Long-Term Care Coverage Headed for Change in California

California’s long-term care system — some would call it a “non-system” — is poised for change. How that change comes about and what the new system might look like will depend in large part on a race between two potential “game changers:” a new long-term insurance program in the national health care reform law and a huge demographic bubble of baby boomers hurtling toward old age.

A portion of the health reform legislation — the Community Living Assistance Services and Supports Act — creates a national, voluntary insurance program to pay participants a cash benefit if they develop functional limitations or disabilities — scenarios that become more likely for all of us, the longer we live.  The intent of the CLASS Act is to increase the options when people are faced with the need for ongoing care.

The HHS secretary still has to develop the exact details of the program.

Potentially as early as 2013, all working adults will have premiums deducted from their paychecks for long-term care insurance unless they opt out. The program could have major implications for states with large senior populations, including California.

Advocates say the new insurance program could, for the first time, establish framework for long-term care.

However, individuals must pay into the system for five years to become vested, so it could take a decade or more to determine the impact of the new plan.

“We have no system for long-term care now,” said Bonnie Burns, policy and training consultant with California Health Advocates, specialists in senior health care issues, including Medicare and long-term care.

“Every person who needs long-term care designs their own plan,” Burns said. “It’s a very, very fragmented area of care. If somebody knows what to look for or where to go to find out what to look for, it can work. There are services out there and there sometimes are ways to pay for them. But it’s not clear or easy and it’s never the same way twice,” Burns added.

A Growing Concern

Although long-term care was not a hot-button issue in the national reform debate, it clearly is a growing concern in California. A survey released last month showed two-thirds of Californians ages 40 and older worry about the costs of long-term care for themselves or a family member. According to a new poll from the SCAN Foundation and the UCLA Center for Health Policy Research, most Californians — regardless of income level or party preferences — say they feel unprepared to pay for services if they or one of their loved ones could no longer care for themselves independently and needed long-term care. 

If we live long enough, most of us will need some kind of ongoing help. At least 70% of U.S. residents ages 65 and older will need long-term care services at some point and more than 40% will need nursing home care for at least a short period of time, according to HHS.

Peggy Goldstein, vice president and COO of the California Association of Health Facilities, said the new insurance plan could help cover the costs, but success depends on participation.

“It stands to reason that a program to provide for long-term care will be helpful,” Goldstein said in a written response to California Healthline questions. “Since the program is voluntary, it is only helpful if an individual or family chooses to participate and only insofar as the fund is sustainable, i.e. enough individuals participating so the premiums will remain low and the money received is enough to pay out the benefit,” Goldstein wrote.

Costs Rising Unevenly

Whether the new national plan attracts enough participants, costs for long-term care continue to rise. But they’re rising unevenly.

A study released last week shows the costs for long-term care at home have risen at a slower rate over the past five years than the costs for care in a nursing home or assisted living facility.

The cost to receive care at home has risen at an annual rate of 1.7% over the past five years, a fraction of the increases at institutions, according to the annual Cost of Care Survey by Genworth Financial. Costs rose 6.7% a year at assisted living facilities, and 4.5% a year for a private room in a nursing home, over the same period, Genworth researchers found.

The national median annual rate for a private room in a nursing home in 2010 is $75,190, up from $60,225 in 2005, according to Genworth.

In California, the median rate for a private nursing home room is $87,345 a year, according to Genworth. In contrast, the median price for a home health aide working 44 hours a week in the patient’s home in California is $46,904 a year, according to Genworth.

Rates charged by home care providers for “non-skilled” services have not risen significantly over the past five years, Genworth researchers found. The national hourly private pay median rate charged by a licensed home health agency for a home health aide is $19, up from $17.50 in 2005.

Long-Term Ombudsman Program Threatened

As California legislators contemplate a huge budget deficit, they’re also being asked to support the state’s long-term care ombudsman program. A bill working its way through the Assembly — AB 2555, by Mike Feuer (D-Los Angeles) — would help sustain funding for the state’s long-term care ombudsman services. Last year, California lawmakers cut $3.8 million from the program but later restored $1.6 million. The ombudsman program investigates and resolves complaints about the quality of care in nursing homes, residential care facilities and assisted living centers.

Burns from California Health Advocates supports the bill to bolster the ombudsman program.

“Any cuts in that program can only worsen the care situation for those services. I support anything that promotes a restoration of funding,” Burns said.

The California Association of Health Facilities supports the ombudsman program but does not agree with the funding plan.

“Facilities and the association, in general, have always sought cooperative relationships with the ombudsman program,” Goldstein said in the association’s statement. “Where a local ombudsman seeks to resolve problems and assist residents in a spirit of helpfulness, it is a constructive and positive program which we support. AB 2555 takes $1.6 million in funds from the Citation Penalty Account, which should remain available to the Department of Public Health for its use in critical programs for the protection of health or property of residents of long-term health care facilities,” Goldstein said.

“We are happy to work with the author to find a reasonable solution to help support the Ombudsman Program,” Goldstein wrote.