Long-term care services are not on the front burner of the Presidential campaign. They are not on the back burner. They are, it seems, not even on the stove.  

Most presidential candidates don’t care enough about long-term care services to bother to describe their views on issue. Of the five candidates surveyed by 15 national advocacy groups only two–President Obama and former House Speaker Newt Gingrich–responded to five questions on long-term care. Neither of the two GOP frontrunners, Mitt Romney and Rick Santorum, answered the survey. Nor has Ron Paul. 

Barack Obama had little new to say in his response. He merely recited past efforts aimed at supporting home and community based care, workforce training, and caregivers. He noted the failure of the CLASS Act but offered no new alternatives. He did not say that his most recent budget would freeze or cut funding for many critical supports for the elderly and younger people with disabilities.

Obama’s disinterest is not new. He had little to say about long-term care policy in his 2008 election campaign either.

Gingrich, who has shown real interest in long-term care issues in the past, was typically provocative though sometimes contradictory and often not specific. The former speaker used the survey as a platform to renew his calls for repealing the 2010 Affordable Care Act, turning Medicare from a guaranteed federal benefit  into a defined contribution program, and replacing the existing  Medicaid system with a federal block grant.

Gingrich said consumers should be able to use tax-advantaged Health Savings Accounts and Flexible Savings Accounts to buy long-term care insurance.  This is somewhat curious since Gingrich has also proposeda flat income tax system that would seem to effectively end HSAs and FSAs.

Still Gingrich also said he’d “promote new models of care” that focus on primary medical care and home care. He also embraced the use of new assistive devices, though he didn’t say how consumers would pay for them.

In addition, Gingrich said Medicare should cover training for family caregivers. This is a very interesting idea through it is not clear how such a mandate would be implemented once Gingrich shifts Medicare to a largely private insurance model.

The survey came from 15 groups including The Arc of the United States, Families USA, the National Council on Aging, and the National Senior Citizens Law Center.

Give Gingrich (or his staff) credit for thinking creatively–if somewhat inconsistently– about long-term care services. If Obama has any new ideas, he was not willing to share them. As for Romney, Santorum, and Paul, the issue is clearly not important enough for them to assign a staff person to answer a survey. That’s an indictment of both the candidates and the advocates who seem unable to get their attention.

In his 2013 budget released today, President Obama has proposed cutting $250 billion out of Medicare and $65 billion out of Medicaid over the next 10 years. Nursing homes,hospitals, and other providers would be paid less, while some Medicare beneficiares would have to pay more out of pocket. At the same time, federal spending for other critical senior services programs would be frozen–in many cases for the third year in a row.

Here is a quick summary of some of Obama’s major budget initiatives and how they’d effect seniors. He has proposed some of these changes in the past but there is little doubt that they are a major priority for a White House looking to reduce the budget deficit.

Medicare: One-quarter of Medicare beneficiaries would pay higher, income-related premiums for Medicare Part B and D (the drug benefit). Starting in 2017, new beneficiaries would pay a surcharge for Medigap policies that pick up Medicare copays and other “first dollar” costs. In that same year, they’d also be charged a $100-per-episode fee for home health care and a $25 increase in the Part B deductible. Many of these changes are aimed at encouraging more seniors to enroll in Medicare Advantage managed care plans

At the same time, Medicare would reduce payments to nursing homes for post-acute care. It would also cut Medicare payments that pick up some of the cost of patients’ bad debts. 

For years, skilled nursing facilities have been  paid generously by Medicare for post-acute and rehabilitation services but lost money on Medicaid payments for their long-stay residents. Now, the Adminstrationwould cut those Medicare reimbursements–a step likely to force some facilities to abandon their money-losing Medicaid beds.  That may not be a problem in areas where there is overcapacity of long-stay nursing home beds. But where there is a shortage, it may create some real challenges for those who are unable to continue to live at home.    

Finally, Obama has again proposed to penalize nursing facilities whose post-acute Medicare patients are readmitted to the hospital for conditions that could have been avoided, such as falls or infections.

Medicaid: Obama would make it tougher for states to game the Medicaid system by taxing providers such as nursing homes and using the money to increase payments to those facilities. This practice effectively shifts Medicaid costs to the federal government and the change would reduce the amount of money available to state Medicaid programs. The White House would also reduce payments to vendors of durable medical equipment such as wheelchairs.

Other spending.  Funding for the National Institute for Aging would be effectively frozen. Most other spending on long-term care services is funded by the Department of Health and Human Services. The Obama budget would freeze funding for the Administration on Aging. Thus, the budgets for nutrition services such as Meals on Wheels, caregiver supports, respite care, and aging network services would all be held at 2012 levels. Funding for aging and disability resource centers would be cut by more than one-third. Alzheimer’s Disease demonstrations would get $6 million more and adult protective services would get $8 million.    

The Department of Housing and Urban Development would receive $475 million for Section 202 housing programs for the elderly.

Keep in mind, the Obama’s budget proposal is very likely the high water mark for spending on these programs. If Congress passes a budget this year–which is unlikely at best–many of these programs would be cut even more deeply. And long-term spending for many of these programs would be in even more serious jeopardy, especially given major spending reductions being proposed by all of the Republican presidential candidates.

We’ve all seen the articles in Forbes, Kiplingers, or U.S. News trumpeting the best states to live in retirement. A key measure for them all: Low taxes. What you may not know is that states actively compete with one another to provide tax breaks to older residents—especially to wealthy seniors.

This competiton is similar to the way states use tax subsidies to woo businesses. It make not make much sense, but it sure is trendy.

For instance, in 2010 the Georgia legislature voted to exempt nearly all retirement income from tax starting in 2016. Last year, the governor of Maine proposed making all pension income tax-free.

Not all states are headed in this direction. Michigan, which is in deep financial distress, recently rolled back some generous tax exemptions for pension income. But nearly every state offers some tax breaks for seniors.

Why? Many seniors have plenty of money to spend including Medicare dollars, and Social Security and pension benefits. Just as important, they use relatively few state and local services: The elderly don’t need K-12 education and spend relatively little time in jail. And their health care is largely funded by the federal Medicare program.

This tax race for seniors is described in a fascinating new paper that Karen Smith Conway of the University of New Hampshire and Jonathan Rork of Reed College presented last week at a Tax Policy Center/UCLA Law School conference on state taxes.

States offer seniors three buckets of tax breaks. They exclude some or all Social Security benefits from tax; grant seniors extra deductions, exemptions, or credits; and exempt at least some pension income from tax. Combined, these preferences cost states more than $24 billion annually. The biggest beneficiaries: middle- and upper-income elders–the very people states want to keep or attract.

For instance, Conway and Rork found that 12 states offer a modest tax exemption for pension income, three exempt income of $70,000 or more, and five exempt all pension income from tax.

Conway and Rork quote Georgia Gov. Sonny Purdue, who said his state’s plan to eliminate taxes on retirement income “will help attract retirees to our state and make our economy even stronger.”

Is he right? Do low taxes attract seniors and are they worth the revenue cost?

Lots of prior research suggests Purdue is engaged in little more than wishful thinking. Last year, fewer than one percent of seniors moved from state to state after age 65 for any reason. And very few appear to do so to reduce their taxes.

This limited mobility may result in another major downside for states. About 70 percent of seniors will eventually require long-term care services in old age, and 20 percent will need this assistance for five years or more.

Many are middle-income seniors who spend down their assets on personal care and eventually become eligible for Medicaid. About one-third of Medicaid dollars are spent on long-term care services and the program is a growing burden on state budgets.

Thus, while states may benefit in the short-run from attracting a few relatively young, healthy, and wealthy pensioners, they may end up paying a substantial price when middle-income seniors become frail, go broke, and require Medicaid long-term care services.

When that happens, states such as Georgia may regret giving up revenue to subsidize seniors. Of course, the price for that mistake will be paid by some future governor who has the misfortune of serving years from now.

This article was orginally posted on TaxVox, the blog of the Tax Policy Center 

In a recent survey, The Washington Post asked white women and black women about their outlook and priorities when it comes to issues such as money, religion, and marriage. And in many cases, they found very big differences. But when it came to one issue, there was no disagreement at all.  You guessed it: Caregiving.

Nearly two-thirds of both African-American and white women worried about family members suffering from chronic disease, according to the survey. And half worried about being responsible for an aging family.  

The Post survey, which was focused on black women, did not look at Hispanics at all. But in 2008, the National Alliance for Caregiving did survey Hispanics. And  while the details were different, the story was  pretty much the same. About a third of Hispanic households had at least one caregiver and three-quarters are women. That suggests the overall percentage of family caregivers is a bit lower than the population at large while the percentage of women is somewhat higher.  But their experiences would be familiar to the white and black women inteviwed by The Post.  

If you are a woman–no matter your race, educational level, or income–caregiving responsibilities are never far from your mind. It may be a reflection of  how the country has changed–and how it has not– that black women now worry as much about being victims of discrimination as they do about caring for aging relatives.

Yet, while the U.S. has made great strides since the 1960s to end racial discrimination, and since the 1970s to reduce gender discrimination, it has done surprisingly little in recent decades to help alleviate the burden on caregivers. If anything, in some respects the nation seems to be backsliding.

For instance, the House of Representatives is likely to vote later today to repeal the CLASS Act which, for all its flaws, had the potential to help support the care needs of the frail elderly and other adults with disabilities. While CLASS will remain alive until the Senate follows suit, its future is limited at best. And few in Washington are exploring alternatives.

At the same time, there is little chance Congress will vote this year to reauthorize the Older Americans Act, the federal government’s primary tool for supporting the non-medical needs of the elderly. Senior centers, job training programs, Meals and Wheels and other food programs, as well as information services are all funded by the law, which is about to expire. 

That doesn’t mean Congress would stop funding these programs. But without the act, it will be easier for Congress to slash them. In recent years, budgets for many Older Americans Act programs  have been frozen. And they are likely to be targeted for deeper cuts. 

Working women pay a financial, emotional, and physical price for caregiving. They suffer high rates of depression and illness. When they take on a greater share of the caregiving burden, they often must cut back on their own working hours and sometimes even quit their jobs. That not only reduces their curent houshold income but also means they’ll have less from Social Security, pensions, and other retirement income when they age. And that, in turn, will place a greater burden on their daughters.

That’s bad news, no matter what your race. The challenge for society is to find ways to relieve their burdens in an era of fiscal constraints.

My best guess is that Congress will formally repeal the CLASS Act in 2012. Already abandoned by the Obama Administration, CLASS has no champion on Capitol Hill and is likely to fall victim to implacable Republican opposition and a lack of Democratic support. Thanks to technical budget rules, Congress can now kill the national, voluntary long-term care insurance program without adding to the deficit.

The Republican-controlled House probably will vote to repeal CLASS next week. But its formal death warrant is likely to be added to a bigger bill—perhaps the extension of last year’s payroll tax cut or some end-of-the-year budget measure. No matter, CLASS has little chance of surviving.

But what next? Are there opportunities to build on the CLASS debacle?

This morning, a group of long-term care experts discussed their ideas at the annual policy research conference of the National Academy of Social Insurance. Speakers included Anne Montgomery, senior policy advisor for the Senate Aging Committee; Steve Edelstein, national policy director of PHI, which represents direct-care workers; and Harvard Medical School associate professor of health policy David Stevenson, who has written extensively about long-term care delivery and financing.

Anne, who remains optimistic despite her many years on Capitol Hill, suggested some relatively small steps to build on what policymakers learned from CLASS. For instance, the Administration still has some modest funding available for a public information campaign to encourage consumers to think about their long-term care needs.

A few years ago, an earlier campaign called Own Your Future did increase public awareness of this issue, though the degree to which it changed people’s behavior (by, say, encouraging them to buy insurance or increase savings) is unknown.

Anne also suggested that the Administration could try to build interest among employers, who do very little to encourage their workers to plan for future long-term care needs. The absence of likely employer participation turned out to be a big flaw in CLASS.

Finally, Anne said it was important to improve consumer projections for buyers of private long-term care insurance. Her boss, Aging Committee Chairman Herb Kohl (D-WI) has introduced a bill (S 159) that takes some steps in that direction.

Like most financing experts, David believes a universal program is probably the only way to solve the participation and adverse selection problems that plague voluntary long-term care insurance.

As I and others have written, a variety of technical changes, such as tightening enrollment standards could improve a voluntary government program. But they are unlikely to generate enough participation to make optional insurance robust policy alternative to Medicaid, which is how the U.S. pays for nearly half of all paid personal care today.

Steve agreed, and called for a mandatory long-term care benefit under Medicare. That makes sense in many ways, but given the federal deficit and the unwillingness of politicians to raise taxes, it is hardly likely any time soon.

The most provocative remarks, however, came from Dr. Joanne Lynn, who has been an outspoken advocate for a fully integrated health system that incorporates both medical and personal care. Why, she asked, should we have a separate system of long-term care (or long-term care financing) at all? That’s a subject for a lot more thought.

Private long-term care insurance can be an important tool to protect against the risk of needing costly personal assistance in old age. But two respected financial economists conclude it is very expensive relative to the benefits it provides and may not be appropriate  for many buyers. At the same time, a new consumer brief from the Society of Actuaries  suggests how much wealth you should have for coverage to make sense.     

The research paper from economists Jeff Brown and Amy Finkelstein describes many reasons why so few people buy long-term care coverage. They focus on two important issues: the effect of Medicaid’s long-term care benefit on people’s decision to buy private insurance, and the pricing and value of those policies. Their paper, in the Journal of Economic Perspectives, concludes that it does not make a lot of sense for people with few assets and little income to buy insurance, since they’ll be covered by Medicaid anyway–a phenomenon economists call “crowd-out.”

But they also find that private LTC insurance is very expensive relative to its benefits. For instance, Jeff and Amy found that 65-year-old buyers of a typical policy would get back only 68 cents for every dollar they pay in premiums.  By comparison, the same buyer of a life annuity would get 75 cents to 85 cents. It is also important to note that long-term care insurance is a much better deal for women, who get back 87 cents for every dollar in premium they pay, than for men–who get only 45 cents.

The deal is even worse when Jeff and Amy include people who let their coverage lapse before they ever get benefits. In that case, a typical buyer at age 65 would get only 50 cents back on the dollar, with men getting less than 33 cents and women about 64 cents. 

For several years, Jeff and Amy  have also looked at how Medicaid , which provides long-term care benefits for those with very low incomes and few assets, affects people’s decision to buy insurance. They found that for many potential buyers, private insurance provides coverage they would have received from Medicaid anyway. Jeff and Amy estimate that Medicaid would cover three-quarters of long-term care benefits for a typical woman buyer of private insurance.

I have questioned how much this calculation effect matters to real people, who often have no idea that Medicaid provides a long-term care benefit. And those who do, understand how restrictive Medicaid rules are and how poor the benefit often is. Medicaid is no bargain. Still, why buy insurance for something you can get for “free” from the government?    

And that helps explain why  the report from the Society of Actuaries suggests that those with savings of less than $250,000 may not want to buy private insurance, while those with assets exceeding $2 million may not need to.

These are by no means hard and fast rules. For instance, wealthier people may still want to purchase insurance  to preserve assets for their heirs. But, unless they face an unusually long period of care, they are probably able to self insure. Other research suggests that only 5 percent of those 65 and older will incur long-term care costs that exceed $250,000.

When it comes to long-term care insurance, I am often asked the same question: Should I buy? As these two reports suggest, the right answer is: It depends.

On Monday, a presidential advisory group set a goal to prevent and effectively treat Alzheimer’s Disease by 2025. There is much to like about this proposal, but it should come with a consumer warning: There is a lot less to this plan than meets the eye.

Let’s start with the good news. This initiative is potentially an important step forward as the nation confronts Alzheimer’s and other dementias that currently effect more than 5 million Americans–a number that will nearly triple by mid-century. The Department of Health and Human Services estimates that 40 percent of those 85 and older will suffer from some form of dementia before they die.    

The panel identified five specific goals. The aim of enhancing research to develop effective treatment and prevention of dementia by 2025 will get the most attention. But the others, including improving  the quality of care of Alzheimer’s patients, supporting their families, enhancing public awareness, and improving data collection are all extremely important.

The draft report also recognized the need to better coordinate medical and long-term care for dementia patients, as well as improving care transitions for this very vulnerable population.

The panel deserves kudos for all of these initiatives, and policymakers should absolutely pursue them all. 

But the draft is not perfect. Here is what I don’t like about it: 

It seems overly focused on Alzheimer’s. True, Alzheimer’s is by far the most common dementia and there is good reason to lavish attention on it. But there are many other forms of memory disease, such as stroke-related dementia and Lewy Body Disease.  These will be treated differently, and drugs that prevent or slow Alzheimer’s are not likely to benefit those diagnosed with other dementias.  

Money. There isn’t any. The report does not set a goal for research funding.  And it barely acknowledges the tremendous financial cost that families bear for providing the personal assistance dementia patients require–often for many years. Without resources, either public or private, all of the panel’s grand plans are a pipe dream.

And keep in mind the budget background of this initiative: In coming years, there will be tremendous pressure on the Medicare and Medicaid budgets, non-Medicaid government support to all of the frail elderly, and NIH research funding. What will happen to this initiative in an era of constrained government resources? This report does not say dementia will get priority in what will be an ugly battle for funding.

The relationship between government and the drug companies. The payoff for the firm that develops a successful dementia drug will be staggering.  It would be great to see a new partnership where, in return for research funding, government receives an equity share of  profits from any blockbuster Alzheimer drug that is developed with its support. In an era of budget cuts, plowing that funding back into public research programs could go a long way towards supporting future studies.

I remember President Nixon’s 1971 war on cancer. Four decades later, we still argue about how successful it was.  But it accomplished one thing: It raised the profile of a disease that people didn’t even want to talk about.  If President Obama runs with this draft framework, he can do the same for Alzheimer’s and other dementias. That itself would be an important contribution. But it won’t be enough.

Want to see the future of adult day programs for the frail elderly and adults with disabilities? Just watch what is happening in California, where 26,000 participants and the centers that care for them are struggling to manage state budget cuts and huge uncertainty. 

Adult day programs can be a key support for the frail elderly or other adults with disabilities who are trying to live at home.  They provide much-needed meals, exercise, companionship, and often an early warning system  for health problems. They can also provide critical respite for family caregivers. They may, although the evidence is not clear, make it possible for people to stay at home and, at the same time, avoid unneeded hospitalizations. 

But adult day is often funded by state Medicaid programs. And Medicaid, which is under severe financial stress, is looking to squeeze dollars from its burgeoning budgets. As I wrote last year, California, whose budget problems are worse than most, tried to end its support of adult day for 35,000 seniors and other adults with disabilities in nearly 300 centers. Had the cuts taken effect, most of those centers would have closed. Last year, California spent about $169 million on adult day through its Medicaid program (called Medi-Cal).

In response, advocacy groups sued and the state settled. It agreed to continue to provide care for 9,000 of those who most need assistance. Each of the remaining 26,000 participants must now each be evaluated to determine if they meet tight new rules for eligibility. Nice story on this assessment process on Kaiser Health News today.

California officials believe that about half will be declared ineligible for financial support. They say they can save $28 million this year and $92 million next year.

It is not clear what the assessments and the inevitable appeals will cost, but it won’t be cheap. And the Kaiser story suggests that most participants will eventually be found eligible even under the new criteria so it isn’t clear how much money the state will save, even in the short run.

In the longer term, it is likely that at least some of those who are kicked out of the adult day programs will no longer be able to live at home, and may end up in nursing homes–at far greater cost to California. Nursing home care costs on average three times as much as an adult day program.  But in today’s budget environment, few elected officials are thinking about the long run.

The uncertainty has already taken a toll. The Los Angeles Times reports that 20 adult day programs closed last year in anticipation of the budget cuts and others remain in limbo. While some participants pay privately, most receive government assistance. Many centers are run by non-profits that face their own budget challenges.   

Sadly, I suspect this story will be repeated elsewhere in the country.

Eighty-give percent of physicians say that unmet social needs lead to worse health outcomes, according to a new survey sponsored by the Robert Wood Johnson Foundation. But only 20 percent are confident in their ability to help patients and their families meet those needs. Talk about good news and bad news!

The survey asked about a wide range of social services from employment assistance for younger, low-income patients to transportation and food assistance, the kind of help that is often critical to the frail elderly living at home. But whatever the assistance, it seems beyond the abilities of doctors to even to tell their patients and their families where they can get it.

This is not a surprise to seniors or their family caregivers. Too often, even primary care physicians are on an island when it comes to patient care. Too often, they see their job only as providing a medical solution to a specific complaint. But when it comes to helping a patient cope when she goes home, too many doctors are clueless.

This is a particular problem with the frail elderly who often suffer from multiple chronic diseases and may need personal assistance as much as medical treatment. Doctors often have no idea whether a patient with severe arthritis must climb stairs when she returns home. Similarly, physicians rarely know whether a patient with diabetes has access to proper foods or whether someone recovering from a stroke has transportation to her physical therapy appointments.  And most often, docs have no idea whether their patients can manage complex medications.  

It is easy to criticize physicians for their lack of knowledge and attention. But rarely are they trained to address these issues. And neither Medicare nor most insurance plans pay them to even ask about these critical needs, much less connect patients to people who can help.

Three of four docs surveyed said the health system should reimburse the expense of making those links.  But it does not.

A few practices, some using the patient-centered medical home model, do address this gaping hole in the system of care. Nurse practitioners or physician assistants sometimes do help patients with making lifestyle choices and meeting social care needs. As medical homes catch on, we may see more doctors able to help where, as this survey shows, they recognize a real need.  

For many patients, it wouldn’t take much. A few words of advice and a simple flyer that identifies local resources (with phone numbers and Web addresses) would do wonders. Letting patients know what caregiver support groups are out there, what information and referral services are available, or providing a list of local care managers would be immensely helpful. And they’d cost the doctor next-to-nothing.  

Going a step further, providing coaching or direct care management services would make all the difference for frail elderly patients. The American College of Physicians has long recognized the importance of primary care practices providing case management to chronically ill patients.

Provisions of the 2010 health reform law such as Accountable Care Organizations and various integrated  care models may encourage docs to take on this role. New rules that will penalize hospitals for excessive readmissions may provide financial incentives for medical systems to support better care management.

The good news from this survey is that most doctors recognize the need. Now, they need the right incentives and some training to make it happen.

Congress is slowly starving senior services programs. 

In the 2012 budget it passed as it was leaving town last weekend, Congress froze or cut spending for a broad range of government programs aimed at seniors and their caregivers–everything from Meals on Wheels to long-term care ombudsman training to information and referral services. 

Most of these cuts were not dramatic and only a handful of programs were killed outright. But few received additional funding, despite the growing needs of the elderly and their families. For many programs, this was the second year in a row their budgets were frozen.  And chances are good  they’ll be frozen again when Congress approves their 2013 budgets a year from now.  

The funding changes were just part of what has been a steady pattern—one likely to accelerate as Congress and the President confront significant budget shortfalls.  The good news for these programs is that, in face of fiscal gridlock, much bigger budget reductions have been delayed. The bad news is this gridlock won’t last forever and many senior services will  face deep cuts in coming years. Much, of course, will depend on the outcome of the 2012 elections.   

Advocates and providers should think of what’s been happening as a temporary reprieve. But they will still feel the effects of  what was esentially a freeze in federal spending for senior services. Overall, the 2012 Administration on Aging (AoA)  budget was trimmed by about $23 million from last year, or about 2 percent.

A few programs suffered actual cuts. These included aging network supports (such as the Eldercare Locator, the ombudsman program, the National Center on Elder Abuse, and several counseling programs aimed at helping seniors enroll in benefits programs).  An Alzeheimer’s Disease demonstration program was cut by almost two-thirds.

Several new White House initiatives were not funded at all by Congress, including a new family caregiver program and $120 million to design and market the CLASS Act, the national long-term care insurance program that has effectively been abandoned by the Obama Administration.

Programs run outside of  AoA were also either frozen or trimmed. The $1.1 billion National Institute on Aging budget was held at 2011 levels. However, a big subsidy program aimed at helping poor families pay for home heating costs was slashed for the second year in a row. And funds to provide low-cost housing for low-income seniors were cut by about 15 percent, although a new program to provide counseling for the elderly seeking affordable housing was funded. The National Council on Aging has a nice summary of these spending changes.

It is important to remember that these changes come in the context of the higher-profile debate over the futures of Medicaid and Medicare. Those programs were not addressed in this budget bill, but they face major challenges of their own. Just this week, for instance, Sen. Ron Wyden (D-OR) and House Budget Committee Chairman Paul Ryan (R-WI) proposed a far-reaching plan to remake Medicare. More about that in a future blog.