[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
EXAMINING THE FINANCING AND DELIVERY OF LONG-TERM CARE IN THE U.S.
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
MARCH 1, 2016
__________
Serial No. 114-122
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
20-210 WASHINGTON : 2017
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
Washington, DC 20402-0001
COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Ohio JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
Subcommittee on Health
JOSEPH R. PITTS, Pennsylvania
Chairman
BRETT GUTHRIE, Kentucky GENE GREEN, Texas
Vice Chairman Ranking Member
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois LOIS CAPPS, California
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas G.K. BUTTERFIELD, North Carolina
MARSHA BLACKBURN, Tennessee KATHY CASTOR, Florida
CATHY McMORRIS RODGERS, Washington JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILLY LONG, Missouri JOSEPH P. KENNEDY, III,
RENEE L. ELLMERS, North Carolina Massachusetts
LARRY BUCSHON, Indiana TONY CARDENAS, California
SUSAN W. BROOKS, Indiana FRANK PALLONE, Jr., New Jersey (ex
CHRIS COLLINS, New York officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
C O N T E N T S
----------
Page
Hon. Joseph R. Pitts, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 2
Hon. Doris O. Matsui, a Representative in Congress from the State
of California, opening statement............................... 3
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 5
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 6
Witnesses
Alice Rivlin, PHD, Co-Chair, Long-Term Care Initiative,
Bipartisan Policy Center, Senior Fellow, Economics Studies
Program, The Brookings Institution............................. 8
Prepared statement........................................... 10
William J. Scanlon, PHD, Consultant, West Health Institute and
National Health Policy Forum................................... 13
Prepared statement........................................... 16
Anne Tumlinson, CEO, Anne Tumlinson Innovations LLC and Founder
of Daughterhood.org............................................ 28
Prepared statement........................................... 30
Submitted Material
Statement of Hon. Debbie Dingell, a Representative in Congress
from the State of Michigan, submitted by Ms. Matsui............ 62
Statement of the Christopher & Dana Reeve Foundation, submitted
by Ms. Matsui.................................................. 63
Statement of the National Academy of Elder Law Attorneys,
submitted by Mr. Pitts......................................... 65
Statement of the American Health Care Association and the
National Center for Assisted Living, submitted by Mr. Pitts.... 67
Statement of America's Health Insurance Plans, submitted by Mr.
Pitts.......................................................... 71
EXAMINING THE FINANCING AND DELIVERY OF LONG-TERM CARE IN THE U.S.
----------
TUESDAY, MARCH 1, 2016
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:15 a.m., in
room 2322 Rayburn House Office Building, Hon. Joe Pitts
(chairman of the subcommittee) presiding.
Members present: Representatives Pitts, Barton, Guthrie,
Shimkus, Murphy, Burgess, Lance, Bilirakis, Long, Ellmers,
Bucshon, Brooks, Collins, Schakowsky, Butterfield, Castor,
Sarbanes, Matsui, Schrader, Ca AE1rdenas, and Pallone (ex
officio).
Staff present: Rebecca Card, Assistant Press Secretary;
Graham Pittman, Legislative Clerk, Health; Michelle Rosenberg,
GAO Detailee, Health; Chris Sarley, Policy Coordinator,
Environment and Economy; Jennifer Sherman, Press Secretary;
Heidi Stirrup, Policy Coordinator, Health; Josh Trent, Deputy
Chief Counsel, Health; Christine Brennan, Minority Press
Secretary; Jeff Carroll, Minority Staff Director; Tiffany
Guarascio, Minority Deputy Staff Director and Chief Health
Advisor; Rachel Pryor, Minority Health Policy Advisor; Samantha
Satchell, Minority Policy Analyst; Matt Schumacher, Minority
Press Assistant; and Andrew Souvall, Minority Director of
Communications, Outreach and Member Services.
OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Pitts. The subcommittee will come to order. The chair
will recognize himself for an opening statement.
Today the Health Subcommittee will examine the financing
and delivery of long-term care in the U.S. Long-term care
largely differs from health coverage or medical care. I know
every member of this committee wants to ensure that frail,
elderly seniors, or disabled individuals across the country
receive high quality care.
We want to see each person treated with the dignity and
respect that they deserve, and we want a long-term care system
that empowers each person and respects individual preferences.
Unfortunately, as we will hear from our witnesses today, many
experts warn that we are facing a coming crisis in the
provision of long-term care. Most notably, we face a
demographic headwind with 10,000 baby boomers turning 65 every
day.
Additionally, as life expectancy increases so too does the
need to provide care for aging individuals, yet our private
market is not as robust as needed. Our public payers are
strained and many individual Americans face high out-of-pocket
costs for providing a long-term care for themselves or a loved
one. Unfortunately, too few Americans are currently prepared to
pay for even a modest amount of long-term care whether through
insurance or savings.
As we engage in today's hearing, I think it is important to
remember our long-term care crisis affects all Americans. If
the long-term care challenge is left unaddressed it will impact
the elderly who require services, the middle-aged who are often
responsible for caring for their aging parents, and the
children who could be left responsible footing the bill for
public programs.
As we embark on examining how we can confront the long-term
care challenge, it is important we learn from failed ideas of
the past. For example, in 2010, the ACA created a new federal
entitlement program called the CLASS Act. The statute required
that the CLASS Act be solvent over a 75-year period, and the
program failed to meet tests for actuarial solvency. CLASS Act
was found to be fiscally unsound; was ultimately repealed in
subsequent legislation.
This committee knows all too well what financially unsound
programs look like. Medicaid and Medicare are both facing
growing financial strains as costs soar and demand increases.
Medicaid is consuming increasing portions of state budgets,
Medicare's long-term unfunded obligations are estimated over
$35 trillion in today's dollars. So it is understandable that
many members of this committee are wary of proposals that
resemble a new entitlement, but caution against new
entitlements does not equal close-mindedness to new approaches.
There are many ideas about ways to improve the outlook for
financing and delivering of long-term care in the country. For
example, just in February, three bipartisan proposals have been
offered. So today's hearing provides members an opportunity to
learn more about the state of long-term care in our country and
to examine the types of policy choices facing Congress if it
wants to reform the current system to provide high quality care
without bankrupting future generations.
Clearly, we need to find better ways to encourage private
market solutions. We need to understand what the research tells
us about what is working in the private and public sectors. We
need to know barriers to efficient high quality care exist in
our public programs, and we need to better understand how to
encourage individuals and their families to plan for the
future.
I appreciate our witnesses being here. We look forward to
your testimony. Is anyone seeking time on our side? If not, I
yield back, and at this point recognize Ms. Matsui of
California filling in for Ranking Member Green as ranking
member.
[The prepared statement of Mr. Pitts follows:]
Prepared statement of Hon. Joseph R. Pitts
The Subcommittee will come to order.
The Chairman will recognize himself for an opening
statement.
Today, the Health Subcommittee will examine the financing
and delivery of longterm care (LTC) in the U.S. While long-term
care largely differs from health coverage or medical care, I
know every member of this Committee wants to ensure that frail
elderly seniors or disabled individuals across the country
receive highquality care.
We want to see each person treated with the dignity and
respect that they deserve. And we want a long-term care system
that empowers each person and respects individual preferences.
Unfortunately, as we will hear from our witnesses today,
many experts warn that we are facing a coming crisis in the
provision of long-term care. Most notably, we face a
demographic headwind, with 10,000 Baby Boomers turning 65 each
day. Additionally, as life-expectancy increases, so too does
the need to provide care for aging individuals.
Yet, our private market is not as robust as needed, our
public payers are strained, and many individual Americans face
high out-of-pocket costs for providing longterm care for
themselves or a loved one. Unfortunately, too few Americans are
currently prepared to pay for even a modest amount of long-term
care--whether through insurance or savings.
As we engage in today's hearing, I think it's important to
remember our long-term care crisis affects all Americans. If
the long-term care challenge is left unaddressed, it will
impact the elderly who require services....the middle aged who
are often responsible for caring for their aging parents...and
the children who could be left responsible footing the bill for
public programs.
As we embark on examining how we can confront the long-term
care challenge, it's important we learn from failed ideas of
the past. For example, in 2010, the ACA created a new federal
entitlement program called the CLASS Act. The statute required
that the CLASS Act be solvent over a 75-year period, and the
program failed to meet tests of actuarial solvency. The CLASS
Act was found to be fiscally unsound and was ultimately
repealed in subsequent legislation.
This committee knows all too well what financially unsound
programs look like. Medicaid and Medicare are both facing
growing financial strains, as costs soar and demand increases.
Medicaid is consuming increasing portions of state budgets, and
Medicare's long-term unfunded obligations are estimated over
$35 trillion in today's dollars.
So it is understandable that many members of this Committee
are wary of proposals that resemble a new entitlement. But
caution against new entitlements does not equal closemindedness
to new approaches.
There are many ideas about ways to improve the outlook for
financing and delivering long-term care in the country. For
example, just in February, three bipartisan proposals have been
offered.
So, today's hearing provides Members an opportunity to
learn more about the state of long-term care in our country--
and to examine the types of policy choices facing Congress if
it wants to reform the current system to provide high quality
care without bankrupting future generations.
Clearly, we need to find better ways to encourage private
market solutions. We need to understand what the research tells
us about what's working in the private and public sectors. We
need to know barriers to efficient, high-quality care exist in
our public programs. And we need to better understand how to
encourage individuals and their families to plan for the
future.
I appreciate our witnesses being here and we look forward
to your testimony.
I yield the remainder of my time to ----------------------
------------------.
OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Matsui. Thank you, Mr. Chairman. And thank you very
much for having this important hearing on a critical issue that
affects millions of Americans--the financing and delivery of
long-term care. And I want to thank our witnesses for being
here today.
Long-term services and supports are medical and personal
care assistance services for people who have difficulty
completing daily living activities over a prolonged period of
time, from feeding or bathing to meal preparation or management
of medications. Approximately 12 million Americans of all ages
require long-term care for medical needs associated with
developmental disabilities, traumatic injuries, behavioral
health or chronic conditions. Elderly individuals in particular
are at increased risk requiring long-term care.
So who is providing and paying for this care in our
country? Unfortunately, we don't have a robust system in place
that works for families. In fact, much of both the care and
financing often falls on the family. Unpaid caregiving service
as a front line across the country, 70 percent of working
adults provide unpaid care for family members or friends. This
is an estimated $470 billion annually in labor costs. This lost
productivity is estimated to the economy $34 billion a year.
Oftentimes, women are the ones who disproportionately bear
the burden of providing unpaid long-term care. Women often are
called on to care for their family members at a time when they
may not be able to reenter the workforce. Women also live
longer. They find themselves unable to save for retirement when
supporting family members. Our daughters, granddaughters, or
mothers should not have to carry the weight of this broken
system any longer.
Despite the growing need for long-term care due to our
aging population, there is no viable financing system in this
country to support it. It is a common misconception that
Medicare covers the long-term care in this country. However, it
only covers limited circumstances such as care immediately
following a hospital stay.
In fact, Medicaid is the single largest payer of long-term
care in the United States. However, most middle class families
do not qualify for Medicaid and must pay out of pocket to spend
down their assets before receiving benefits. And for Americans
with disabilities, successful employment can lead to a loss of
Medicaid coverage and thus create a disincentive to participate
in the workforce. We need to create a system that allows
recipients to receive services and support while remaining
employed.
Without Medicaid or private insurance, on average families
are spending about $140,000 on long-term care for their loved
ones. For working families who are trying to pay their
mortgage, send their children to college and take care of the
long-term medical needs of their loved ones these costs are
devastatingly high. The reality is clear. Long-term care
financing is in a crisis state in this country and is one of
the greatest threats to retirement security for seniors and the
adult family members who care for them. It is time for us to
act to protect our seniors, people with disabilities and those
who care for them.
Today we will hear about major bipartisan reports which
have independently agreed on three major actions Congress must
take. First, we must strengthen and simplify Medicaid long-term
care. Second, we need to build a more consumer-friendly long-
term care private insurance market. Finally, we must create a
program that will be there for those with catastrophic long-
term care costs. Together we must commit to finding a
sustainable means for financing and delivering quality long-
term care to our loved ones because our families deserve more.
Mr. Chairman, we received many statements for the record
for this hearing. I ask unanimous consent to submit statements
from our good friend and colleague Representative Debbie
Dingell who has certainly worked on these issues for a long
time, the Christopher and Dana Reeve Foundation, and the
National Academy of Elder Law Attorneys. And I ask that these
be submitted for the record.
Mr. Pitts. And I will add to those statements from the
American Health Care Association, the National Center for
Assisted Living, and America's Health Insurance Plans.
Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Ms. Matsui. Thank you, and I yield back.
Mr. Pitts. The chair thanks the gentlelady. Now in the
place of Chairman Upton, the chair recognizes Dr. Burgess 5
minutes for an opening statement.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. Thank you, Mr. Chairman. I appreciate the
recognition. I actually had not prepared or planned on
delivering an opening statement, but it does occur to me that
we have had similar hearings multiple times in the past. Ms.
Matsui just asked the question who is paying for long-term
care. Mr. Chairman, you wondered aloud if there was a private
sector solution, and indeed there are private sector solutions.
The private insurance market in long-term care was hurt by
the introduction of the CLASS Act and then the abandonment of
the CLASS Act. I think it was very disruptive in the market.
Look, long before I ran for Congress, my father was disabled
and my mother told me that I needed to get long-term care
insurance. She said if you don't buy it now before you are 50,
you won't be able to afford it when you really need it. And it
turns out that was good advice that she gave. Long-term private
long-term care policy is expensive. Premiums run between 1,500
and $2,500 a month. Yes, they are after-tax dollars.
But I can really think of no more loving gift that a parent
can give their child than to prepare for what may happen in the
future. For me, it just seems like responsible financial
planning and I do wonder why it is not more of the financial
planning that people do in their lives.
Look, 11 years ago, this committee, this subcommittee and
this full committee passed language in the Deficit Reduction
Act for what was known as the Partnership Program. This allowed
for the protection of some assets in an estate. If a person had
a private long-term care insurance policy, then the amount of
the spend-down was protected to the extent of the private
policy that they had. It was not as robust as perhaps providing
full deductibility of a long-term care insurance premium, but
it at least provided some incentive for people to consider a
private long-term care insurance policy.
Again the CLASS Act was very disruptive. It was disruptive
to the marketplace. We have seen our premiums go up over the
last 10 or 15 years. That is unfortunate. But I do think this
subcommittee and this committee should do what it can to get
people my age to understand that this is important for you to
do for your family.
Yes, there need to be safety net programs. No argument
there. There need to be valuable programs for people who don't
have other resources or other places to go. But I just remember
my mother who was the primary caregiver for my father who was
disabled by a stroke in 1989 and lived until 2005. You need to
be prepared for these sorts of things. They can happen to you.
So Mr. Chairman, I appreciate the time that you have given
me today. I will be happy to yield back and I am anxious to
hear the testimony of our witnesses and what has happened over
the last ten years in this space. I yield back.
Mr. Pitts. The chair thanks the gentleman, and now
recognizes the ranking member of the full committee, Mr.
Pallone, 5 minutes for an opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman, and thank you for
holding this hearing today to discuss long-term care, an issue
that is very important to me.
Today we face a long-term care crisis that is forcing
millions of Americans to drain all of their resources before
they get any support from the federal government. This crisis
is not only affecting those that need long-term care but also
their families, sons and daughters who have no other choice
than to spend hours every week caring for their parents.
This simply cannot continue and I hope that today's hearing
is the beginning of an ongoing conversation that leads to real
action to address this crisis. After all, the crisis is not
new. Congress has been discussing a solution for decades. I
worked with the late Senator Kennedy and Mr. Dingell on the
inclusion of a public benefit for long-term care in the
community setting as part of the Affordable Care Act. While
this provision known as the CLASS Act was not a perfect piece
of legislation, the ideas behind it were worth fighting for,
namely, the idea that there is a desperate need for a strong
federal program to help with long-term care costs.
This hearing is timely in that it falls just weeks after
three separate and independent reports authored by those across
the political spectrum have agreed on just that point. The
three reports have all independently agreed on three actions
Congress must take. The first is to strengthen and simplify
Medicaid long-term care; the second, to build a more consumer-
friendly long-term care private market; and third, to create a
strong federal program that will be there for those with
catastrophic long-term care costs when they need it.
And I could not agree more and that is why I plan to
introduce legislation some time this year to provide a federal
role in long-term care financing. Seventy percent of Medicare
seniors will someday need long-term care services and support
and they deserve a better option when faced with catastrophic
out-of-pocket costs rising into the hundreds of thousands of
dollars. Congress must do more to improve the quality and the
affordability of these services, and I believe that we can
achieve some of these goals by establishing a Part E option in
the Medicare program to provide for this care. Now this can be
done in many different ways, but whatever form this effort
takes we must act with a sense of urgency.
The current system forces people to sell off all their
assets in order to become eligible for Medicaid. While Medicaid
was put in place to help our most vulnerable, it is currently
funding 51 percent of long-term care expenditures, a full third
of the program's total spending. And because many people never
purchase one of the available albeit expensive plans on the
market, private insurers only pay for about eight percent of
care.
The fact that both public and private insurance plans
provide so little in terms of long-term care benefits means
that these costs are left to be shouldered by the elderly, the
disabled and their families. These direct out-of-pocket costs
account for $53 billion of long-term care spending and this is
too great a burden for many who do their best to manage without
care, who often depend on family caregivers to provide health
assistance free of charge.
An estimated 52 million unpaid caregivers make it possible
for their loved ones to stay out of nursing homes and
hospitals. As anyone who has ever cared for a loved one knows,
this is often an arduous task and often means missing work.
These costs to society add up and not fully tracked, but
conservative estimates have found that 17 percent of working
adults provide unpaid care for family members or friends
providing an estimated $470 billion annually in labor costs.
The federal government must be part of the solution and I
stand ready to work with anyone on any of these options to
start addressing this crisis because I think I simply can't, I
just don't think we can afford to wait any longer. I thank you,
Mr. Chairman. I yield back.
Mr. Pitts. The chair thanks the gentleman. As usual, all
members' written opening statements will be made a part of the
record.
That concludes the opening statements and now we will go to
our panel. And I would like to thank our panel for coming
today. I will introduce them in the order of their
presentation. First, Dr. Alice Rivlin, Ph.D., Co-chair, Long-
Term Initiative, Bipartisan Policy Center, Senior Fellow,
Economic Studies Program, The Brookings Institution. And then
Dr. William J. Scanlon, Ph.D., Consultant, West Health
Institute and National Health Policy Forum. And finally, Ms.
Anne Tumlinson, CEO, Anne Tumlinson Innovations, Founder of
Daughterhood.org.
Welcome. Your written testimony will be made a part of the
record. You will each be given 5 minutes to summarize. So at
this point, the chair recognizes Dr. Rivlin 5 minutes for your
summary.
STATEMENTS OF ALICE RIVLIN, PHD, CO-CHAIR, LONG-TERM CARE
INITIATIVE, BIPARTISAN POLICY CENTER, SENIOR FELLOW, ECONOMICS
STUDIES PROGRAM, THE BROOKINGS INSTITUTION; WILLIAM J. SCANLON,
PHD, CONSULTANT, WEST HEALTH INSTITUTE AND NATIONAL HEALTH
POLICY FORUM; AND, ANNE TUMLINSON, CEO, ANNE TUMLINSON
INNOVATIONS LLC AND FOUNDER OF DAUGHTERHOOD.ORG
STATEMENT OF ALICE RIVLIN
Ms. Rivlin. Thank you very much, Chairman Pitts. And glad
to see my old friend, Congresswoman Matsui, and especially to
have Mr. Pallone here because he has been such a champion for
long-term care for such a long time. I am happy to be back
before this subcommittee which is never afraid to take on
complex issues and to work in a bipartisan manner. The last
time I was here we were talking about the SGR, so you are not
afraid of the tough stuff.
I have worked on long-term care services and supports for a
long time and I have recently had the privilege of co-chairing
the Long-Term Care Initiative at the Bipartisan Policy Center
along with several distinguished former elected officials.
Nobody ever elected me to anything. But we produced just last
month a report entitled ``Initial Recommendations to Improve
Financing of Long-Term Care,'' which is appended to my
testimony and which is one of the three reports that have been
referred to already.
I don't need to remind this committee that the need is
increasing and that the burden on families, on seniors
themselves and on the public programs, especially Medicaid, is
increasing very, very rapidly and will certainly increase more
as the baby boomers age.
Many efforts have been made to find a comprehensive
solution to long-term care financing. The chairman and several
of you have referred to the CLASS Act. Recently, a growing
consensus has formed among a number of groups that steps,
incremental steps, could be taken to improve the availability
and affordability of long-term services and supports to
America's most vulnerable populations. And so we have addressed
ourselves to that problem.
One thing that is important and this committee knows very
well is that over the last few years the whole emphasis has
shifted from institutional care and nursing homes to ways of
keeping people in the community where they are happier and
where they often can be served cheaper.
So the group that I worked with addressed ourselves to the
question, is there a set of practical policies that could
command bipartisan support and improve care for older Americans
with disabilities, take significant pressure off families and
Medicaid and not break the bank? We came up with four
proposals. One is a major effort to make private long-term care
insurance more affordable and more available. Long-term care
should be an insurable risk and if more people bought long-term
care insurance during their working years there would be less
pressure on their savings, their family resources and Medicaid
when they became disabled.
Our report recommends developing a new type of private
insurance product, which we call retirement long-term care
insurance, which would cover long-term care for a limited
period after a substantial deductible or waiting period and
would have co-insurance. This is not Cadillac long-term care
insurance. This is bare bones but we believe it would help. It
would have inflation protection and a nonforfeiture benefit.
Employers would be encouraged to offer such policies as the
default option as part of a retirement package. These policies
if offered through employers and public-private insurance
exchanges could, we estimate, cut premiums in half. We also
suggest that penalty-free withdrawals be allowed from
retirement plans such as 401(k)s beginning at age 45 for the
purchase of such insurance.
We will also recommend designing a long-term care option, a
federal long-term care option, for those with catastrophic
costs. We would recommend streamlining the Medicaid home and
community-based care options to encourage more effective care
in lower cost settings. The Congress has already moved in this
direction, but the waiver process is unbelievably complicated
and we think it could be simplified.
And finally, we recommend ensuring that working people with
disabilities in need of long-term care services and support do
not lose their access to those services under Medicaid as their
earnings increase, a cheaper buy-in for just those services.
Thank you, Mr. Chairman and members of the committee, and we
will be happy to work with you over the longer run and to
answer any questions.
[The prepared statement of Ms. Rivlin follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The chair thanks the gentlelady and now
recognizes Dr. Scanlon five minutes for your summary.
STATEMENT OF WILLIAM SCANLON
Mr. Scanlon. Thank you very much, Mr. Chairman and members
of the subcommittee. I am very pleased to be here as you
discuss the issue of financing and delivery of long-term care
services. Long-term care services and financing have been an
area of concern during my entire career on health policy which
is now about a 40-year period. Much of what you are going to
hear from me also will be in agreement of what you heard from
Dr. Rivlin, because I think we have recognized the nature of
the problem for the long term and that the issue is finding the
right set of options in terms of trying sort of to address it.
The need to address it has become more acute as the aging of
the baby boomer generation sort of adds sort of to the numbers
of people needing long-term care so that it is a critical issue
today.
In my view, long-term care is quite distinct from other
health care services both in the nature and the provision of
those services and its financing. Unlike medical care, which
aims at treating or managing diseases or conditions, long-term
care as you have heard involves assistance that determines how
one lives one's life in the presence of a disability. It is the
assistance with activities to daily living like bathing,
dressing, eating, and toileting that we all would do ourselves
but those with disabilities cannot. Long-term care is not
provided solely by health professionals, as you have heard
family members are probably the principal suppliers of sort of
long-term care services. Long-term care is also quite distinct
in its financing. There is very little sort of insurance. The
predominant payer is state Medicaid programs which constitute
about two-thirds of all spending, with out-of-pocket spending
comprising another one-fifth of total spending.
Medicaid as the primary source of payment is problematic
for both individuals and the programs. Only individuals with
limited resources are eligible for Medicaid. Some people
outlive their savings and become Medicaid-eligible when a long-
term care need arises, others exhaust their savings paying for
long-term care needs that they have incurred.
What services a Medicaid beneficiary receives depends
greatly on where one resides. The options for home versus
nursing home care differ by state. Medicaid offered in-home
services supplement what families provide, do not replace them.
An individual's preferences or relief of the burden on family
caregivers may not be significant enough factors determining
what services are offered.
For Medicaid programs, long-term care is the largest share
of their spending and generally has been the fastest growing
part of the program. States have had some success in moderating
spending growth as there has been a substantial shift from
nursing homes to home and community care following the
enactment of the Medicaid waivers. States have also restricted
the number of nursing home beds through moratoria on new
construction of new beds and sort of a stricter certificate of
need. As a result, today we have one million fewer beds than we
would have expected given the size of the elderly population.
The challenge for the future magnified by the Baby Boom
generation involves reforming long-term care financing in ways
that improve the well being of people with disabilities and
their caregivers and that are affordable and sustainable.
Unlike medical care, a solution is unlikely to be found in
finding efficiencies that reduce spending. Medicaid programs
efforts and individuals paying out of pocket sensitivity to
costs have likely prevented considerable inefficiency already.
The need to find another way to finance long-term care is
not a new idea. Serious discussions about alternatives to the
current system began in the early '80s and with the primary
focuses on expanding private long-term insurance. This seemed
and is a reasonable approach as needing long-term care is an
insurable event, a risk not a certainty, and insuring for that
risk rather than saving for it makes more sense.
Despite multiple efforts, the private long-term care
insurance market remains limited. Only three percent of adults
and 11 percent of elderly currently have any coverage at all,
and recently the number of policies sold sort of annually has
declined. While the limited growth in long-term care insurance
has generally been seen as a demand problem, today there is a
need to consider the potential for a supply side problem as
well. In 2002, 102 companies were selling long-term care
insurance. The number declined to 20 by 2014 and additional
companies have since left the market.
Long-term care insurance has always been a difficult
product for insurers. There was and is uncertainty about the
likely benefit use with the presence of insurance. There is an
additional problem now though and that is the limited returns
on the investment of premiums that have been associated with
the low interest rates we have experienced over the last 8 to 9
years. The ability to invest premiums is key for insurers in
setting premium rates and having a sustainable product.
I would like to conclude with some considerations that
might be taken into account as you are examining sort of long-
term care financing options. Encouraging personal preparedness
should be a priority. While that might be perceived by some as
limiting public expenditures, I see it as essential to
providing individuals with more choice in how they live their
lives when they have a disability and how their families will
be impacted.
Insurance as I mentioned is preferable to savings as the
primary means of preparation, yet we now have concerns about
insurer participation. What actions can be taken to assure that
insurers will be interested and able to market long-term care
policies with reasonable benefits and premiums? The proposals
that you are going to hear today sort of offer some sharing of
risk which may be sort of key to the participation of insurers.
It may also be key to giving a clear message to individuals
that preparation sort of is an important personal
responsibility.
Finally, what the Baby Boom generation means for state
Medicaid programs deserves attention. States already differ
significantly in the shares of their population needing long-
term care and the cost of providing services. As the numbers
needing long-term care increases and as economic activity may
shift geographically, some states may be disproportionately
affected. What assistance they may need should be considered.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Scanlon follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The chair thanks the gentleman and now
recognizes Ms. Tumlinson 5 minutes for her summary.
STATEMENT OF ANNE TUMLINSON
Ms. Tumlinson. Thank you. Chairman Pitts and members of the
committee, thank you very much for the opportunity to testify
today. I really appreciate your focus on this issue.
The perspective that I am about to share comes from a
variety of experiences over the past 25 years. I work at the
Office of Management and Budget on the Medicaid program as a
researcher and a consultant to long-term care providers and
most recently serving as a facilitator between the economic
modeling work done at the Urban Institute and Milliman and
several of the very brave groups working on long-term care
financing reform. I also write a blog for family caregivers.
We have a very serious and significant financing gap
between the services and supports that people need and the
funds available to pay for them. I am going to make just three
points that I hope will frame today's discussion and shape the
work of this committee.
First, as we have heard already, having a need, a high need
for long-term care in old age is not an inevitable part of old
age. And what I mean by high level of long-term care need is
when you get to the point that you need help with two or more
activities, basic activities of daily living like bathing,
eating or dressing, or if you are living with a severe
cognitive impairment.
And what we are learning from the recent work done by the
Urban Institute and Milliman is that there is a huge variation
in whether and the degree to which individuals will actually
experience this high level of long-term care need in old age.
The researchers project that over the older adult population
there is roughly a 50 percent chance that if you live to age 65
that at some point over the rest of your old age you will
experience that high level of need for long-term care.
Now there is also a smaller, a 15 percent chance that a
person will live with that level of need for five or more
years. Just imagine living with two or more activities of daily
living limitations for five or more years. These situations are
incredibly expensive. If you are among the top 15 percent of
spenders, the Urban Institute projects that your care will cost
at least, at least $250,000 over your lifetime. The bottom line
is that the risk here is large and it is uncertain.
So the second point I want to make is the way we finance
these costs as we have all heard is inadequate to the need.
Individuals and families face huge financial risks. Generally
what the Urban Institute research is telling us is that on
average over half of lifetime costs are actually financed
through individuals' income and savings through out-of-pocket
spending. But when and if these resources run out, Medicaid
plays a very important role. It finances about a third of
lifetime costs on average and makes the biggest contribution
for people who need care for very long periods of time.
The reliance on individual resources and Medicaid has
created huge gaps in the system. We have already talked about
this, but we rely very heavily on unpaid family caregiving and
this is in part because this is often the only option that
families feel like they have.
But I want to talk about another gap that we see, which is
that we often simply just fail to meet needs. In a recent
survey, about a third of individuals with long-term care needs
reported serious consequences from going without needed
services. For example, individuals who have difficulty
preparing their own food or difficulty eating and can't get
help with that often go without eating, and this unmet need
gets addressed in the emergency room and the hospital which is
of course where Medicare pays.
So my third point is that the risk of needing long-term
care is one that is well suited for insurance, but shifting all
or even a part of our financing to insurance will be very
challenging, so I am the Debbie Downer here. So even when we
estimate a twofold increase, a twofold increase, in voluntary
participation in long-term care insurance we still don't see it
moving the needle that much on how much we spend on Medicaid
and how much out-of-pocket contributions are made. So I want to
be careful here and say that this doesn't mean it wouldn't be
helpful to increase insurance participation under a voluntary
approach. It would. It just wouldn't dramatically change the
role of Medicaid or out-of-pocket spending. To do that, we need
everyone to participate. But even when we assume that everyone
is covered it is still hard because that new coverage soaks up
so much of the unmet need that it increases overall spending
almost as much as it offsets other sources of payment.
So in grappling with these tough issues, where the groups I
have worked with have landed as you have heard is that some
sort of private market and public insurance partnership
solution is needed and that the appropriate role of public
insurance is to cover that catastrophic risk; that 5 years or 4
years or 3 years, but the part that is the most expensive for
individuals. But that is only going to work, that catastrophic
risk coverage will only work as long as we can stimulate the
private market and reform Medicaid to better cover the earlier
risk.
But everyone has more work to do. We have to develop
details. We still have to work on financing strategies. But we
have to move forward no matter how challenging it might be,
because our stopgap patchwork system has serious implications
for future economic productivity, public program spending and
for the functioning of the American family. Thank you.
[The prepared statement of Ms. Tumlinson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The chair thanks the gentlelady. That concludes
the opening statements. We will now go to questioning and I
will recognize myself 5 minutes for that purpose.
Dr. Rivlin, you have suggested Congress create a state plan
amendment for home and community-based services in Medicaid. If
home and community-based services are more cost effective and
offer preferred settings, why aren't states making full use of
existing authorities to provide such services under Medicaid?
Ms. Rivlin. I don't know the answer to that for all states.
Many states would like to and get caught in the complicated
waiver process, and we are simply saying let us make it easier.
Let us make it simpler for states to do this and hope that they
do and that therein can be encouraged broadly to get with it
and use the authorities that are there.
Mr. Pitts. And why does the Bipartisan Policy Center feel
the federal government needs to create incentives for states to
increase the adoption of home and community-based options?
Ms. Rivlin. Because it is not happening and we think that
some incentives might help.
Mr. Pitts. OK.
Ms. Rivlin. And the simplification is really very
important. The Congress has wanted to do this and has done it,
but as so often happens in policy as you know we end up with a
complexity that could be simplified.
Mr. Pitts. Ms. Tumlinson, I was particularly struck by the
sentence in your written statement, ``it is important to
remember that because the system is currently underfinanced,
any change that ensures a significant portion of the population
with need will result in more overall spending rather than
less.'' Would you explain more about what you are suggesting?
Is it that there is cost shifting currently going on, or we
just buckle up and spend more nationally, or are you suggesting
we need to approve large new expenditures now for promised
savings tomorrow?
Ms. Tumlinson. Oh, there we go. No. The way that our system
works right now, we have a lot of care that is being financed
so to speak without paying for it, so we are financing care
through unpaid family caregiving. We are financing care through
unmet need, so to speak, and we are financing care kind of back
door through the health care system.
So when we put an insurance program in place, what the
modelers estimate is that we have something called induced
demand. In other words that people do actually, who have been
essentially kind of holding back will actually come in and use
their insurance benefits as we would expect them to. And as a
result of that we will see, absolutely, we will see a
replacement of some Medicaid dollars. It does reduce Medicaid
dollars. It reduces out-of-pocket dollars.
But the insurance itself is, there is also kind of a place
in the spending where the insurance brings in new dollars so we
will have new dollars in the system. It is actually, it is good
news. It is just that I think that this idea that our system
somehow is, is we have out of control spending is a fallacy. We
actually have a very tight, very efficient long-term care
system right now.
Mr. Pitts. All right. Dr. Scanlon or Dr. Rivlin, do you
want to comment on that?
Mr. Scanlon. I would agree with Ms. Tumlinson. It is very
clear that there have been pressures to control costs that are
present for both Medicaid programs as well as individuals
buying out of pocket. And the reason that we will have an
expansion of spending if we were to get insurance is the fact
that at this point families are probably doing more than they
really can bear in terms of the burden of caregiving and if
given an option they will seek to provide some additional
outside resources. We don't want to supplant family caregiving,
but we want to make sure that we do not have it sort of create
too much of a cost or burden on those family members.
Mr. Pitts. Dr. Rivlin, do you have any thoughts on this?
Ms. Rivlin. No, I agree with that.
Mr. Pitts. Dr. Scanlon, in your written testimony you state
that Medicaid as a primary source of payment is problematic for
both individuals and the programs. Can you explain why you
believe it is problematic for Medicaid to be the primary payer
for long-term care?
Mr. Scanlon. I feel it is problematic for the Medicaid
program because of the sort of the enormity of its obligation
in terms of trying to deal with sort of long-term care as the
only financer. Secondly, there is the difficulty of defining
what services should be provided by Medicaid programs.
Historically, we have relied exclusively on nursing home
care and we recognize the shortcomings of that but as we move
to having more care in home, we also have to face the
difficulty of deciding how much care is appropriate to both
benefit the individual as well as protect the program. And the
reality there is we do not want to supplant sort of family
care, we want to support it in a very positive way.
Mr. Pitts. The chair thanks the gentleman. My time has
expired. The chair recognizes Ms. Matsui 5 minutes for
questions.
Ms. Matsui. Thank you, Mr. Chairman. Our long-term services
and support system are challenges that threaten our seniors'
retirement security, young people with disabilities, the
ability to both work and afford needed services, and our
nation's families who are attempting to either pay for their
loved ones' services or to provide the care themselves.
Unpaid caregiving particularly impacts women, as daughters
most likely step out of the workforce to take care of their
aging parents and mothers are most likely to take care of their
disabled children. This leaves women with less retirement
savings and Social Security accrual, and women need more as we
also live longer. As we know, approximately 12 million
Americans require long-term care and that number is expected to
grow as the baby boomer population ages.
Given that the need for long-term care is driven by
increased functional limitation whether it be from the aging
process or untoward circumstances in life, isn't it fair to
assume we need to approach this issue from a point of
universality so that all Americans have a safety net without
being required to become poor and significantly disabled in
order to access the services and supports that they need? And I
would like each of you to comment on that. Dr. Rivlin?
Ms. Rivlin. In an ideal world I think I would say yes, let
us cover this in a universal way. But right now the idea of and
creating a new entitlement program primarily for older people
seems to me both unlikely to happen and probably not desirable.
I worry that we are spending so much on older people for good
reasons that we are squeezing out investments in the young and
in education both at the federal level and at the state level
and for which reason I think it was important to take some of
the burden off Medicaid.
Ms. Matsui. Right. Mr. Scanlon?
Mr. Scanlon. Yes. I agree that in an ideal world we would
have a system where there is all needs that are going to be
met, but I think that we need to also look at long-term care as
something that is not just another health care service; that
long-term care is about how you live your life in the presence
of a disability. So it is not just the question of need, it is
the question of your preference and your satisfaction.
And while we can have insurance that is aimed at making,
and public programs aimed at making needs being met, there is
this question of what additional services one might want. That
is where I think personal preparation comes into play, where
individuals can be able to exercise their preferences and the
preferences of their family.
Ms. Matsui. Ms. Tumlinson?
Ms. Tumlinson. Yes, thank you. Well, I can't figure out how
to change the current system unless everybody is in it. We have
three different populations that need that universality--
children born with developmental disabilities, adults who
develop disabilities, or individuals who develop disabilities
as adults and older adults.
And I think that as somebody who has worked on the budget
side of Medicare and Medicaid for many years, I share Dr.
Rivlin's concern about spending on older adults. At the same
time, I think that we cannot back door finance this off of
women who are giving up huge amounts of work time and their own
financial resources in order to take care of their parents.
I certainly know from my work with caregivers that not only
do they spend a lot of time, they also spend a lot of their own
money. And that is not even in our model right now. We don't
model that.
Ms. Matsui. I want to address long-term care insurance. The
vast majority of employers as we know do not offer long-term
care insurance to their employees. The federal government does
offer long-term care insurance. However, over 80 percent in the
general workforce does not have access through employers. Some
have recommended requiring or incentivizing employers to offer
long-term care insurance as an opt-out basis. What roles do you
recommend employers play in education and enrollment in long-
term care insurance? Dr. Rivlin?
Ms. Rivlin. I think employers could play a major role,
especially if it were not so expensive and if they thought of
it as the selling point as protect your retirement resources,
your savings, by buying this relatively inexpensive long-term
care insurance which we are offering you, and not only that we
are enrolling you unless you opt out.
Mr. Scanlon. I agree that the employers would be a trusted
source of information, and I think education is the key to sort
of having consumers understand sort of the value of insurance.
Ms. Tumlinson. I agree with Dr. Scanlon and Dr. Rivlin.
Ms. Matsui. OK. Thank you, and I yield back.
Mr. Pitts. The chair thanks the gentlelady. I now recognize
the vice chair of the subcommittee, Mr. Guthrie, 5 minutes for
questions.
Mr. Guthrie. Thank you. Thank you for all being here for
this important issue that we need to figure out a way to
address. And I have a question for the panel, a couple
questions for the panel. Generally, the home represents the
individual's largest asset. Medicaid payments prevent certain
individuals with substantial home equity from receiving
coverage for long-term care. After adjustments for inflation,
states' current home equity limits range from $552,000 of home
equity to $828,000.
I have introduced H.R. 1361, legislation to encourage the
use of home equity to finance long-term care by eliminating the
option for states to increase the home equity allowance above
$500,000 adjusted for inflation. Are there other policies that
could be implemented to encourage--this is a question. Are
there are policies that could be implemented to encourage
individuals, especially elderly individuals, to tap the equity
interest in their home to help finance long-term care needs?
Ms. Tumlinson. OK. So first of all, thank you for that
question. We also know that individuals--one of the ways, the
main ways that individuals access assisted living is by selling
their homes and getting access to the home equity and then
spending that down. That is what we hear from assisted living
providers. So it is a really important set of assets that we
would like to be able to tap better. I think we have been
around and around about reverse mortgages, and I think that
that is definitely an area where we could definitely do some
more work in understanding how to make those financial
instruments that basically allow people access to that equity
without having to move out of their house.
Mr. Guthrie. OK. Thank you. OK, the second question then,
use of personal care in home health services in Medicaid has
been growing rapidly. For example, in 2011, Medicaid costs for
personal care services totaled 12.7 billion, a 35 percent
increase since 2005. At the same time, the Office of Inspector
General found that fraud in personal care services is on the
rise, representing more cases investigated by state Medicaid
fraud control units than any other type of Medicaid fraud.
Another bill I have introduced is H.R. 2446, which would
reduce the level of fraud and improper payments in personal
care services by requiring the adoption of electronic visit
verification systems for personal care and home health services
under Medicaid. We can protect some of the most vulnerable
Medicaid beneficiaries and ensure they receive the care they
need.
Given most people's preference to remain at their home and
growing demand for long-term care services, do you each think
it is important to use technology such as electronic visit
verification systems to ensure that the vulnerable
beneficiaries receive the services they need and for which
Medicaid is paying?
Mr. Scanlon. I definitely do. I think that in the statistic
that you have cited in terms of the growth of expenditures
there is actually a positive side of that which is those
expenditures have been growing because we have been reducing
reliance on nursing homes. I saw some data recently that in
2013, while the numbers of dollars spent by Medicaid programs
on home care increased significantly, the numbers of dollars
spent on nursing homes had actually declined, which is rather
surprising.
Monitoring the integrity of home care is one of the most
difficult things to contemplate if you are running a program
when you think about it, this care being delivered in homes
across one's jurisdiction. Using any technology that would aid
in that is a plus, but I also think we need to think for the
future in terms of this, if we are talking about service
delivery for long-term care, what other roles can technology
play?
To be quite honest, as the Baby Boom generation grows and
needs more long-term care, the idea of withdrawing people from
the labor force to provide that care has very serious
implications for our economy.
Mr. Guthrie. Yes. Thank you very much. And the third
question for Dr. Rivlin, I understand the recommendations the
Bipartisan Center released last month are just an initial
recommendations in that the Center continues to work on
additional recommendations regarding the financing of long-term
care. Can you share with us some of the additional areas that
will be the focus of the Center's continued efforts?
Ms. Rivlin. The primary one is to work out some details for
the catastrophic insurance. That we believe has to be a federal
program and universal, but it is complicated to work out and we
wanted to put some more effort into that. We also want to work
on how long-term supports and services could be integrated with
Medicare Advantage.
Mr. Guthrie. Thank you very much and I yield back the
balance of my time.
Mr. Pitts. The chair thanks the gentleman. I now recognize
the ranking member of the full committee, Mr. Pallone, 5
minutes for questions.
Mr. Pallone. Thank you, Mr. Chairman. I wanted to ask Ms.
Tumlinson, we will see how much time there is. Maybe the others
could respond as well. Two things about the spend-down
provision and just about affordability of long-term care. I
don't want to put words into Dr. Burgess' mouth because he is
not here right now, but I think he said between $1,500 and
$2,500 a month for long-term care insurance. Was that accurate?
Let us assume it is $2,000, which is halfway between, right.
Mr. Shimkus. For over 50.
Mr. Pallone. For over 50. So you think about that that is
what, $24,000 a year, right. Will we say nursing home care now
is about maybe $100,000, a little less than that? So I mean, it
doesn't even seem worth it, I mean in the sense that you could,
say you are 50, or of course even if you were younger and you
put away that $25,000 for 10 years or so that would be--I don't
know. That would pay for at least 2 years of nursing home care.
So it seems to me that--and then a lot of times those
policies don't even cover more than 6 months or a year of care.
So I think a lot of people just look at this and say it is not
worth it. In other words--and that is what I wanted you to
comment. I think a lot of people just look at it and say, look,
it is so expensive I could just as easily put the money in the
bank or in some kind of a mutual fund and have enough to cover
it.
The real issue really is catastrophic, if you had to be in
a nursing home for 5 years or so which I know is unusual but
not totally unheard of. So I just wanted you to comment on
that. I mean, I don't see, practically speaking it doesn't even
seem like the long-term care insurance is even worth it given
its cost and limitations. And is that why you talk, all of you
were talking primarily about catastrophic and what would that
catastrophic entail?
Ms. Tumlinson. All right. So I think it is the case that
today it is very hard to buy private long-term care insurance
for catastrophic risk. Most of the insurers are not interested
in lifetime policies, selling lifetime policies anymore, so
policies that would cover the care that you might need after a
certain period of time. And so that is one of the reasons why
we have all, all of these groups have been interested in a
public program to cover the catastrophic risk.
Mr. Pallone. And the catastrophic would be covering like
what, after a couple years?
Ms. Tumlinson. So, right. After, well, defining that is
part of the work that we have to, still left to do, but in the
modeling that we did we started it after 2 years. So you have 2
years of high need and that at year two that is when the
catastrophic piece of the insurance would kick in.
Mr. Pallone. Well, see that seems to me to make the most
sense if we are talking about a public program, extension of
Medicare or something else after that 2 years, because
otherwise from what I see on the market it is just not worth
it.
Well, let me ask you the second question. We haven't really
talked much about it, but to me the biggest scandal, if you
will, in this whole system is the spend-down provision. I don't
like to talk about values, but I mean, from a value, we say
that we are trying to instill certain values in what we do
here, and it seems to me that that is like the most valueless,
if that is the right word, thing that we ever created is the
spend-down provision. And all I hear from my constituents is
how do I get around it. What can I do to transfer my assets
before the deadline so that I don't have to spend my savings or
whatever, and then I can go on Medicaid.
I mean, I have to go be honest with you, practically
speaking is one thing, but just from a value point of view I
think it is outrageous because this is what people do. Yes,
would you comment on that? I mean, in your experience this
whole spend-down and people's efforts to get around it and what
does that do to the family and the fabric of things from a
moral point of view, I guess, is what I am asking.
Ms. Tumlinson. Sure. Well, so what I observe in what we are
seeing, I think, in the data, is actually that in part because
of Medicaid, because access to, even though access to home and
community-based services is much better than it used to be
through Medicaid, but because it is not guaranteed, in many
cases, still, the only way you can use Medicaid is if you are
in a nursing home.
And many, many, many families, most of the families that I
talk to or that I deal with would much prefer to spend their
own money in assisted living, senior housing, they would prefer
to provide unpaid caregiving. One of the home care providers in
California told me they had folks maxxing out their credit
cards to pay for home care themselves. So I don't really see
people really working to sort of get rid of their assets in
order to qualify for Medicaid because in many cases that just
simply means a nursing home for their family member and they
would prefer to avoid that.
Having said that there is a huge amount of diversity out
there, and absolutely, once you have made that decision that a
nursing home is where it is going to have to be there is, maybe
the incentives are in place to try to figure out how to make
that work in a way that is financially best for your family.
But generally speaking, I don't really see people gaming it
given how much out-of-pocket spending is happening.
Mr. Pallone. I appreciate what you are saying, but I hear
it so often and it just galls me to think that we have set up a
system where people are encouraged to basically get around it.
And I know we can talk about it another day, but it is one of
my biggest concerns. Thank you.
Mr. Pitts. The gentleman yields back. The chair recognizes
the gentleman from Illinois, Mr. Shimkus, 5 minutes for
questions.
Mr. Shimkus. Thank you, Mr. Chairman. Welcome. This is a
great hearing and something that we have been struggling with
forever since I have been on the subcommittee. And I really
appreciate Ranking Member Pallone's comments, because I do have
frustrations with that and elder law attorneys who try to find
these ways to protect assets when those assets should be used.
I mean, we can't take it with us when we die, right. So I think
maybe we will continue to talk about that because there has got
to be a way to incent and keep and encourage, and I think a lot
of different ideas are being thrown out here.
And I have always been, I have spent a lot of time talking
about the budget as a whole, Dr. Rivlin, and whatever 2014
numbers, the 3.4 trillion and really the 1.900 billion or the
1.1 trillion discretionary budget that we always seem to fight
about when the real challenge is our entitlements. People are
entitled to these services and then the mandatory money then
follows because you are entitled for these programs. So those
are the right words and I think are rightly used.
But in the Bipartisan Policy Center when we talked about
the failure of the CLASS Act, because you all talk about the
new programs, how would we fund something like a CLASS Act to
help people coverage? I mean, what would be a possible funding
mechanism? Or is that to be answered in--it is kind of a
follow-up from the other discussions.
Ms. Rivlin. The CLASS Act was very expensive and that was
one of the problems. If you are funding something less
expensive like catastrophic care, then I think you still have
the usual options. It could be a small payroll tax. It could be
some other kind of tax. And I don't know exactly what the cost
would be because we haven't done that work yet, but I think it
has to be funded, in my opinion, and the less pressure you put
on the federal budget, the easier it is to fund it obviously.
Mr. Shimkus. Because we are going to continue to fight
budget debt, deficits, and the like and we will have to make
sure that we have a funded program so it doesn't add to the
deficit because then we are just continuing in the spiral down.
Let me also go, we know the benefits of employing our disabled
community and keeping them, but long-term services and long-
term support and services help them stay in the workforce.
But there is that balance, right, of how you continue to
provide Medicaid support so that they can then be active
citizens and in employment without getting into the other--oh,
now, you are making money or you are not making money and we
are going to kick you off services or we are going to add you
to services. So do you have any comments on that?
Ms. Rivlin. Yes. We suggest a limited buy-in to Medicaid
just for the long-term supports and services not for the whole
Medicaid package because they may not need that. They may, if
they are employed have insurance.
Mr. Shimkus. Ms. Tumlinson, you are smiling, so do you want
to add?
Ms. Tumlinson. Well, I agree with the Dr. Rivlin side. The
BPC has got a really interesting solution that they have put
forward, but I go back to if we had, the other option of course
is to create an insurance system that if you, so that if you
sort of unexpectedly face a disability as a working age adult
that you have access to those long-term support and services
through that insurance program. That is what the CLASS Act was
designed to do, but it was a voluntary program.
Mr. Shimkus. Right. Thank you. And I want to finish up.
There has also been debate, we are talking Medicaid, but
recently we are also following the Puerto Rican debt crisis,
health care dilemma, et cetera, et cetera, et cetera. But there
is some confusion. I want to go to Dr. Scanlon. I don't think
all Americans understand that the Puerto Ricans do not pay
federal income tax as a protectorate, but the question is does
Puerto Rico even provide long-term care which is mandatory
Medicaid service?
Mr. Scanlon. My understanding of that and this is based on
some GAO work that was done in 2000 and sort of in '05, is that
Puerto Rico does not cover either nursing facilities, or at
that point it was identified as home health. The home health
portion sort of is not really long-term care. I think one of
the things in educating the public is to stop confusing them
about sort of what home health is. In terms of the nursing
facilities there is the question of whether they, outside of
Medicaid, support any other types of residential care.
Mr. Shimkus. Yes. So the only way--if Mr. Chairman, I will
just in my summary--it is a debate between block grants and per
capita grants and there is a confusion, then to lump what
states are doing with what is going on in Puerto Rico is not
appropriate. So with that I will yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from Florida, Ms. Castor, 5 minutes
for questions.
Ms. Castor. Thank you, Mr. Chairman, and thank you to the
panel for sharing your expertise with the committee.
It is very important as you know to families across America
and it is in our national interest to strengthen long-term care
across the spectrum from home and community-based care to
skilled nursing. And Dr. Rivlin, you suggested working on
practical bipartisan solutions and I wanted to recommend one to
my colleagues.
Congressman Gregg Harper, my Republican colleague, and I
are cosponsoring H.R. 3009. That is the RAISE Family Caregivers
Act. RAISE means Recognize, Assist, Include, Support and Engage
Family Caregivers Act. It would create a national caregiving
strategy based upon the input from advocates and experts and
families across the country. And the reason I really recommend
it to you is it passed the Senate. The Senate version has
passed, and we the House should take action. So I would ask my
colleagues to take a look at that and help us move forward on
some of these practical solutions.
And Ms. Tumlinson, thank you very much for bringing up the
fact that long-term care right now is often funded in a back
door way by women and families who take time off their job, who
cut into their salaries and overtime, and there must be a
solution for that. And all of the witnesses have mentioned this
as well. So thank you.
Another concern I have is that American families do not
fully understand the availability or more accurately the lack
of availability of financed long-term care services.
Specifically, many Americans mistakenly believe that Medicare
provides for long-term care services. Ms. Tumlinson, in your
testimony you described Medicaid's role in long-term services
and supports. Can you briefly talk about Medicaid's current
role, and if no Medicaid reforms are taken here in the near
future what do you believe is the outlook for financing long-
term care through Medicaid?
Ms. Tumlinson. So in other words what happens under status
quo.
Ms. Castor. Yes.
Ms. Tumlinson. We do nothing for Medicaid. So the modelers
did what we call a baseline estimate of Medicaid, so what
happens to Medicaid spending in the absence of current law, and
it certainly starts to decline fairly rapidly. Just the long-
term service and supports portion for older adults is the piece
that they did, and it starts to decline very rapidly hitting
500 billion fairly soon, and so we are going to see rapid
growth. But that is just kind of a modeler's view of the world,
not that there is anything wrong with that.
But asking of myself practically, what does that mean
because can states and the federal government actually really
absorb that? And I think that what I worry about is that when
you have all of these people coming through the system who are
entitled to these services and you can't change that
entitlement, your only other choice is to use all of the
leverage at your disposal to reduce spending on a per person
basis.
So that what we will start to see is this compression
around what is available through Medicaid, further putting
pressure on families and personal finances at exactly the same
time when we are going to see this rapid decrease in the
availability of family caregivers relative to the number of
older adults. So this is a perfect storm of unsustainability.
Ms. Castor. So could you expand on some of the most
promising Medicaid reforms going on at the state level? It
would seem that to your point a moratorium on skilled nursing
beds is a false reform. And that is what you are talking about
is the compression and the--if we don't have the ability to
make these reforms it is simply going to shift costs to
families.
Ms. Tumlinson. Right. That is a good example of ways in
which it is, states can reduce spending on a per person basis
for home and community-based services, they can increase
waiting lists, they can put moratoriums on beds, they can
reduce payments to nursing homes to the point where their
margins are negative for Medicaid.
But in the states that are very innovative, what we see,
for example, in Minnesota is a combination of efforts to use
sort of central information systems called aging and disability
resource centers to help people who are starting to have a need
for a long-term services supports and have potentially
financial eligibility to actually get tracked into the right
level of appropriate care for them so that they don't end up in
an institution unnecessarily, and so that, for example, if all
you really need is a wheelchair ramp then you get a wheelchair
ramp. You don't get 12 hours of personal care a week if that is
not what you need. So developing personalized care plans that
are specific to the individual needs of the people.
The thing about long-term care is that it is a universal.
Universally it is an issue that we all in our families and our
lives may face, but each situation is in fact fairly
personalized. And so what I like about what Minnesota is doing
is that it is allowing those individuals to get the right level
of care.
Ms. Castor. Thank you very much.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentleman from Texas, Dr. Burgess, 5 minutes for
questions.
Mr. Burgess. Thank you, Mr. Chairman. And first off, let me
apologize to Mr. Pallone if I misspoke, or if he misheard let
me correct him. The premium that I pay for a long-term care
insurance policy right now is $1,500 to $2,500 per month. Now I
am used to talking about the exorbitant premiums I pay in
healthcare.gov--did I say it is per month again? I meant per
year. The healthcare.gov premiums are per month.
And so I am used to the exorbitant premiums per month, but
that is for the ACA coverage. The long-term care coverage is
$1,500-$2,500 per year. Still a significant amount of money out
of a household budget, $100 or $200 a month amortized over the
course of a year, but an amount of money that perhaps is
achievable for middle-class families. And what worries me about
what we are doing or what we have done with the discussions we
have on long-term care insurance is we pretty much have taken
the middle class out of it. Sure, we are going to provide
benefits, we are going to provide the safety net for the most
vulnerable populations--the blind and disabled children--that
continues unabated. But what we are talking about are people my
age, people in the 55- to 75-year age group who are aging into
a situation where their families now may be called upon to
provide long-term care.
So wouldn't it be great if people would at least consider
whether or not that makes sense for them and their families?
And again I am not even talking about the tax consequences. I
am talking about the actual consequences for your family.
Again, I referenced the loving gift that a father, mother,
father can give their children, which is to provide for that
care and not be a burden to their offspring at a time when,
correctly, under the normal circumstances of living their
offspring are actually raising their offspring and life goes
on.
But back to practicalities. Now, Ms. Castor just talked
about bipartisan solutions, so Dr. Scanlon, let me just ask
you. Independence at home was something that was worked on in
this subcommittee and this committee. Actually, the
demonstration project was then, I believe, extended and that
was just signed into law during this Congress, so that is one
of the achievements in health care that can be correctly
attributed to this Congress. But can you perhaps fill us in a
little bit more on the Independence at Home program and ongoing
what it actually means for families?
Mr. Scanlon. Certainly. The Independence at Home program
also could be called the Home Based Primary Care program in
which sort of individuals are enrolled in primary care
practices that will deliver their medical care services in
their homes. It is aimed at individuals that have very serious
chronic conditions that make it very difficult to be receiving
their medical care in physicians' offices and other settings.
The idea behind it is that it will generate savings by
preventing these individuals from having their conditions be
exacerbated where they will have to visit emergency departments
or end up being hospitalized. As you mentioned, the
demonstration is underway. I think we are now in the third year
of that demonstration and the early results have been positive
in a number of the practices.
And so there is this question of how can we make this
potentially practical on a widespread basis, what are the types
of patients that are best served, what kind of practices should
be serving them?
Mr. Burgess. And would you suggest that the results are
positive? Not just positive from a family care-patient care
standpoint, also positive from a standpoint that it was self-
sustaining and in fact did result in a negative score by the
Congressional Budget Office; is that not correct?
Mr. Scanlon. In the first year results. We do not yet have
the second and third year results. But I would say again, in
terms of this hearing, this is about your medical care needs.
This is not about your long-term care or long-term service and
support needs.
Mr. Burgess. Well, let me just ask of the panel for anyone
who wants to answer. I referenced the Partnership Program that
we did, now, I guess, 10, 11, 12 years ago under the Deficit
Reduction Act of 2005. Those hearings that led up to that
inclusion in the Deficit Reduction Act, the inclusion of the
Partnership Program, there are lawyers who make a business of
impoverishing families so that they can then be Medicaid
eligible.
And the idea of the Partnership Program was there are a
certain number of assets that you can then protect as a family
and you don't have to do this to yourself. And one of the
unfortunate things about people who enter into long-term care
is most will not actually overspend or outlive, if you will,
the ability of premiums to cover their term in long-term care.
There are limits on the policies, but most people don't exhaust
those. Unfortunately, whatever the problem is that brought them
to long-term care is going to claim them before the amount is
exhausted.
But for families to have that option to fall back on, to
give an incentive for families to actually participate in this
program, do any of you have any thoughts on that?
Mr. Scanlon. Well, I think it is a positive to allow
families to have this option. And in my discussions sort of
with people in the insurance industry, they have said that it
has had a positive impact in terms of the number of people
buying policies with there is maybe a 15 to 20 percent increase
sort of in sales of policies.
The problem, overall, for what we are discussing today
though is we are talking about a 15 to 20 percent increase on
an incredibly small base. If you raise 5 percent by 15 or 20
percent, as you know we only are increasing it by one or two
percentage points.
Protecting your assets in order to pass them on to heirs is
potentially one very positive thing that families may value in
terms of partnership policies, but I also think that they
shouldn't overlook the fact that the policy is going to
increase your purchasing power. It is going to be able to allow
you to get more services that are potentially going to relieve
families of some of the excessive burdens that they may be
incurring. That is a second aspect of insurance that I think we
really have to focus on.
Mr. Burgess. OK. Thank you, Mr. Chairman, I will yield
back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Oregon, Dr. Schrader, 5 minutes
for questions.
Mr. Schrader. Thank you very much, Mr. Chairman. I
appreciate it. I appreciate the hearing. This is a good area of
bipartisanship. We can all agree that the rising cost of the
baby boomers coming into long-term care need situation is going
to be untenable and unacceptable.
My state has been a pioneer, I guess, in the community-
based services. We don't emphasize nursing homes at all. We are
primarily an assisted living, foster care, or in-home-based
long-term care state. We have great success. It is wildly
popular. People prefer to be in these settings than a nursing
home, at least in my area. It is also a lot cheaper for the
taxpayer and I think for the individuals that are at risk here.
So I urge the rest of my colleagues to look at the Oregon
program and maybe try and create some similar situations in
their own home state.
We have talked a lot about Medicaid. The ranking member and
others have talked about the spending down provisions that seem
relatively unconscionable. You can't get good care until you
are poor, until you spend yourself into poverty. And that is
certainly not a great pattern for success, I don't think. It is
something that the greatest nation on earth should not be
striving for as a way to provide long-term care services.
And Medicaid is expensive for the taxpayer. Now, as was
alluded to by several of my colleagues, it is one of the
fastest growing parts of our budget. The safety net programs
are the long-term debt deficit conundrums that we face. And I
think it has also been said here today that it is a little
untenable to have another program added into these otherwise
already slightly untenable programs at high cost to the
taxpayer.
So there has got to be some other alternatives out there.
Dr. Rivlin, you mentioned very briefly about before we get into
the higher cost Medicaid programs that maybe there is something
that could be done in the Medicare Advantage arena for seniors
seeking home and community-based services. Could you elaborate
on that please?
Ms. Rivlin. I mentioned that in the context of a question
of what else do we need to work on, and I think that is
certainly one. A Medicare Advantage plan, which is a
comprehensive approach to health care anyway or should be,
could, if we figure out how to do it, offer long-term supports
and services as part of a package and that would help with
integrating the health care with the LTSS.
Mr. Schrader. And I appreciate that. And to that end, there
is a bill that Congressman Lance, Congressman Meehan,
Congresswoman Linda Sanchez and I are putting forward, H.R.
4212. It is a bill based on Community-Based Independence for
Seniors Act, and basically it is a demonstration project
picking five MA plans across the country. It is budget neutral.
Please look at a way that these MA plans, which we have
great success with in the state of Oregon, most of our seniors
are frankly on MA plans not fee-for-service, and see if they
can't integrate with a cap so you can't spend too much, but a
cap on how much senior per month so that they can get this in-
home care in their home care setting or at least in their
community before they have to spend themselves down into the
much more expensive Medicaid programs, which are much more
expensive for the individual and their family as well as the
taxpayer.
So I would urge the committee to please look favorably upon
Mr. Lance and my proposal and see if we can't at least get
something going, one part of this problem with long-term care
our country faces. So I appreciate the opportunity and would
yield back my time then.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from New Jersey, Mr. Lance, 5 minutes
for questions.
Mr. Lance. Thank you very much. And Congressman Schrader
and I are working together and I hope the panel will look at
the proposal we have. And our cosponsors are Linda Sanchez and
Pat Meehan of Ways and Means, so we have Ways and Means and
Energy and Commerce working together for precisely the reasons
the distinguished congressman has suggested as a model moving
forward.
Does anyone on the distinguished panel know how many
Americans age 65 or older are currently in nursing homes?
Mr. Scanlon. It is probably about 1.75 million.
Mr. Lance. All right. And I know there are others who go to
nursing homes, younger people, for other reasons, but the
Medicare, Medicaid, the Medicare population 65 or older, about
1.75 million. How many in those nursing homes in that age
category are funded by Medicaid?
Mr. Scanlon. About 60 percent of them are funded by
Medicaid.
Mr. Lance. Sixty percent of those 65 years or older in
nursing homes funded by Medicaid, so not private payment at
all?
Mr. Scanlon. That is correct. But at the same time, one of
the features of the Medicaid program is that if you become a
nursing home resident that you pay your entire income less a
personal needs allowance for your care, which in the personal
needs allowance is around $50 a month.
Mr. Lance. Yes. Yes. And Medicaid is a program funded
partially by the federal government and partially by the
states. And in the state of New Jersey, for example, we fund it
mightily. Our contribution is significantly higher than many
other states. Is that accurate?
Mr. Scanlon. That is correct.
Mr. Lance. And this may be a more difficult figure. Of the
Medicaid population in nursing homes, 60 percent of almost two
million so it is roughly a million people, I suppose, what
percentage have had their assets spent down and have been
impoverished?
Mr. Scanlon. That is a number I can't give you. I do not
know it.
Mr. Lance. Yes. I come from a family law firm, and on
occasion people come into the law firm saying we want to
impoverish our parents. And I am vigorously opposed to that and
we don't do it, so they just go next door to somebody else who
helps them. Has there ever been a study as to this phenomenon
in the United States?
Mr. Scanlon. There has been some GAO work sort of on this
issue. It has been a number of years, I think, since it has
been looked at.
Mr. Lance. And I want to work with others in the Congress
on a program that helps senior citizens stay in their
residences. I think it will be cheaper, vastly cheaper over the
foreseeable future and that is why the congressman and I are
working on a bill that we hope that you will examine.
Is there any discussion in the academic community or the
fine work you do at Brookings as to this challenge regarding
impoverishing one's parents? Dr. Rivlin?
Ms. Rivlin. I think we are all aware that we are not doing
research on it.
Mr. Lance. Anyone else on the panel? Ms. Tumlinson?
Ms. Tumlinson. Yes. Well, I think a lot of people have
tried really hard to research this because it is has been this
persistent question for years and years, as long as I have
worked on long-term care for 25 years, and it is hard to get
any real conclusive evidence. And the reason is because there
is so much--well, it is challenging to analyze what is really
going on in people's financial lives, and there is some data
sets that we have used.
But Josh Wiener and I did some work and we were not able to
find evidence of a significant amount of asset transfer or
improper use of assets in order to gain eligibility for
Medicaid. And again, I would just emphasize that even though
that certainly does happen and it sounds like quite a bit in
New Jersey from what I am hearing from you----
Mr. Lance. I don't think in New Jersey to any differently
from any other state that I might respectfully place on the
record.
Ms. Tumlinson. Certainly. Sorry. But that there is in fact
quite a bit of----
Mr. Lance. New Jersey is a state, if I might reclaim my
time, that sends funds to Washington. We are either number one
or number two in the percentage we send as opposed to what we
get back. I am sure that this is a state where we send a lot of
money to Washington, Ms. Tumlinson.
Ms. Tumlinson. So we know that at least a third of all
spending on assisted living comes from adult children. So for
as many children who are seeking to impoverish their parents
there are probably just as many who are seeking to pay for
them.
Mr. Lance. I am sure that is the case. That doesn't mean
there isn't a problem with the former category. Thank you, Mr.
Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from Illinois, Ms. Schakowsky, 5
minutes for questions.
Ms. Schakowsky. Let me just say I would hope that those who
are interested in figuring out how many ordinary families are
trying to figure out how to be able to pay for long-term care
that we might look at how the wealthiest among us figure out
how to pay lower taxes than many of their secretaries. So I
would urge that.
I just came from, the National Institute on Retirement
Security is having their national conference. I spoke to them.
And they just issued a report today, ``Shortchanged in
Retirement: The Continuing Challenges to Women's Financial
Future.'' And among the things that I pointed out in my speech
was that the average yearly out-of-pocket costs for a patient
living with dementia is $61,522, and the average annual cost of
a semi-private nursing home is over $80,000 a year. And we are
talking about significant, ending up with significant out-of-
pocket costs.
But it is also as Bankrate tells us, two-thirds of
Americans don't have enough savings to handle a $500 emergency
car repair. A lot of people are not able to set money aside for
the kinds of contingencies that we are talking about, or
perhaps inevitabilities that we are talking about.
So I am really happy that we are having this conversation.
I think it is just the beginning of how we can work together to
truly improve or maybe even create a long-term care system in
the United States. We have to improve the quality of our long-
term care facilities. We need to increase access to community
and home-based services. We need to drastically expand our
caregiving workforce, and most importantly we need to have that
serious conversation, in my view, about universal social
insurance for long-term care.
I would like to just address quickly one of the most
persistent issues in long-term care and that is nursing home
quality. And I believe one of the best ways to find
efficiencies in our long-term care system and better protect
taxpayer dollars is to improve the quality of patient care
offered at long-term facilities and especially nursing homes
and skilled nursing facilities.
So currently, federal law only requires a nurse to be
present 8 hours a day at nursing homes and skilled nursing
facilities. I personally was shocked to find that out and I
think most Americans, especially putting their parents in
nursing homes, would be. This means that for 16 hours a day
patients can be left without a nurse on staff at all, and as a
result residents are experiencing avoidable injury, increased
illness acuity and premature death due to the lack of direct
care from an R.N. So I have legislation, H.R. 952, to put, it
is called Put a Nurse in the Nursing Home Act that would
require nursing homes and SNFs to have an R.N. on staff 24
hours a day.
But Mr. Scanlon, do you believe that efforts to improve the
quality of care offered at nursing homes and SNFs would improve
efficiencies in our long-term care system and help save federal
tax dollars?
Mr. Scanlon. Those types of efforts to improve quality in
nursing homes would certainly improve sort of our long-term
care system. And in fact we actually have experience with what
you are suggesting. If you go back into the 1980s, there was a
demonstration program called the Teaching Nursing Home where
the amount of nursing services in nursing homes was increased.
What resulted was both an increase in the quality of care and a
reduction in hospitalizations which are very expensive. Because
the reality is that nurses in nursing homes can deal with many
of the kinds of problems that lead today to hospitalizations
such as pneumonia and other infections.
Ms. Schakowsky. Thank you so much for telling me that
because I think that would be good evidence for this
legislation.
The other thing, where was it that I wanted to ask you. So
the National Association of Insurance Commissioners, again Mr.
Scanlon, you mentioned, previously worked to develop model laws
and regulations for long-term care insurance. Unfortunately,
the regulations surrounding long-term care insurance have not
been updated for over, well, a decade and a half. I previously
introduced legislation with Congressman Lloyd Doggett to
require HHS to ask the insurers to update their model laws and
regulations for long-term care insurance every 5 years and to
require their update to be incorporated into the model act and
regulations used by HHS.
Do you believe that Congress should work with NAIC to
update the standards and regulations pertaining to long-term
care insurance?
Mr. Scanlon. I think we need to assure ourselves that the
standards are up to date. I don't know what is on NAIC's agenda
at this point. In the past it would appear that sometimes that
they have updated the standards, the model laws and regs, in
response to some crisis that has appeared. That has actually,
might alleviate the problem for the future, but it has the
negative effect of the crisis erodes consumer confidence and
really undermines sort of the ability to convince people that
long-term care insurance may be a positive idea.
Ms. Schakowsky. Thank you. I want to thank all the
witnesses, but I want to say a special welcome to Dr. Rivlin.
It is so good to see you once again.
Ms. Rivlin. Very good to see you.
Ms. Schakowsky. Just wanted to comment, if I could, Mr.
Chairman.
Mr. Pitts. The chair thanks the gentlelady. I now recognize
the gentleman from Florida, Mr. Bilirakis, 5 minutes for
questions.
Mr. Bilirakis. Thank you so very much, Mr. Chairman. Thank
you also for holding this hearing, and I thank the panel for
their testimony.
This is a question for the entire panel. Back in the 1990s,
Congress experimented with a demonstration program called the
Cash and Counseling. This allowed Medicaid recipients with
disabilities to pay for long-term services. The government
provided funds to the beneficiary to establish a personal
budget for personal assistance services that would best meet
the personal needs and paid financial counseling services. This
participant-directed personal assistance service allowed
flexibility for caregivers and flexibility for beneficiaries to
pay for nontraditional services such as respite services and
hiring family members as the caregiver. Can you take lessons
from this program and other programs to build a better system
to promote greater flexibility within the long-term care
program, and can we promote more home and community-based care
so that seniors may tailor the program to best fit their needs?
Who would like to begin?
Ms. Tumlinson. I will just go first. Yes, I think that that
program, the Cash and Counseling programs have been game
changers in the way that we think about how we finance and pay
for long-term service and supports. In the sense that as I was
saying earlier the experience of having a long-term care need
is very personal and the individual and the family caregiver is
very integral to that. And so making the funds available based
on that person's need as opposed to what the services that they
buy is a way that we can actually incentivize, I think, a lot
of innovation in the marketplace and give people control over
their own personal care needs.
Mr. Bilirakis. Very good. Thank you.
Mr. Scanlon. I think this program illustrates an important
aspect of long-term care that long-term care is not like
medical care, where you are willing to accept a prescription
because you hope there is science behind that prescription
which says this is going to deal with your condition or your
disease. Long-term care is about how you live your life. And
having personal direction and sort of affecting sort of that is
a critical dimension of sort of the satisfaction you are going
to get sort of in terms of living your life.
The counseling part of this, I think, is very important
because it is not just a question of money. It is very
difficult to navigate the market for long-term care services
even if you have money. It is not the kind of very visible
market that we have for many other services. So being able to
assist people to be able to exercise their choices is a very
critical piece.
Mr. Bilirakis. Thank you.
Ms. Rivlin. I agree with all of that. Let me just pick up
on one thing you mentioned and that was respite care. And I
think that is in our list of things we would like to work more
on because it is very important.
Mr. Bilirakis. I agree. Thank you.
Dr. Scanlon and Ms. Tumlinson, the Deficit Reduction Act of
2005 provides states the option to create a Long-Term Care
Partnership Program which is a joint federal-state policy
initiative to promote the purchase of private long-term care
insurance. What can you tell me about the success of this
program both in terms of the extent to which it increased use
of private long-term care insurance and the extent to which it
reduced Medicaid costs? Are there changes that we could make to
improve the program? Yes, please.
Mr. Scanlon. At this point I think it is too early to look
for its impact on Medicaid costs, because the issue of the
long-term insurance is one buys a policy and then hopefully
over, say, a 20- or 30-year period, there is going to be a 20-
or 30-year period before one goes into benefit and starts to
receive the benefits under the policy.
My conversations, as I mentioned with the insurance
industry executives, have indicated that the Partnership
Program has a positive effect on the sale of insurance
policies. It is a modest effect of maybe 15 to 20 percent on a
base that is small, of maybe five or six percent.
One of the difficulties in the Partnership, for while it
has got positive aspects, actually adds to this problem. If you
talk to brokers or agents for long-term care insurance they
will tell you this is a complicated product to explain to
consumers; that is not fun to try and sit down and convince
somebody that they should buy a policy. The Partnership aspect
of this creates additional value to that product, but is also
another complexity to have to explain sort of how that is going
to work.
Ms. Tumlinson. Yes. I will just add very quickly that part
of the challenge is that brokers tell us is that they are both
selling against Medicaid and then also for Medicaid at the
same--so you want long-term care insurance to avoid Medicaid,
but then if it runs out you get Medicaid. So that is a hard
sell, but the concept of the partnership is a really powerful
one, and I think it is one that the groups have built on to try
to, maybe if it is not Medicaid as the backstop it is something
else. So the idea that the private insurance could sell against
a public backstop is still a really good idea.
Mr. Bilirakis. All right. Well, thank you very much. I
yield back, Mr. Chairman.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Maryland, Mr. Sarbanes, 5 minutes
for questions.
Mr. Sarbanes. I want to thank the panel. This is a
fascinating and sobering topic. Speak a little bit to the
actuarial dimension of needing to come up with some products,
whether they be hybrid, public-private products or whatever
they may be, sooner rather than later, just because the way the
trajectory is going you are going to get this huge influx of
people hitting at a certain time in terms of their needs and at
that point it will be prohibitively expensive to try to solve
the problem. You want to have had the benefit of people paying
in obviously earlier when they are healthier.
So against where we are headed with the demographic
trends, I don't know if anyone has computed with each passing
year what the extra cost is that we are talking about in terms
of even the kind of bare bones solution that you are offering
up. But I imagine that dynamic is something very present in all
of these considerations, so maybe you could just speak to that.
Mr. Scanlon. I think that is a very important point. One of
the strong differences between medical insurance where actually
premiums are covering the cost of services during a single
year, what we are talking about with long-term care insurance
is trying to build the reserves that are going to be able to
pay for benefits 25 or 30 years later. And as we talked about
premiums for long-term care insurance here today, if you look
at those premiums they rise dramatically with age, essentially
telling everyone if you start too late this is going to become
prohibitively expensive and that applies both at the individual
level and for the population of the whole.
Ms. Rivlin. That is clearly right, and that is why we were
looking for ways to get people in their earning years to more
likely buy long-term care insurance, even if it is a limited
long-term care insurance, and to establish a catastrophic
program which will take some of the pressure off both the
carriers and the beneficiaries.
Ms. Tumlinson. This is definitely one of the most
challenging parts of thinking about the financing of anything
that we are contemplating, because we have a lot of cross, what
we call cross-cohort challenges with asking very young people
to pay as much as we ask older people to pay who are going to
be in that level of need much more quickly. And so there are
ways in which I think we need to continue to work on the
financing so that we can arrange it so that we have kind of the
ability to not shift the costs for that population that is
nearly there onto the younger people entirely, so we are asking
them to pay more, for example.
Mr. Sarbanes. There is a little bit of a moral hazard
dimension here in that you can imagine people saying, well, I
don't necessarily want to step in now and be the guinea pig if
it doesn't look like structurally the system is actually going
to get fixed. I will just assume that at some point when the
whole thing crashes we are not going to let people just be
without any kind of recourse, and then I will step in and
benefit from whatever that fix is at that time. So you have
that dynamic at work too.
It is not helped by the fact that people don't really
understand this product. That many as was mentioned, I think,
by Representative Castor have gotten confused and assume that
it is somehow bound up in Medicare and Social Security and
these other programs and benefits that are available to them.
So I appreciate your testimony. Thanks very much.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Indiana, Dr. Bucshon, 5 minutes
for questions.
Mr. Bucshon. Thank you, Mr. Chairman. I am going to take a
little bit different approach. I am going to, well, our
conversation today has mostly been addressing coverage and how
to finance a system in a system that needs to be changed in
another area and that is how much it costs on the front end,
not just how to finance a system that has been growing in cost
for decades much faster than the rest of our economy. The ACA
addressed mostly coverage. That is one of the issues I have
with it not really affecting cost.
And what I mean by cost is I am not talking about the cost
to a program overall, what I am talking about is the cost to
the government or private insurance companies on an individual
care basis when services are rendered. So even if less services
are rendered overall, yes, the cost to the Medicaid program is
down, but on a case by case basis that is probably not the
case. The cost to the system continues to go up.
And if we are going to reform many of these programs, one
of the things we really are going to have to do is figure out
on the front end how it costs us less, but rather than just
talking about how we are going to figure out how to pay for
what it currently costs or what the cost in the future will be.
Does that make sense?
Mr. Scanlon. Yes.
Mr. Bucshon. And so I am going to get to the question in a
second. So one of the things that I am really focused on is
trying to work on that and in a number of areas. Price
transparency for the consumers is extremely important. Quality
transparency for consumers is extremely important. And we are
really going to have to look at a number of things that are in
place legally and otherwise that are impinging on our ability
to address those issues.
Why can't consumers know exactly what something costs? It
starts all the way from the bottom at a hospital or at a long-
term care facility, the cost of a gauze pad or the cost of a
diaper or whatever in the health care system. It can be way up
there compared--a gauze pad is essentially a little square of
cotton fabric, but it is sterile and it--it costs almost
nothing except if you have to buy it, if you are a hospital and
you have to buy the product. I am a free market guy so we need
to look at how to fix this in a free market way, in my opinion.
Price fixing is not an answer to the question.
So my question for all of you is, are any of you looking at
what the actual cost of providing long-term care is on the
front end and so that we can help decrease the actual outlay of
payments on the back end, and what are the drivers, currently,
drivers of the actual increasing costs to provide the care?
Again, not the cost of what the insurance company or the
government has to pay, but buying the product. What are the
drivers? Have you looked at it? Because we are going to have to
address that.
Ms. Tumlinson. One of the sad things about long-term care
is that because so much of it is paid for out of pocket there
is more natural transparency in the system. And so I would, I
am sure Dr. Scanlon will want to say this too, but I just want
to stress that there really are some--medical care and what we
are used to in terms of the lack of transparency in medical
care that is so frustrating to everybody, especially consumers,
is it is medical care and long-term care act very differently
sometimes.
And one of the ways that they do is that much of the
spending is out of pocket and the other way is that long-term
care is primarily labor. It is not a high tech business, it is
a hands-on business. So you really just have two things. There
is a price for the hour of labor and then you have the amount
that people are using per person. And so we know fairly well
what it costs to hire a home care aide, for example, per hour.
Mr. Scanlon. I have spent a lot of my caree looking at the
differences between Medicare and Medicaid and looking at
exactly at this issue that you are talking about which I will
call unit costs. And I will have to say that the Medicaid
programs, in terms of nursing homes at least, have done sort of
much more sort of effective job in terms of trying to keep
those costs down. I wish that actually sometimes we could take
some of the lessons from those Medicaid programs and apply them
sort of within sort of Medicare.
There is actually a concern that I think should be raised
that relates to your question for the future, which is that as
we have sort of more what I will call purchasing power, more
people wanting to buy services, we have to worry about what is
going to be the impact then on unit costs, because we don't
want to necessarily create a system that is so formalized that
we build in a lot of overhead. That gauze pad is expensive in a
hospital because you pay the overhead as well as the cost of
the pad. And we want to avoid that when we are paying for more
long-term care services.
Mr. Bucshon. Briefly, my time is running low.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman Mr. Ca AE1rdenas for questions.
Mr. Ca AE1rdenas. Thank you very much, and thank you, Mr.
Chairman, for holding this hearing. But I just, for those of
you who came here and had to change your schedule, I want to
quote a very knowledgeable famous legislator in California, and
I will clean up the phrase a little bit because it was made
about 70 years ago. He says, hold on to your horses and your
spouses, the legislature is in session. So let us just hope
that we have some good constructive not only dialogue but
outcomes from this hearing, this legislative hearing.
My first question is for you, Ms. Tumlinson. Until the new
policy options are available, what is your thoughts on ensuring
that Medicaid remains stable and adequately funded? I mean, in
our current environment.
Ms. Tumlinson. So I think that what probably the most
productive thing that we can do around Medicaid right now is
just continue to work on ways in which we can ensure that
individuals who are eligible and for the program are getting
the supports and services that they need in the most
appropriate setting and the most efficient way possible through
the use of aging and disability resource centers, for example.
I think that from a budget perspective it is funded through
general revenues and the challenge, really, is on the per
person level for the states to manage those funds as
efficiently as they can while at that same time ensuring access
to high quality care.
Mr. Ca AE1rdenas. Now when it comes to access to high
quality care the dynamic is changing, because the demands on
that care with the baby boomers seems to be shifting this whole
environment. So that being the case, what should we not do
right now before we have a more comprehensive solutions and
changes? Yes, Ms. Rivlin. Dr. Rivlin.
Ms. Rivlin. Well, I think we should do some of the things
that the three reports that have been mentioned are
recommending. And one, to come back to the question of saving
costs as well as improving quality, is to make it easier to use
home and community-based care and make it easier for the states
to do that because there is plenty of evidence that it is just
better and cheaper if it is done well.
Mr. Ca AE1rdenas. And also, when it comes to home care I
think of the information that I have received, not speaking ill
of hospitals or what have you, just because it is an
environment where you have so many people with an array of
illnesses and reasons why they are there, there is a higher
likelihood that somebody is going to catch an infection in a
hospital, correct, than they would maybe if they were in a
different adequate environment, et cetera.
So there are other tertiary reasons why we should make sure
that our panoply of solutions takes into account the whole
range of reasons why it is a better solution, or better way in
which we should deliver care.
Ms. Rivlin. Right. Hospitals are dangerous places to be.
But I think working on hospital safety is another aspect.
Mr. Ca AE1rdenas. And I just want to make sure that I am
not casting aspersions on hospitals. One of the most unfair,
dumbest statements I have ever heard is that more people die in
hospitals than anywhere else. Well, for god's sakes that is
where the people are in the worst condition, but more people,
their lives are saved because that hospital is there and they
have the facility and the professionals to actually put people
back together and keep them alive for god's sakes. So I just
want to make it clear that this is not a bashing point, it is
just trying to remind everybody how involved this very
important issue is especially with an aging population.
You were going to say, Doctor?
Mr. Scanlon. No, I mean, I am in total agreement, I think,
and physicians and hospitals, I think, would also agree with
you. I mean, we have seen this decline sort of in length of
stay because they recognize that it is in their patients'
interests to have them out of there as quickly as possible.
Mr. Ca AE1rdenas. And these are not funny issues. I will
use a very personal example. My father used to say, why do I
want to go to the doctor, so they can tell me I am sick? But
little did he realize that when he finally went to the doctor
he was 60-some years old, only God knows how long he was a
diabetic and had he gone to a doctor and enlisted the help of
professionals he would have had a better quality of life. He
would have lived longer, et cetera.
And it is not just about my father, it is about the kids
and grandkids, et cetera, who don't have him around because
unfortunately he thought he was being funny and cute, but what
he should have been is a little bit more responsible with all
due respect. And so I just want to point out that this is
incredibly serious. And again, seriously, Chairman, thank you
for holding this hearing.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentlelady from Indiana, Mrs. Brooks, 5 minutes
for questions.
Mrs. Brooks. Thank you, Mr. Chairman. The figures I have
seen and that we hear repeated over and over are that we have
about 10,000 Americans turning 65 every day and aging into the
system, and so the numbers are off the charts. But what we
also, I think, are realizing is that the retirees are
astoundingly unprepared.
In my district, in 5th district of Indiana, CNO Financial,
one of the nation's largest long-term care insurers is
headquartered in my district, and I have talked with them on
many occasions and they have studied this issue pretty
significantly and some of the stats they have found are pretty
astounding. What they have found is that half of middle income
boomers report investable assets of less than $100,000, with a
third reporting assets of less than $25,000. And so they have
found at CNO two-thirds of the middle income boomers express
doubts whether or not they will have money to live comfortably
throughout retirement, eight in ten have not received any
specialized training or education on retirement financial
security, and six in ten don't receive any professional
financial guidance at all.
And so my question to the panel is, I think there is a
severe lack of education and of understanding for middle income
America about what is coming at them and what they should
expect with respect to retirement, and so I am really curious
as to what your thoughts are about how we as a country do a far
better job. And I would like each of you, what do we need to be
doing to share with people what is happening because so many
people actually, I think, believe that Medicare is going to
take care of them in long-term care and that is not the case.
And so how do we bridge this gap of a significant under
education?
Dr. Rivlin, any ideas?
Ms. Rivlin. Well----
Mrs. Brooks. The reports are great with a lot of ideas, but
we just have so few Americans really understanding what is
coming at them in retirement.
Ms. Rivlin. That is certainly true. And it is hard to know
how to reach the people. It is the people in their middle
earning years that you really need to reach. If you do
education in school, nobody is going to pay attention because
they are too young to worry about it. And so I don't know
exactly how we do this, but I think employers are key.
One of the things that I think has come out of behavioral
economics in recent years--economists do some useful things--is
the notion that if you tell people you can opt out of this,
whether it is a savings plan or a long-term care plan, we are
not forcing you to take it but the default option is you are in
that really works. More people save and we think more people
would buy long-term care insurance if it were the default
option.
Mrs. Brooks. Thank you, Doctor.
Mr. Scanlon. I think approaching this as a retirement
question is really the right way to go as opposed to thinking
that this is only a health care issue. This is a portion of
sort of your thinking on planning for retirement. Now the
reality is that as some of the statistics that you indicated
for us, it is a challenge to think about all your needs in
retirement given the resources that you are going to have
available. But we need to think about bringing this into the
discussion so that people can recognize it and, if possible,
prepare for it.
On the issue of being confused that Medicare is going to
cover this service, I think we have to stop doing a disservice
to Americans at the federal level by talking about Medicare
covering some long-term care. It covers no long-term care.
Skilled nursing facilities and home health agencies may provide
long-term care services, others, but they are paid by another
source when they are providing long-term care services. The
services they provide to Medicare are not long-term care. We
cannot expect the public to read the footnotes to understand
that Medicare is not covering long-term care.
Mrs. Brooks. Thank you. Ms. Tumlinson?
Ms. Tumlinson. Yes, I just agree very much with what Dr.
Rivlin and Dr. Scanlon said. And the only thing I would add
here is just that I think that this is an odd kind of silent
crisis in every American family, and for whatever reason we are
not having a national dialogue about the fact that our whole
demographic structure is going to shift from now on and that
retiring at age 65 is maybe not a reasonable expectation if you
are going to live to be 95.
So we have to rethink how we think about work, how we think
about our old age and that I guess my brilliant idea is I think
we need to have much more of a public conversations in our
districts, at national level with leadership and even among the
private capital and investor community.
Mrs. Brooks. Experts--oh, I am sorry. I guess my time is
up.
Mr. Pitts. That is all right.
Mrs. Brooks. Thank you.
Mr. Pitts. That is all right.
Mrs. Brooks. I yield back.
Mr. Pitts. The chair thanks the gentlelady and now
recognizes the gentleman from New York, Mr. Collins, 5 minutes.
Mr. Collins. Thank you, Mr. Chairman. I want to thank the
witnesses from coming in. I am the last one, I think, to ask
questions.
Just a little brief history in my case. My dad passed back
in January of 2010, but prior to that he was through some
levels of dementia unable to care for himself at all. So for 3
years we had a team of seven women who cared for him 24/7. It
took seven full-time individuals to care for one person 24/7.
Six hour shifts with four individuals with him every second of
every day, and then you throw in the weekends. That is the
staggering amount of individual time it takes. And the cost for
seven full-time individuals was a significant burden, but we
determined in our family's case my dad had earned money, it was
the right thing to spend it for him to be safe, clean, and well
fed. But that was not an easy thing to do.
But when I come back again to what Mrs. Brooks was talking
about and Dr. Scanlon, would you think it would make sense in
the Medicare & You handbook in some bold print to point out
Medicare pays no part of this? I mean, we have got a federal
handbook that people get.
Mr. Scanlon. I think the no has to be sort of in bold
print. I mean, I think that this issue of trying to kind of
split hairs and tell them what it covers and what it doesn't
cover is confusing people. Because years ago we were doing a
survey and 80 percent of the people would say Medicare covers
long-term care. It is now maybe around 50 percent would say
that.
Mr. Collins. Big bold letters right, top, bottom, in the
middle, Medicare does not cover any type of long-term care. I
think we have got a vehicle in the Medicare & You handbook that
we could do a better job at.
My other question, really, carrying it in the same vein is
about advance directives, individuals making sure the family
knows. I know in our case again with my dad we had a DNR on the
refrigerator for emergency personnel just to make sure the
wishes of the family were well known, my dad's wishes as well.
But in that regard, I think the federal government now is
trying to address that problem of very few people having these
advance directives for long-term care in talking about paying
physicians to have a small conversation. And Representatives
Diane Black, Peter Welch and myself introduced H.R. 4059 which
would actually have a small incentive paid by Medicare to
individuals to put together a plan. If you are putting together
a plan you have to be thinking it through.
I mean, what we were just talking about with
Representative--and myself is the lack of education, people
being in denial and so forth. So the bill we are promoting is a
very small payment to get somebody attention just would ask if
you have any opinions on something like that.
Ms. Tumlinson. Yes, sure. I think that is really creative,
actually. And it is absolutely the case that you can even, once
somebody is even educated about advance directives that they
are still very reluctant to have that conversation. Having that
conversation between the family member and the older adult is
very hard to do. I have tried to do it and my mom said, ``do
you think I am dying?'' Not yet.
So I think it is a really creative idea. I think we have to
continue to come up with it those because ultimately having a
good advance directive someplace can be cost saving.
Mr. Collins. Well, it lets the family be more at ease with
what we are talking about. End of life decisions is what our
country seems to be unwilling to have discussed.
Mr. Scanlon. I think our education efforts, some clearly is
sort of not working, part of it is the message that we have
been delivering, but also a part of it is getting the attention
of the people that we want to deliver the message to. So your
idea is very innovative.
Ms. Rivlin. And part of it is medical education in medical
schools, getting young doctors to recognize this is part of
your practice. You need to be talking about death and dying.
Mr. Collins. Well, I want to just thank all the witnesses
for coming in. This is a discussion we need to be continuing to
have as more and more old folks are--since I was there last May
I can joke about it. I have got my card.
Mr. Chairman, I yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Missouri, Mr. Long, 5 minutes for
questions.
Mr. Long. Thank you for recognizing me, Mr. Chairman, even
though Mr. Collins failed to do so, and when you are talking
about elderly you would think that you would at least recognize
me.
Dr. Rivlin, I am interested in the Bipartisan Policy
Center's recommendation for creating lower cost, limited
benefit, retirement long-term care insurance policy options.
Can you provide more details on what a policy like that would
look like and how it differs from existing options?
Ms. Rivlin. Yes. What we are suggesting, what we call
retirement long-term care insurance, is a bare bones policy. It
is not fancy. It would have a high deductible or waiting period
and it would have co-insurance and a limited period for which
it covered benefits. That doesn't make it sound very desirable.
It has other desirable features, but it would cost much less
than long-term care insurance typically costs now. And we think
if it was marketed properly as part of a retirement plan by
employers, and if it were the default option in your retirement
plan and if you were allowed to pay the premiums out of your
401(k) beginning at age 45, those are all small changes that we
think would make it more attractive and more people would buy
it.
Mr. Long. Are there any current statutory or regulatory
barriers to preventing companies from offering those policies
today?
Ms. Rivlin. Yes.
Mr. Long. There are?
Ms. Rivlin. There are in that as you know this kind of
regulation is at the state level, and so what we are suggesting
is that the NAIC be asked to prepare model regulations that
states could then adopt.
Mr. Long. So legislative action that would be something
that you would recommend even with at the state level?
Ms. Rivlin. Right.
Mr. Long. OK. And this is for any of you or all of you on
the panel that want to respond. In recent years, state Medicaid
programs have been shifting long-term care into a managed care
environment. From 2004 to 2012, the number of states with
managed long-term services and support programs doubled from 8
to 16, and the number of beneficiaries receiving these services
grew from 105,000 to 389,000. What have been the experiences of
these new programs in terms of improving services for
beneficiaries and controlling costs?
Ms. Tumlinson. So there is really a diverse set of
experiences with managed long-term services and supports
throughout the country, but certainly in certain states what we
have seen is that the states have been able to use the managed
care mechanism to enable a fairly dramatic shift out of nursing
home setting and into home and community-based services
settings, because the managed care plans are on the ground
level with care managers helping to ensure appropriate, and
with significant financial incentives to do so to ensure a
persistent home care.
I think that it is not, from my perspective, a way that
necessarily the state is going to save money over the long term
and in many cases the managed care plans are actually able to
get paid based on their costs and their experiences, and so I
am not sure it is--I think it is a great mechanism for shifting
the services and maybe over time the state would realize some
savings from that. But at the same time, I am not sure that I
see it as an immediate cost saver.
Mr. Long. Dr. Scanlon, do you care to weigh in?
Mr. Scanlon. No, I would agree, because I think that states
when they have not used managed care have been still managing
the benefits sort of much more than for medical care services.
In looking to the managed care organizations, I think they are
working to sort of make sure that there is a capacity to
continue to sort of manage that benefit as best as possible,
but over time it is likely to be inflation in the numbers of
people that need services is going to drive the cost.
Mr. Long. Dr. Rivlin, last 30 seconds, do you care to weigh
in on that?
Ms. Rivlin. No, I think it is a work in progress.
Mr. Long. OK. Thank you all and thanks for being here
today. Mr. Chairman, I yield back.
Mr. Pitts. The chair thanks the gentleman, and I have a UC
request. I would like to submit a statement from the National
Association for Home Care & Hospice into the record, and
without objection, so ordered.
That concludes our questions of members present. We will
have some follow-up questions in writing. We will send those to
you. We ask that you please respond. I remind members they have
ten business days to submit questions for the record and that
means they should submit their questions by the close of
business on Tuesday, March 15.
Excellent, excellent hearing. Excellent testimony. Thank
you very much for being here on this very important issue. This
is a discussion that our society really needs to have today.
Without objection, the subcommittee hearing is adjourned.
[Whereupon, at 12:22 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]