Americans are living longer than they ever had in history. And the system of supports and services has not quite caught up with this dramatic change in life expectancy.
The other thing that has happened is that demographics have changed a lot. The baby boomers have fewer children than previous generations. So there are fewer people to care for them.
People are also more and more interested and more and more insistent on getting care at home. It can be less expensive than to be in a nursing facility or an assisted living facility, but it is also not a very efficient way to deliver services.
On the payer side, we have several longstanding problems that are only getting worse. One of them is that Americans are notoriously poor savers, so we don’t have the financial resources to pay for this care in our old age. The second is that the major government payer for this is Medicaid. Medicaid is under enormous financial pressure.
Then there is private long-term care insurance. It has been a product that few people have wanted to buy, and fewer and fewer insurance companies want to sell.
A group of us got together about three years ago to form what we called the long-term care financing collaborative. We recruited people from across the ideological spectrum — people who represented consumer groups, providers, the insurance industry.
The centerpiece of this proposal, and probably the most controversial piece was a universal public catastrophic insurance program.
About one in six or one in seven people could need a high-level of supports and services for five years or more. The care could cost a quarter million dollars or more. You can’t expect Americans to save that amount. We also concluded a voluntary program just wouldn’t work. You could not get the premiums low enough that healthy people would be willing to participate.
If there is no private market solution, if people can’t be expected to save, and if a voluntary program isn’t going to work, it had to be some sort of universal program.
That could be funded in many different ways. The Urban Institute modeled a payroll tax. You could also do it with an income tax increase. You could do it with premiums.
We also recognized that there was going to be a large segment of the population that simply was never going to be able to afford to do this on their own, and they were going to have to use the safety net. Medicaid is the safety net that’s out there. We needed to have a lot more flexibility in those programs, particularly flexibility in terms of shifting the balance from institutional care to home and community-based care. Every individual ought to get care in the setting that is most appropriate for them. The states should have the flexibility they need to provide that care.
Nothing is going anywhere anytime soon. 2016 is a washed year in terms of policy, but in 2017 there is going to be a new president and there is going to be a new Congress. There is a lot of talk about entitlement reform. What do you do with Medicaid; what do you do with Medicare? The argument we are making is that in that context, you ought to think about long term supports and services.
The baby boom generation is running out of time. Baby boomers have all hit their 60s and in another 15-20 years, when they hit their 80s, their need for care is going to be enormous.
The money has got to come from some place and we just thought an insurance system is the best way to do it. If we are going to do it in time for the baby boomers, we better get started. In fact, we should have gotten started years ago.