Senate health bill would
decimate long-term care coverage
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[June 29, 2017]
By Mark Miller
CHICAGO (Reuters) - When Americans think
about retirement planning, long-term care usually is a major blind spot
- few of us want to contemplate the possibility of infirmity and
dependency in old age. But we would do well to think about it now, as
the Senate Republicans take a holiday weekend pause in their push to
dismantle the Affordable Care Act.
Roughly half of Americans now turning 65 will require some level of
long-term care during retirement. And when professional care is
required, it usually is paid for by Medicaid, which covers 62 percent of
long-term care in the United States, according to the Kaiser Family
That may surprise people who think of Medicaid as a social safety net
for the poor. Indeed, the program is a critical lifeline for 35 million
children and 27 million adults in low-income households.
But nursing home care is expensive, and 62 percent of near-retirement
households have saved less than one year of annual income for
retirement, according to the National Institute on Retirement Security.
When savings run out, Medicaid steps in - nearly two-thirds of its
spending in 2014 went to the elderly and disabled, according to KFF.
“Medicaid has been a critical safety net for 50 years for people who
have depleted their life savings,” said Jean Accius, vice president of
the AARP Public Policy Institute. “It is insurance for your mother or
your father or eventually for yourself, because the price can be so
The current national system of financing long-term care is a mess. Few
households purchase commercial long-term care policies, and the market
has experienced upheaval in recent years as underwriters stopped writing
new policies or boosted premiums by double-digit rates.
Yet the Senate bill would take our already-dysfunctional system of
long-term care and make it worse - much worse.
The Better Care Reconciliation Act (BCRA) proposes to reduce expected
Medicaid outlays by $772 billion over 10 years. That would destabilize
access not only to nursing home care but home and community-based
services - an innovative approach to care that saves money, and has
grown quickly in recent years.
Medicaid is administered by states, but funded jointly with the federal
government. Currently, the federal contribution is open-ended. Under
BCRA, starting in 2020 states could opt for a federal contribution
subject to a per-enrollee cap or in the form of a block grant. The
contribution would be based on the current amount sent to a state, and
then adjusted annually for inflation.
FUNDING WILL SHRINK
Proponents of BCRA argue this will not squeeze the states because the
inflation adjustment will be tied to the federal measure of medical
inflation (CPI-M). But as this Medicaid population ages into their 80s
and 90s, their care needs will intensify and become much more expensive
on a per-capita basis.
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A pair of elderly couples view the ocean and waves along the beach
in La Jolla, California March 8, 2012. REUTERS/Mike Blake
And after 2025, the inflation measure would shift to a more general
inflation gauge that rises much more slowly than healthcare costs.
Finally, per-enrollee caps will not adjust for unanticipated major new
spending needs - for instance, a major new blockbuster drug or the need
to deal with a public health emergency.
As federal funding falls behind, states would be left to raise taxes to
meet the shortfalls, cut their budgets elsewhere or provide less
Medicaid coverage. Cuts could be made first within home and
community-based care, because these are optional programs under federal
law, while nursing home coverage is mandatory. But nursing home coverage
would suffer too, said Jessica Schubel, senior policy analyst at the
Center on Budget and Policy Priorities.
"States may be forced to cut provider rates - which already aren’t very
high,” she said. “The providers will then be forced to do more with less
- they may cut staff, make fewer beds available to Medicaid patients, or
Overall, the BCRA would increase the number of uninsured Americans by 22
million in 2026, according to the Congressional Budget Office (CBO). The
increase in the number of uninsured would be disproportionately large
among people aged 55-64 and with income less than 200 percent of the
federal poverty line. Enrollment in Medicaid would fall by 15 million by
In the insurance exchanges, premiums for older people would soar to
unaffordable levels, CBO found. For example, the net premium (after tax
credits) for a 64-year-old with income of $56,800 would skyrocket from
$6,800 to $20,500.
Taking away insurance will kill people - literally. A new study
published in Annals of Medicine (http://bit.ly/2ua8ecp) documents how
the lack of health insurance increases mortality; its math suggests that
taking insurance away from 22 million people will result in 29,000
avoidable deaths annually.
At the same time, the tax cuts in BCRA would reduce federal revenue by
$700 billion - with 45 percent of that going to households making
$875,000 or more, according to the Tax Policy Center. The bill repeals
the Affordable Care Act’s 3.8 percent net investment income tax on
dividends, interest and capital gains, and the 0.9 percent Medicare
payroll tax surcharge.
The trade-offs in BCRA - insurance for tax cuts for the wealthy - are
nothing short of appalling. Governor John Kasich of Ohio put it well
while speaking out against the BCRA in Washington this week: “That’s
good public policy? What, are you kidding me?”
(The opinions expressed here are those of the author, a columnist for
(Editing by Matthew Lewis)
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