NEWS INDEX Archives 2004 March

Health-care crisis looming for aging boomers unless problems addressed

Mark Reutter, Business & Law Editor
217-333-0568; mreutter@uiuc.edu

3/30/04

CHAMPAIGN, Ill. — How to pay for the long-term health-care needs of aging baby boomers will become a major crisis unless steps are taken to rationalize the current hodge-podge of federal regulations and restricted coverage, according to a health-law expert at the University of Illinois at Urbana-Champaign.

Most elderly Americans have limited coverage of long-term-care expenses through Medicare and face potentially cataclysmic expenses as nursing-home costs soar to as much as $100,000 a year, Richard L. Kaplan, an Illinois law professor specializing in elder law, wrote in the upcoming issue of the University of Illinois Law Review.

Kaplan proposes a comprehensive restructuring of long-term-care financing to tackle this problem, which most heavily falls on middle-class families. Under his plan, Medicare, the government’s health-care program for older Americans, would cover most nursing-home costs.

To help families pay for care outside of nursing homes – such as assisted-living facilities and continuing-care retirement communities – Kaplan also proposes improving private long-term-care insurance to make it more appealing.

Fewer than 10 percent of Americans now have private long-term-care insurance, and many believe mistakenly that Medicare will cover their long-term care. In fact, Kaplan writes, “Medicare is woefully inadequate in terms of long-term care. It covers only the two extremes of the long-term-care continuum, home health care and nursing homes, and does so under significant restrictions. Medicare’s coverage of home health care utilizes primarily a medical approach that only incidentally strives to maintain a senior citizen in his or her home. On average, this coverage is limited to only four hours of assistance per day and requires ongoing coordination with a supervising agency and a physician.”

Medicare’s coverage of nursing-home costs is equally restricted. “Programmatic limitations apply to the level of care needed, the medical condition being treated and a patient’s prior hospitalization. As a result, Medicare enrollees face substantial financial exposure when they enter a nursing home.”

Shifting the cost of nursing-home care to Medicare – which could be financed by general tax revenues plus premiums paid by enrollees – would help protect families from costs that can wipe out the assets of senior citizens and often their children as well.

In his article, Kaplan focuses on various Medicare restrictions that no longer make sense in the context of today’s longer-living American. He zeroes in, for example, on the distinction between physical and mental impairments. Medicare will pay for physical disabilities treated in a hospital or nursing unit, but will not pay for mental or cognitive impairments treated in nursing homes.

Medicare health-maintenance organizations do not help elder Americans because they do not generally expand Medicare’s restricted coverage of long-term care. The latest Medicare options, collectively called Medicare Part C, also are of little or no benefit with respect to long-term care.

Yet another alternative, Medicaid, only helps elderly citizens below the poverty level. For seniors with even minimum assets, Medicaid “essentially confiscates” a person’s income, Kaplan writes, and requires that almost all assets be “spent down” before the person can quality for Medicaid health coverage.

To correct the deficiencies and inconsistencies of long-term-care financing, the Illinois expert recommends that Congress lift several restrictions on Medicare coverage, including that seniors admitted to a nursing home without prior hospitalization do not qualify for coverage.

“Many older Americans are admitted to nursing homes directly from their personal residences,” he wrote. “Often a visiting relative or friend notices that the older person is no longer able to live independently or is endangering her health in some way, for example, skipping meals or leaving stoves or irons turned on. In such circumstances, a nursing-home placement may be appropriate, even though there was no need to go to a hospital.”

Medicare currently limits the length of a nursing-home stay to 20 days at full coverage and 80 additional days at partial coverage. This amount “is inadequate for chronic care,” Kaplan wrote. “Precisely where the new limit should be is unclear. Three-quarters of older peoples’ nursing home stays are less than three years, but the longer stays are obviously the most expensive. Perhaps the best approach is to replicate Medicare’s coverage of hospital stays – namely, a limit that covers almost all stays, with a significant co-payment requirement for the latter portion of that limit.”

While Medicare should be structured to provide medically oriented nursing-home care for elder Americans, the cost of other long-term care should remain in the hands of private citizens. The Illinois expert recommends that long-term private insurance be re-oriented to cover such expenses as assisted living facilities, and that insurance options and features be standardized.

A major reason why so few Americans have private long-term-care insurance is because the insurance features of different providers are confusing and of uncertain reliability.

Kaplan’s article is titled, “Cracking the Conundrum: Toward a Rational Financing of Long-Term Care.”