Everyone is aging, but not everyone fully utilizes programs such as Medicare, Social Security, and Medicaid that most people pay into. In 2019, only 10% of Medicaid beneficiaries were 65 or older , but long-term care (LTC) and Medicare payments made up 22.3% of Medicaid’s $728 billion dollars of expenditures in 2021 . Thus, Medicaid made up 42.1% of all domestic spending on long-term services and supports (LTSS) spending . Further, 70% of people will need LTSS in some form .
LTC policy has been a concern in health care since the 1980s, when the nursing home industry was rapidly growing. We almost saw the Affordable Care Act (ACA) include the Community Living Assistance Supports and Services (CLASS) Act—which would have established a public LTC insurer—though it was not found to be economically sustainable in the long-run. Other than $139 billion in annual LTC spending by Medicaid , the other major quantifiable cost of the current system is submerged: unpaid, informal caregiving. This unpaid labor, along with its opportunity costs, amounted to an estimated cost of $67 billion in 2013 . This is not to mention the largest cost faced by the status quo, loss of life and quality of life for our older adults. Though sweeping national reforms for LTC have not been successful, more initiative may be possible at the state level.
Though the ACA passed in 2010, some key provisions were either never implemented or repealed at some point. Title VIII of the ACA, the CLASS Act, was officially deemed not to be implemented in 2011 and repealed in January of 2013 . The CLASS Act’s attempt to create a public LTC insurance market would function similarly to Worker’s Compensation, where everyone who pays in may become eligible to utilize the insurance. The CLASS Act would require that individuals pay an average monthly premium of $123 for a potential average daily benefit of $75 as a direct cash support, or at least $50 per day admitted in an LTC facility or utilizing LTSS . These premiums would be adjusted by age, but not by health status. Benefits were also to be triggered given that the individual was suffering from a cognitive impairment or at least two or three limitations in their activities of daily living (ADLs).
The essential problem of the CLASS Act was that paying into the program was voluntary rather than compulsory. The CLASS program was likely made voluntary so as not to mount more opposition against the ACA’s constitutionality or palatability; the ACA already intended to eliminate the uninsured population via the individual mandate, which was constitutionally upheld by the taxing power of Congress. A mandatory CLASS Act likely could have been held constitutional on the basis of the General Welfare Clause, however, the basis of other compulsory social programs. Thus, the CLASS program was doomed to suffer from adverse selection and a downward spiral, with costs and premiums rising and few healthy workers opting to pay into it.
Instead Medicaid remained the primary payer of long-term care for the elderly. LTC has had a place in Medicaid since its inception in 1965, where Medicaid was set to pay for institutional LTC while Medicare would not. This was a large contributor to the rise in nursing home utilization, creating the basis for proposed LTC reform since the ‘80s and many reforms to nursing homes. In 1981, home and community-based services, including non-medical supports, were added onto Medicaid’s benefits to act as a substitute for nursing homes and hopefully save money. Legislation in 1987 expanded these services for frail older adults and increased appropriations to prevent elder abuse in nursing home settings. The final major expansion was a 1990 piece of legislation that allowed Medicaid to pay for a beneficiary’s Medicare premium given that they could not .
In recent years, California, Hawaii, Maine, Michigan, and Minnesota have implemented regulatory reforms to their LTC markets, studied potential reforms, voted on reforms, and even attempted some of these larger reforms. The most successful individual state action came out of Washington, however, in 2019, with the state currently working to implement a universal LTC insurance program with exemptions only for some veterans and people who have already purchased a private plan. The WA CARES Fund is planned to collect contributions starting July 1, 2023 and to begin paying benefits July 1, 2026. The CARES Fund is intended to work as a bridge between Medicare and Medicaid in LTC funding, creating a dedicated pay-for for LTC in Washington and offsetting the state’s Medicaid cost. The CARES Fund has a lifetime maximum benefit of $36,500, which is enough to pay for 20 hours of care per week for a full year. This is described as the average level of utilization of long-term, at-home care for Medicaid users .
LTSS funding may become a reality once it is clearly cost-saving. This is a difficult position to reach, as LTSS is geared towards people who do not have many economically productive years ahead of them. Effectively, the government is incentivized to let these older adults die and prioritize other populations. The U.S. health care market is rapidly growing and represented 19.7% of GDP in 2020 . Investing in LTC programs and infrastructure may arguably be cost-saving in this regard, through the new jobs and markets it can create.
Medicaid enrollment by age. KFF. (2021, December 3). https://www.kff.org/medicaid/state-indicator/medicaid-enrollment-by-age/?currentTimeframe=0&sortModel=%7B%22colId%22%3A%22Location%22%2C%22sort%22%3A%22asc%22%7D
Distribution of Medicaid spending by service. KFF. (2022, August 22). https://www.kff.org/medicaid/state-indicator/distribution-of-medicaid-spending-by-service/?dataView=0¤tTimeframe=0&sortModel=%7B%22colId%22%3A%22Location%22%2C%22sort%22%3A%22asc%22%7D
Who pays for long-term services and supports? Congressional Research Service. (2022, June 15). https://crsreports.congress.gov/product/pdf/IF/IF10343
HHS. (2019, April 3). What is the lifetime risk of needing and receiving long-term services and supports? ASPE. https://aspe.hhs.gov/reports/what-lifetime-risk-needing-receiving-long-term-services-supports-0
Mudrazija, S. (2019). Work-related opportunity costs of providing unpaid family care in 2013 and 2050. Health Affairs, 38(6), 1003–1010. https://doi.org/10.1377/hlthaff.2019.00008
Norton, E. C. (2016). The Economic Challenges of the Community Living Assistance Services and Supports Act. In D. J. Meyer (Ed.), The Economics of Health (pp. 103–116). essay, W.E. Upjohn Institute for Employment Research.
Long-Term Care in the United States: A timeline. KFF. (2015, August 31). https://www.kff.org/medicaid/timeline/long-term-care-in-the-united-states-a-timeline/
DSHS. (2021). WA Cares Fund. https://wacaresfund.wa.gov/
HHS. (2021, December 15). Historical. CMS. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical