America Needs Better Solutions and More Options for Long-Term Care

I am a member of the National Academy of Elder Law Attorneys and this was written by one of my colleagues.

America Needs Better Solutions and More Options for Long-Term Care
Proposed Medicaid Block Grants, Managed Care Waivers, and Federal Cut-Backs Take Wrong Turn; Fail to Address Need For Long-Term Services and Support

By Morris Klein, CELA, CAP

This spring, the House of Representatives, in a party-line vote, approved a budget that makes fundamental changes to the delivery of long-term care services and support (LTSS) under the Medicaid program. LTSS includes home health and personal care for persons who remain in the community, plus institutional care such as a nursing home. The changes included in the budget are harmful to older Americans and people with disabilities and fail to address the need for LTSS.

This budget proposal would have an impact on most Americans. Consider these statistics:

• About 70 percent of people age 65 or older will need LTSS at some point in their lifetime.¹
• It is a common misconception that only seniors require LTSS; in fact, 40 percent of people currently receiving LTSS are adults under age 65.
• Medicaid is the primary LTSS provider for America’s seniors and persons with disabilities, paying for care for more than 3 million individuals.
• The median cost of nursing home care is $73,000 per year, and the cost of licensed home-health aide services is $19/hour.

Why Fixed Block Grants Won’t Work
Medicare does not cover most LTSS programs, and individuals typically pay out-of-pocket for these services. Insurance for LTSS has attracted few participants, and due to the premium structure and restrictive underwriting policies, is attractive to healthy persons in their 50s and 60s, making it unlikely to have a short-term impact as an option to pay for LTSS. Consequently, persons in need of LTSS turn to the Medicaid program when they run out of money to pay for their care. For example, more than 60 percent of nursing home residents rely on Medicaid.

The Medicaid program is a joint federal-state program. Under the current system, the federal government pays each state a percentage of its Medicaid costs. The House Budget proposes to convert this payment to a fixed block grant. Under a block grant, the federal government would provide states with a fixed amount of money. Moreover, the House Budget cuts $810 billion from federal support over 10 years, which in effect is a one-third reduction in federal spending.  After 10 years, increases to Medicaid payments would be capped at the general rate of inflation that has been historically less that the cost of health care services.

States Will Bear the Shift in Costs
Unfortunately, the block grant will harm both states and individuals in need of LTSS. States will endure a greater shift of the cost and risk of Medicaid. Payments under a block grant would not change, even during economic downturns or other situations when more people may require Medicaid. States would lose the flexibility to innovate with new programs because of limited funds.

Deep cuts to the Medicaid program are therefore inevitable. States will be forced to restrict eligibility and cut programs because of the limited federal payment structure. Yet, individuals in need of LTSS are among the nation’s most vulnerable citizens. Their burden, and the burden on their families, will increase. An estimated 42.1 million Americans already provide informal caregiving to family members, and many rely on Medicaid to help with their caregiving responsibilities beyond their own sacrifices. (e.g., 57 percent of primary caregivers report having to dip into their own retirement funds or savings to help a family member). This burden will only grow if a family member cannot afford the cost of a nursing home and Medicaid cannot help. Medicaid programs allow such family caregivers to remain in the workforce. Nationally, businesses lose an estimated $33 billion each year due to employee caregiving responsibilities. Cuts to Medicaid would hurt the families of those who need long-term care and the businesses they work for.

Private Managed Care Is Misguided
Block grant proposals are not the only misguided approach to saving money that will hurt older Americans and Americans with disabilities who rely on long-term services and supports from the Medicaid program. Many states have requested or are presently preparing requests to force all long-term Medicaid beneficiaries into private managed care.

The Florida waiver request is a good example of a state that would, without appropriate preparation or the necessary capacity, require these vulnerable Medicaid beneficiaries to receive their nursing home, hospice, and home and community-based care through private managed care plans. The request before the Centers for Medicare and Medicaid Services (CMS) is the most expansive in the nation, and the state has not proven that such a system will safely and effectively serve older Floridians and Floridians with disabilities.

In a recent letter to CMS from the Leadership Council of Aging Organizations (LCAO), the concerns were outlined regarding the state’s ability to:

• Monitor and provide effective oversight of such an expansion and transfer of state responsibly;
• Ensure that untested private plans have the infrastructure necessary for an influx of vulnerable individuals who will be forced to enroll in them;
• Ensure quality of care and appropriate program evaluation;
• Provide access to the necessary community-based services for this population, and address current waiting list issues;
• Ensure that older and individuals with disabilities are not dumped from nursing homes into the community without proper services and supports, as a result of the financial incentives provided to plans; and
• Provide the needed grievance and appeal process, and ensure enrollees receive benefits during the process.

President Obama’s Budget Proposal Does Not Address LTSS
The President’s Fiscal Year 2013 budget proposal also offers solutions that do not address the core problem – the lack of a comprehensive and coordinated long-term care or long-term services and supports system. The budget raises serious concerns regarding the Federal Medical Assistance Percentage (FMAP) for Medicaid. The President’s budget proposes to save the federal government $18 billion over 10 years by “blending” the FMAP for Medicaid and the Children’s Health Insurance Program (CHIP) for each state, beginning in 2017. The blended FMAP was proposed with the justification that a blended FMAP will save states and the federal government money on administrative expenses currently expended on determining the separate matching rates. Aging advocates have voiced concern that a blended FMAP could not accomplish the target savings of $18 billion, and states might face a lower federal match under the blended FMAP.

The President also puts the states in an untenable position by proposing cutting an additional $37.7 billion from Medicaid over 10 years by phasing down the states’ use of provider taxes to satisfy their state Medicaid match, and by decreasing the Disproportionate Share Hospital (DSH) allotments that help hospitals cover the cost of the uninsured. Where will the states find the money to replace what the federal government saves with these changes in policy? As noted earlier, states are already struggling to find ways to reduce Medicaid costs. At some point, services and eligibility will be cut and beneficiaries will be expected to pay more of their modest incomes for health care.

A Better Solution
The Medicaid block-grant proposal simply passes along the challenge of providing LTSS for our vulnerable citizens to the states, as do the President’s budget proposals. The states, on the other hand, without proper preparation or needed resources, would like to pass the Medicaid LTSS problem on to private managed care plans with the hope of finding savings there. None of these approaches will solve the problem. A better approach is to offer more options for long-term care, particularly home and community-based care, and roll LTSS into our general health care system of private insurance and Medicare.

¹Statistics cited in this article come from the Genworth 2012 Cost of Care Survey, Executive Summary,http://www.genworth.com/content/etc/medialib/genworth_v2/pdf/ltc_cost_of_care.Par.85518.File.dat/Executive%20Summary_gnw.pdfand FamiliesUSA Special Report: Republicans Again Propose Slashing Funding for Medicaid, Medicare, and Other Health Programs,http://familiesusa2.org/assets/pdfs/budget-battle/Republican-Budget-Slashes-Health-Programs.pdf.