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Insurance that would serve seniors better than Medicaid

Bloomberg / 11 Sep 12 | 12:09 AM

As the dust settles from the political conventions in Florida and North Carolina, one issue important to the health care of older Americans is rising into the sunlight and finally getting some of the attention it needs.

We don’t mean Medicare; for months, the campaigns have taken regular shots at each other on that.

We mean Medicaid, the program generally thought of as health insurance for poor families. Yet one-third of Medicaid’s budget — about $120 billion — goes to fund long-term care for the disabled and frail elderly, most of it in nursing facilities.

People who need custodial care often fall back on Medicaid after they’ve used up their own resources and can qualify for the program’s very low income and wealth limits.

Even though President Barack Obama and his Republican challenger, former Massachusetts Governor Mitt Romney, have said little specifically about long-term care, it’s clear from their general views on Medicaid that they differ on how much to continue this support. Obama intends to preserve Medicaid as an entitlement program — which means it promises to pay all acceptable expenses that arise for qualified beneficiaries. He even plans to expand the program, starting in 2014, to cover 11 million more Americans, including people with income as much as 138 per cent of the federal poverty level.

Presumably, then, if Obama is re-elected, support for nursing-home care would continue — though it could be squeezed a bit by budget constraints, especially after 2020 when the federal government stops financing 100 percent of Medicaid’s expansion.

Romney has endorsed his running mate Paul Ryan’s proposal to change Medicaid’s structure entirely, so that it would no longer be an entitlement program at all. Instead, the federal government would give the states block grants to spend on health care as they please. (The idea is to make the program work better by giving states more control.)

These grants would increase every year at a rate of 1 percentage point more than inflation, but this would be significantly less than Medicaid’s budget is expected to expand under the current structure along with the changes set in motion by the 2010 health-care law. By 2022, the difference would add up to a budget cut of about $1.26 trillion, a new analysis by Bloomberg Government shows. That would mean considerably less money for long-term care — and everything else Medicaid pays for.

This policy disagreement illustrates the great divide between Obama and Romney over government aid: Obama believes in setting a floor to support Americans in need; Romney wants a ceiling on the government’s responsibility. The ceiling is a simpler way to manage the budget, but it doesn’t address what happens to people who urgently need medical or nursing care when neither they nor the federal government can afford it. Will the states really be able to come to their rescue?

Obama’s strategy is preferable to Romney’s in that it would at least preserve the Medicaid safety net for millions who need long-term care.

Yet there is another question to consider: Is a welfare program really the best way to provide medical services that so many Americans will someday require? It would be better for people to be insured for this care. Ideally, we would have a program analogous to the Medicare Part D drug benefit or the Medicare Advantage managed-care plan that would help people to buy affordable insurance from private carriers.

The 2010 health-care law did include a long-term-care insurance program, known as the Community Living Assistance Services and Supports (CLASS) Act. But this was abandoned when it became clear, almost immediately, that too few healthy people would enroll to allow the program to be financially sustainable. However, the CLASS Act was not well constructed, and, as Howard Gleckman, a resident fellow at the Urban Institute, has pointed out, Congress could design a new program that would have a greater chance of success. Gleckman suggests that such a program should, for example, be limited to people who work at least 20 hours a week and offer a greater menu of insurance options — including some with very high deductibles.

Tackling long-term care outside of Medicaid would have the added advantage of enabling the elderly to afford it without first liquidating their assets.

It’s safe to assume that Congress and whoever is president next year won’t be in a mood to immediately create a new health- care program. But lawmakers should at least begin waking up to America’s growing need for a sensible strategy on long-term care.

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