the age of 65. In just twenty years, thanks to the rapidly aging baby boomer generation, that number will double.
That’s why long-term services and support must be a fundamental part of healthcare reform. The structure of our current system makes caring for seniors and disabled adults fragmented, difficult and expensive. So it affects not only individuals and their families, but government programs, the medical profession, and the economy as a whole.
Consider the typical situation of an 83-year-old woman — let’s call her Louise — who breaks her hip. She receives a hip replacement in hospital, recovers in a skilled nursing facility, gets therapy at home and then hires aide to drive her to the grocery store, help her get dressed, and assist with other daily activities.
Louise would view this scenario as one event; not several.
But our health care payment system doesn’t see it the same way. Louise’s hospital stay and rehabilitation would be covered by health insurance, but not the help she needs at home. For this, she would have to drain her savings and ask her children to help before public assistance would step in.
Many Americans assume that Medicare pays for long-term services and support. It doesn’t. Long-term services and support are covered by state-run Medicaid — and only for those who exhausted all other resources. Medicaid is skewed toward institutional care, but most Americans would surely prefer to remain at home throughout this period.
They deserve that opportunity.
Meanwhile, Medicaid programs are already busting state budgets. On average, state governments spend 18 percent of their budgets on Medicaid. About half of that money goes toward long-term services and support.
Consequently, it is mostly patients and their families who are paying for expensive care. A skilled nursing facility room can cost tens of thousands of dollars each year. The national average for an assisted living facility is $32,000 annually. Most certified home healthcare providers are paid more than $30 per hour. This explains why, according to a recent survey, the average long-term caregiver spends more than $5,531 per year on food, transportation, and medicine for a loved one.
The stock market crisis has made things even worse. And while insurance for long-term services and support is available on the private market, only one in five Americans can afford it.
Reform is desperately needed.
Most important is a long-term financing strategy. Toward that end, lawmakers should develop a broad-based national insurance trust –funded by premiums, not tax dollars — with an all-inclusive risk pool.
With such a system, baby boomers could prefund the long-term services and support they’re likely to need. An independent, federally-charted organization could manage premiums, investments, and benefit payments. And benefits should be tied to simple and transparent level-of-need determination.
Our current system makes it unaffordable to care. The time to fix the system is now.
Larry Minnix is the President and CEO of the American Association of Homes and Services for the Aging.