Testimony of Patrick Brady, Executive Director
Citizens For Long Term Care
The Commission on Affordable Housing and Health Facility Needs
for Seniors in the 21st Century
March 11, 2002
Madame Co-Chairs and Commissioners, on behalf of Citizens For Long Term Care (CLTC) I am grateful for the opportunity to testify before such a respected commission. Your charge to address the senior housing and health care needs of today and tomorrow's older Americans is completely consistent with the mission of Citizens.
Citizens For Long Term Care is a coalition of more than sixty aging, disability, health care provider and insurance interest groups that are committed to focusing policymakers on the need to address the inevitable long term care financing and delivery challenges that confront our aging society. This collaboration represents a groundbreaking unification of diverse organizations committed to addressing this long term care challenge.
Every member of Citizens believes that the welfare-oriented approach to financing and delivering long term care is ill conceived. We believe that the long term care system must be modernized prior to the time when the Baby Boom generation becomes most susceptible to requiring long term care services and supports.
Policymakers in Washington and across the nation are increasingly recognizing that the graying of America will necessitate new and creative, public and private policy interventions that respond to this challenge. However, policymakers have yet to actively engage the type of national dialogue that is necessary to undertaking comprehensive reform. The entitlement reform debate, which will focus both on income and health security issues, offers the best and most immediate opportunity for organizations interested in long term care financing reform to raise the issues of reform. We believe that true reform of Social Security and Medicare cannot thoughtfully and workably take place without integrating long term care into the policy discussions.
In the 1930s, when a retirement income crisis threatened the ability of seniors to remain independent and threatened massive dependence on state welfare programs, the federal government enacted Social Security to help prevent a majority of Americans from becoming impoverished. In the 1960s, when health care costs threatened the financial security of the elderly, the federal government responded by creating Medicare as a vehicle to insure people and help prevent impoverishment. Unfortunately, long term care was never integrated into Medicare or Social Security because it did not exist as a threat to the economic security of a great proportion of the population.
Today, the rising costs of long term care for current recipients and the future needs of a largely uninsured Baby Boomer population demands that long term care be fully integrated into our national economic security system. However, unlike the 1930s and '60s the United States has a much better developed financial security system which suggests it will not be necessary to establish a social insurance vehicle to pay for all long term care costs.
Defining Common Ground
In April 2001 Citizens For Long Term Care released, Defining Common Ground, a report that established a broad framework for integrating long term care financing reform into our national financial security system. Defining Common Ground established that the need for long term care services is an insurable event that would best be served through a public/private partnership that utilized tenets of both social and private insurance. Our recommendations include:
- A new social insurance cash payment benefit with appropriate eligibility and benefit level standards and requirements based on the level of functional need [to] provide a minimum floor of protection in a way that is sufficiently flexible to best help disabled individuals and families meet their unique circumstances.
- The financing system should be as flexible as possible, not only to meet different and changing needs of individuals, but also to assure appropriate consumer choice in settings across the continuum of care. Two people with the same level of functional need should receive the same level of assistance but be able to use that assistance differently.
- The acquisition of private insurance, especially at a younger age, for those for whom it is most appropriate must be encouraged and supported through publicly supported tax incentives.
As we framed the long term care challenges facing this nation, it became self-evident that a multi-faceted policy intervention would be required. Your own work on housing issues makes this point quite clear. Chronically ill and people with disabilities frequently require architectural design, access support and transportation services that do not fit into a medical model of long term care. If we are to address these problems, we simply must advocate policies that are flexible enough to meet these varied needs.
With this in mind, we believe that health care for the long term care population needs to be reformed to ensure that the most appropriate level of supportive services can be provided. In that regard, Medicare must be redesigned to prevent, delay, and even roll back the onset of chronic illnesses that necessitate the need for long term care. This will have a substantial impact on the number of people, and the severity of their conditions, that ultimately enter the LTC system. While a well-managed Medicare prescription drug benefit can make a significant contribution in this regard, it is by no means the entire solution. Medicare must be more focused on addressing and treating chronic illnesses.
To develop an insurance system that delivers a cash benefit to people in need of long term care, we are beginning to explore the current Social Security Disability Insurance (DI) program as a basic model that can be expanded and refined. The DI program currently provides a flexible benefit to millions of people of any age who suffer from disabilities. Citizens feels that for the purpose of obtaining access to long term care services, a disability is the same whether it is caused by mental retardation, age, chronic illness or accident. Expansion of the Social Security DI Program is an established model for providing flexible assistance. As such, we are examining its ability to serve a greater population and to provide a basic level of assistance to all people in need of long term care. In this vein, we would greatly appreciate any suggestions you would make about designing flexible approaches for the delivery of long term care.
How to Pay for a Long Term Care Benefit
There is no way around the fact that adequately addressing the long term care needs of the Baby Boomers and the disability population will require significant resources. Citizens is examining financing and delivery approaches that utilize funding and programmatic resources that are currently available. More specifically, we are examining how a reallocation of programmatic responsibilities between federal and state governments could more rationally manage federal and state resources for long term care. In addition, we are contemplating strongly advocating that current surpluses from retirement programs like Social Security and Medicare should be preserved and allocated for retirement security needs such as long term care.
In 1982, President Ronald Reagan proposed a Medicaid swap that would result in the federal government being responsible for providing long term care services. Although the concept was not implemented, we believe the idea should be reexamined in today's climate. The most immediate reason for reexamining a swap is the Medicaid crisis being felt by the states. State Medicaid budgets driven by long term care and prescription drug costs are exploding. A majority of states are currently experiencing deficits caused by weakening tax revenues coupled with exploding health care costs. This crisis is a prelude to even greater future problems that will occur when states are struggling under the weight of an elderly Baby Boom population. With different tax capacities and different populations, states will struggle independently to address long term care at the expense of other important issues like education, infrastructure development, and civil justice.
As the numbers of people expected to need long term care increases, there is also a projected increase in the number of people dually eligible for Medicare and Medicaid. This fact opens up the possibility for a pooling of resources that could be more efficiently managed. Citizens is in the process of contemplating how a better coordination of services and responsibilities could lead to better resource allocation that enhances the type and level of services available to some of the nation's most vulnerable populations.
While the so-called swap of responsibilities from state long term care liabilities to federal jurisdiction has potential, it must be evaluated carefully to ensure that any new state-based responsibilities are adequately financed, and that responsibilities retained at that level do not in any way undermine the quality and scope of services available for eligible populations.
Social Security and Medicare Surpluses
Currently there is a 10 year projected surplus in the Social Security and Medicare trust funds that totals approximately $3 trillion. It is long past time we all recognized that, unless both parties change course, the Congress and the Administration will whittle down the $3 trillion Social Security and Medicare surpluses without seriously addressing the health and retirement security challenges that face this nation. Both Republicans and Democrats are using the Social Security and Medicare surpluses for non-retirement security issues, such as tax breaks for corporate interests and spending on farmers. It is long past time that advocates for the elderly and people with disabilities become more aggressive in advocating that dollars dedicated to retirement security be invested in retirement security. We believe long term care financing reform in addition to prescription drug coverage should be at the head of the line.
It is critical that we make a significant down payment on changing our long term care financing from a state-based welfare system to a national insurance system. We must address the large and growing cost of care shouldered by our nation's chronically ill and disabled, their caregivers, and private and public payers, especially the states.
This is an issue of domestic priorities. Will we use the money in the trust fund that has been set aside for health and retirement issues on those issues, or will we spend it on other unrelated priorities? Citizens For Long Term Care urges this commission to make a strong statement in its final report and declare that all Social Security and Medicare surpluses be reserved for assisting people in need of financial security due to disability caused by age, illness, accident, or mental retardation.
Entitlement reforms that simply shore up Social Security or Medicare without considering the impacts on financing for long term care will leave families vulnerable to impoverishing long term care costs. Without inclusion in entitlement reform, long term care costs will continue to drain state budgets and undercut the success of other federal programs that maintain economic security in old age and disability. At the same time, rethinking long term care financing and services in the context of entitlement reform offers possibilities for finding ways to coordinate and make better use of existing resources, contributing to a more successful restructuring of the core entitlement programs, while relieving a burden on state governments. To achieve this outcome, we respectfully request that the commission seriously consider supporting the concept that Medicare and Social Security surpluses be dedicated to help develop a needed social insurance program for long term care which can work in concert with private mechanisms to protect people from the catastrophic costs of long term care.