The House Republican Budget proposal released today calls for the biggest changes in health and long-term care services for the elderly in a half-century. While there is no chance that these proposals will be enacted as proposed, they reflect a profound sea change in the way many in Washington look at assistance for seniors, and especially for the frail elderly.
The fiscal plan, developed by House Budget Committee Chairman Paul Ryan with the support of the House GOP leadership, would make four major changes aimed at senior care. The plan would:
• Abolish Medicare and, instead, give seniors a voucher they could use to buy insurance in the private market.
• Cap the federal contribution to Medicaid, the state/federal health program for the poor that funds more than $110 billion annually in long-term care costs. Medicaid finances more than 40 percent of paid long-term care services for the frail elderly and disabled adults living at home or in nursing facilities.
• Cut in half spending for all other domestic programs, including non-Medicaid services for the frail elderly living at home such as Meals on Wheels, information services, housing subsidies, and transportation. While the budget plan does not identify how these programs would be funded, all of them would likely face major reductions.
• Repeal the CLASS Act, the national long-term care insurance program included in the 2010 health law.
The Medicare change is the most dramatic. While it would not take effect for a decade, it would end the half-century-old health program for seniors. In its place, the federal government would subsidize the cost of private insurance. But the value of that subsidy would be capped, so if health costs rose faster than value of the voucher, seniors would be responsible for higher out-of-pocket costs. The GOP would also gradually raise the eligibility age from 65 to 67.
In theory, vouchers can be made to work. But there is one big problem. Medicare was created in large part because the elderly, many of whom suffer from one or more pre-existing conditions, could not purchase private insurance at an affordable price. That problem still exists.
The 2010 health law creates a mechanism to make coverage available by requiring insurers to cover all buyers no matter their health status and creating insurance exchanges through which private insurers can pool risk.
Under such an arrangement, Medicare might not be needed, as long as the subsidies were sufficient. However, the House Republicans also would repeal the 2010 health law, and won’t say how they’d replace it. Thus, there would be no way many seniors could buy insurance, even with vouchers.
The Medicaid changes would give states far more flexibility in how they deliver both health and long-term care. However, it would also reduce the amount the federal government contributes to the program, now about 57 percent of all costs. The Congressional Budget Office estimates that projected federal Medicaid payments would be cut by more than one-third in 10 years and by nearly half by 2030. Over 10 years, the federal contribution would be cut by $1.4 trillion.
It is impossible to know how states would respond to these changes, but it is very likely that the already big differences in state Medicaid long-term care programs would widen. Many states will cut payments to nursing facilities, home health agencies, and other providers. At the same time, they may expand their home and community based programs. The question is whether funding would be adequate to serve the growing needs of the frail elderly living at home. It is hard to imagine that it would be in the face of such large cuts in federal assistance.
I’ll describe each of these proposals in more detail in future blog posts, but the trend is clear: As difficult as it is to think about, families and providers need to plan for having to do more with less.