Finding a sustainable path for long-term care

The federal Commission on Long-Term Care recently released its final report and recommendations for improving long-term care services and supports.  The Commission advanced a robust package of recommendations designed to bring LTSS care integration, technology and innovative workforce strategies together to improve care and to reduce the overall cost of achieving better health and well-being outcomes for individuals and families.

As the Commission emphasized, the report is the start, not the end, of the LTSS discussion.  The Commission’s Call to Action: the ‘need is great’ and the ‘time to act is now.’
 
The challenges of long-term care affect millions of American families physically, emotionally and financially.  America is facing dramatic demographic change.  The number of affected families will continue to rise sharply in the coming years as boomers age. By 2050, one-fifth of the total population will be 65 years or older (up from 12 percent in 2000), and the supply of family caregivers is not expected to keep pace with future demand.
 
The costs and worries that burden families across America are staggering. A single room at an assisted-living facility averages $47,000 annually. At a nursing home, costs average about $80,000 a year. It is estimated that roughly two-thirds of those 65 years or older will require assistance at some point, yet Americans are simply not financially prepared – or preparing — for that eventuality.
 
Should Americans not increase their retirement savings rates or acquire long term care insurance, there is a potential risk that more and more middle income Americans will end up spending their limited savings, becoming impoverished and relying on Medicaid, with disastrous human cost and back-breaking fiscal effects.
 
Nationally, long-term care services for the elderly and individuals with disabilities already cost about $210.9 billion in 2011, or 9.3 percent of all personal health care spending. About two-thirds of that total was paid for by Medicaid.  Even that figure pales in comparison to the $450 billion in unpaid or informal care, in the form of time, forgone wages, and other expenses provided by family caregivers in 2009 alone.
 
The costs are daunting and unsustainable. The Commission has broadly agreed that the path forward must involve a combination of public and private support mechanisms, but was unable to settle on a recommendation on a single package of public and private financing components. Any further delay in addressing the financing question is a matter of deep concern, and a failure to act will only increase the financial risk to American families and public budgets.
 
There is a strong argument for a balanced plan that does two things. First, we must incentivize private savings and private long-term care insurance plans. Second, we must provide public insurance programs for very low income populations, in the form of a strengthened, more uniform Medicaid program and social insurance for those experiencing a catastrophic event.  Such a strategy would provide a safety net for those with limited resources and financial security for individuals who endure lengthy and costly periods of cognitive or functional disability. Conceptually, such a mixed public-private program could enable many Americans to contribute a very modest amount to mitigate the catastrophic costs of the relatively few people who experience very lengthy LTSS needs. Advancing this approach will require development of a model benefit structure and financing mechanism.  Our goal should be the design of a program that limits the costs to American taxpayers, avoids putting further stress on an already stressed Medicaid program, and provides protection to those who need our assistance.  
 
The current system is fragmented, costly and inefficient. But we have an opportunity to address these problems practically and reasonably and to build a system that relieves the current and growing heavy economic burden on our nation and our families.  Diverse voices from the government, foundations, associations and the private sector working cooperatively will help fortify a positive, sustainable plan for tackling these challenges.
 
We can’t squander this opportunity to build a better system for our parents and for ourselves.

Vradenburg, an attorney and chairman of USAgainstAlzheimer’s, was a member of the federal Commission on Long-Term Care.