April 10, 2012 by Milton Jones
In my childhood, I recall people speaking fondly of living “to a ripe old age.” My own father lived to celebrate his 100th birthday. But old-age is not always a blessing. Longevity creates its own expensive problems, and many more of us are living much longer than in the past.
In times past, the elderly lived with their children. Today, we live in a society where most of us can look forward to years of custodial care in a nursing home. Some of these places can be quite attractive, while others are places of squalor. All are expensive.
Long-Term Care is one of our most expensive problems. Many people incorrectly assume that Medicare covers most of this expense. In fact, Medicare coverage usually provides only a limited number of days in Rehab or Skilled Nursing, and does not reach the more massive problem of “Custodial” care. The bulk of these expenses are borne by Medicaid grants, matched by funds at the State level.
Private Long-Term Care insurance is a relatively new thing, having become a significant market segment only within the past 30 years or so. When people asked me about who buys this coverage, I would give the wry answer that “there are basically three classes of people:
(a) The rich, who could afford to buy their own nursing home if they choose;
(b)The poor, who cannot afford to buy the coverage; and,
(c)The middle class, who have something to loose; namely their life savings.”
Of course, the reality is a bit more complicated. The affluent will attempt to hire people to care for them in their own homes; or perhaps buy into a Retirement Community.
We of the middle class risk exhausting our life savings unless we buy private insurance. Because current law requires that we spend our own money for our care before asking others (taxpayers) to provide for us. This is referred to as the “spend-down” rules.
The aged poor can usually get their nursing home care provided at government expense in the form of Medicaid. But if you have a little money, you can expect to spend it before you get any help.
These tough-love rules can seem a little harsh, but philosophically we can agree with the idea. Society should not allow us to keep our savings to pass on as an inheritance while, at the same time, getting our care at the public expense.
About twenty years ago, Congress passed something called The Catastrophic Long-Term Care Act, only to run into a buzz-saw of public resistance. The law called for higher income senior citizens to pay a surcharge for this coverage. Congress, in a burst of fair-mindedness, rightly declared that the segment of society who would benefit most should be the ones to pay.
But the press (bless their hearts) kept saying “when senior citizens find out they must pay for this, they’re going to be mad.” So, after much protest and outcry, Congress repealed this legislation.
Don’t look for anything to replace it anytime soon. Long-Term care is the proverbial 800 pound gorilla in healthcare, and Medicaid costs are breaking State budgets across the land.