Can Medicare Be a Vehicle for Improving Coverage for Long-Term- Care Services and Supports?

Few issues have flummoxed policy makers more than how to address the need to improve coverage of long-term-care services and supports (LTSS). Two leading experts, Sheila Burke, adjunct lecturer and faculty research fellow at the Malcolm Weiner Center for Social Policy at the Harvard Kennedy School, in Cambridge, Massachusetts, and Judith Feder, founding dean and professor at the Georgetown University McCourt School of Public Policy and Institute Fellow at the Urban Institute, both in Washington, D.C., provide their perspectives on the role Medicare can play.

Generations Guest Editor Tricia Neuman moderated this discussion.

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Generations: Thank you for joining us to talk about long-term care services and supports, both the sad history of efforts to move forward, and the potential opportunities for progress. Let’s start with the basics: what is the long-term-care financing challenge?

Sheila Burke (SB): The demographics that we’re confronting suggest an increasing number of people over the age of 85 and fewer young people to care for them. The questions that have arisen are how, looking forward, we assist in the financing of those services and the right source of financing. Medicare has, in its history, been a traditional acute care program. We’ve largely looked to Medicaid or to personal funds as the source of funding for traditional long-term-care services. Today, that continues to be the method of funding and because much of this care is financed out of people’s pockets and, in many cases, has impoverished them, there is a growing concern. Looking forward, given the aging of the population, the question is what role do public financing programs play, particularly in the context of Medicare?

Judy Feder (JF): The demographic challenge that Sheila emphasizes is exacerbating a long-standing problem in long-term care. We really have no insurance for long-term care. The need for expensive long-term care stems from an unpredictable catastrophic event. It’s unpredictable for the under-65 population with disabilities, which constitutes 40 percent of the current population needing long-term services and supports. It’s also unpredictable for people who are now turning age 65. Thirty percent are going to die without needing any services. Among the other 70 percent, there’s tremendous variation, with 20 percent likely to need five or more years of care.

With that kind of unpredictability and variation, we typically have insurance. But for long-term care, private insurance doesn’t work; health insurance doesn’t cover it, and Medicaid provides protection only after financial catastrophe strikes. We have no mechanism that enables us to insure against a need for long-term services and supports. The problem this poses for individuals who need services, and for their families who provide the bulk of long-term care, is enormous.

SB: I want to draw on the reference Judy made regarding the family caregiver, the extent of informal services provided, and the fact that at least a good percentage of what occurs is not what we traditionally consider healthcare services. Support services are what allow peopleto remain independent and, in many cases, are really more social welfare or supportive services rather than traditional health services.

Frankly, the innovations that have occurred and the introduction of assistive technologies have raised a series of questions about what we need to finance and the best source of that financing. Such a huge percentage of what occurs today is informal family caregiving. To what extent do you want to formalize that in the form of some kind of reimbursement? As Judy points out, private insurance has not been the answer, and is not likely to be the answer, at least as many people believe.

JF: Sheila, let me pick up on a piece you raise, in terms of your overall description. Long-term care is not healthcare; it is not delivered by expensively trained professionals wearing white coats. It is delivered by family members, for the most part.

The challenge is that family members are knocking themselves out at enormous cost. They, too, essentially need insurance protection. The families are caught between taking care of their children and taking care of their parents. As a result, caregivers are suffering health problems, giving up income opportunities, and finding themselves unable to provide the care their family members need. But when individuals are able to receive paid services, families don’t go away. They are able to concentrate their efforts on services that they’re more comfortable with and more capable of providing.

SB: Another thing I would add is that there is an appropriate desire to keep people out of institutions. This drive toward home- and community-based services is really one that underscores the value of being able to provide services outside of an institutional setting. The institution, in most cases now, is not the first-choice alternative. A relatively small percentage of people in this country are institutionalized. The desire is to remain at home.

Generations: Let’s segue to public policy a little bit. You said that Medicare doesn’t really pay for long-term care. The public seems to have a different perception, based on recent surveys. Can you review what Medicare does and doesn’t cover?

JF: Yes, the perception comes from the fact that Medicare pays long-term-care providers, but it doesn’t pay for long-term care. At the same time, the statute prohibited the coverage of what was called custodial care—the equivalent of long-term care—it also provided a benefit for post-acute care delivered in nursing homes or as home health care. Both that prohibition and post-acute coverage were aimed at guarding against people staying forever in hospitals. That’s not an issue anymore for a variety of reasons, but that was a concern when the law passed.

Nursing home coverage after a hospital stay and home health coverage, which isn’t necessarily tied to a hospital stay, are nevertheless contingent upon a need for skilled nursing or rehabilitative services. Largely because of lawsuits and challenges to Medicare’s arbitrary limitations on services at home in particular, there have been periods when that benefit has broadened and allowed the provision of personal care services alongside skilled care services. But Medicare always manages to constrain its availability.

Generations: The reason for these constraints is budgetary?

SB: Yes, certainly that’s been the case in recent years, where there has been much attention to the budgetary expenditures in those areas. To Judy’s point, the original view of the program was that it was a traditional acute care program based on traditional private insurance. Post-acute services—both skilled nursing facilities as well as home health—have always been viewed as relatively short-term benefits, not benefits that are viewed as long-term commitments to essential custodial care.

JF: It’s interesting; there’s nothing in the law that refers to short-term care. The oddity of a focus on custodial care as the budget buster when we are overspending and excessively paying post-acute providers is an outrage. When you look at the relatively recent Institute of Medicine study on the variation in Medicare spending across the nation, 40 percent of that is attributable to post-acute home health and nursing home care.

Generations: Let’s talk about why this is so hard to fix. Let’s go back to the Pepper Commission of 1989, when a majority of Commission members voted to support a public program to help pay for long-term services and supports.

JF: A strong bipartisan majority of the Pepper Commission recommended public coverage for long-term care. Sadly, rather than reflecting broad support, that vote reflected the fact that long-term care was so far off the legislative radar screen that it was uncontentious to be in favor of it.

Generations: What was the specific proposal?

JF: The proposal that twelve of fifteen Commissioners—including Republican members of Congress—voted for was universal social insurance for short-term nursing home care and home care, enabling people to come home or stay home when they needed long-term care; plus, a “floor” of protection in Medicaid so that even long-term nursing home residents did not have to become impoverished.

Generations: At the time, did people think that long-term-care insurance would fill in the back end?

JF: Actually, [former] Senator George Mitchell [D-ME] supported a catastrophic or “back-end benefit,” hoping that private insurers would welcome an opportunity to fill in the front end. But they were not supportive. Concern that only better off [people] would benefit from the back-end benefit led the Commission to support a “front-end benefit,” advocated by [the late] Senator Ted Kennedy [D-MA] at that time.

Generations: Let’s fast forward more than two decades to the other Commission that was looking at long-term care. You both were involved with this Commission on Long-Term Care. What happened? What were the dynamics behind trying to come to agreement and ultimately not reaching consensus, and where does that leave us?

JF: Both the Pepper Commission and the more recent Commission on Long-Term Care were consolation prizes for [the loss of] something else. The Pepper Commission was a consolation prize to [the late] Senator Claude Pepper [D-FL] (although at that time he was a congressman). He’d wanted universal homecare legislation; he got a commission. That was then. This recent Commission was a consolation prize that [former] Senator Jay Rockefeller [D-WV] sought for the repeal of the Community Living Assistance Services and Supports (CLASS) Act. There was a significant difference between the two commissions: the Pepper Commission was made up of members of Congress. Not so for the more recent Commission; it had very little clout.

Generations: Do you think the inability to reach consensus is more about money and financing, or is it a philosophical dispute about the role of public programs and the private sector, or some combination of both?

SB: It’s both. There are a host of issues that the Commission chose not to deal with, in part because of the anticipation that there would be no agreement. Financing clearly was one of those issues. There also were deep philosophical differences among many of the members about the role of the public versus private sectors and how those intersect. The different perspectives were evidenced in the course of the conversation; even though they did not opine on the issue of financing, it was clear in the conversation and in the folks that they sought to have speak and present information.

Setting aside for a moment the financing question, there are other issues highlighted that warrant our attention: certainly the issues around caregivers and the emphasis placed on the role of family members, but also the caregiving that is sought and provided by non-family members. Going forward, there are issues around how we prepare that workforce.

JF: On the financing, I think that you have to look at this issue—adequate insurance protection for people who need long-term care—within the context of the current political debate. Some members of the most recent Commission, like members of Congress and politicians generally, challenge the continuation of existing protections in Medicare and Medicaid. The notion of improving those protections is most definitely not on conservatives’ agendas. Progressives are on defense.

To illustrate: Immediately after a love fest on modest recommendations that some of the Commission membership from both parties supported, the Republican appointees to the Commission released a letter saying they would not support a dime being spent on any of their recommendations. That tells you that meaningful action poses a political challenge.

SB: And how deep the division is.

I think that the current environment is an interesting one, and I think there is this deep-seated division about the role of the public versus private sectors. I think there has been an avoidance of this issue in part because people didn’t know the answer. If you look back at the history of the committees of jurisdiction that worry about these issues, this has not been at the top of anybody’s agenda. They focus on Medi-caid issues, and MedPAC [Medicare Payment Advisory Commission] pays a lot of attention to the post-acute space in terms of where Medicare is spending its money, with a view toward protecting the trust funds. It’s a budget-driven conversation currently, but not conducted with great enthusiasm.

Now, an interesting note: you see the current chair of the Finance Committee (Senator Orrin Hatch, R-UT), and the Ranking Democrat (Ron Wyden, D-OR), both of whom are interested in chronic illness and in the management of chronic illness, and have made some efforts in that respect. But not on the broader question of what to do about long-term services and supports.

JF: The budget perspective on this is very powerful. There is a desire to present any improvement in services, whether it’s coordination or any kinds of new services, as a way to save money.

But the notion that we can take care of a population under and over age 65 without spending more is outrageous. You can’t have a cheaper program than one that relies on families and underpaid workers to deliver services. My concern, going forward, is not that Medicaid spending is going to rise and drive out all other spending on human needs. It is that it’s not going to rise, and that we are going to have, increasingly, people not simply dependent upon their families for care, but people going without care.

Generations: Do you think the aging of the baby boomers will create enough of a political demand for change? We’ve heard about institutions that are too big to fail. Are you saying this is a problem that is too big to fix?

JF: It’s not too big to fix; it’s about political willingness.


SB: Right, it’s about political will.


JF: Remember, other industrialized nations are doing a far better job [addressing the long-term care needs of their people].

SB: Although, our history is to not consciously look anywhere [outside the United States] for solutions. Legislatively, people tend not to respond until we’re in crisis. We saw that in Social Security, with the 1983 provisions. We’ve seen that in other programs where you come right up to the brink, and there’s nothing that suggests, near term, that we’re at the brink.

Generations: But aren’t people experiencing private crises?

SB: Yes, they have been for a long time, but it hasn’t translated into a political debate that puts it at the front of every conversation that members have when they go home for a town hall meeting. It’s not at the top of the list.

Generations: Is that because the financing is going to be a heavy political lift?

SB: Yes, a huge political lift.


JF: But there has to be recognition of and a political demand for service to generate a willingness to bear the tax burden that it entails.

SB: As we saw with health insurance, when you ask the question, are you prepared to help support people without health insurance? Absolutely. Are you prepared to pay more to do it? Maybe not.

JF: On health insurance, President Obama and the Democrats got to that point; they were willing to pay for it. A political leader took it on, and a party took it on, as part of their agenda.

Generations: No president has taken this on?

SB: Not long-term care, specifically.


JF: The political mood has to change.


SB: If you look to the history of Medicare, the coalition that formed in 1963, 1964, and 1965 around the time of Medicare’s passage was made up of children of the unions and seniors themselves. There was a broad coalition of people, and there was also a sense that this was a worthy population. It was linked to Social Security, it was linked to work, and it was linked to a work history.

This is a much tougher coalition to build, around a much more diverse population. It is the under 65s, the over 65s—people in various circumstances—so building that coalition is a challenge. But the other question, going forward, is what are the services that we think are critical long-term services and supports? It is beyond our traditional view of skilled care, and even non-skilled care, and the population is different. If you look at the dementia population, the physically disabled, the mentally impaired, all of whom require a wide range of services and providers, you begin to see the challenge of building a support system or a coalition to move that forward. I think it’s much more complicated today than it was.

JF: I don’t know if I agree with you on that. People have different needs at different times in their lives, but there is a core, common need that is based around personal assistance and services to manage daily life. The primary difference that I see from the beginnings of Medicare and Medicaid is that at that time, everyone accepted that most old people were poor. Since that time, Social Security has improved. It does not mean that the elderly are rich; there is a substantial low-income population and they are, on the whole, a low- and modest-income population. The facts are somewhat different from the perception of that population.

SB: And my point was simply that I think the coalition will be more challenging to build. I think there will be more difficulty arriving at a decision as to what the right answer is than perhaps was the case. I think the politics today are different, in a variety of ways. If you look at what [President Lyndon] Johnson had at hand in terms of large majorities in the House and Senate . . .

JF: That, I would say, is the key!


SB: . . . and that Johnson himself was a wily operator and essentially had extraordinary skills. He basically said to [the late Congressman] Wilbur Mills [D-AR], ‘Just get me something.’ [Editor’s Note: See Joseph Califano’s article]. There are different industry perspectives today than there were then, and very well-matured industries.

JF: And strong stakeholders.


SB: Much stronger stakeholders in each of these places. I think it is a much more complicated question today.


Generations: So what we’re talking about is leadership at the top? Or a major campaign that would generate demand at the local level?

SB: I think there are issues of timing and leadership. And I think we can reflect back on Medicare’s passage as part of that. It is also dependent upon leadership, not only in the White House but also in the Congress. You had Pepper, you had Rockefeller, you had [former Congressman Henry] Waxman [D-CA], you had [former Senator] David Boren [D-OK] on nursing homes. It also takes somebody who’s willing to take up the mantle, who has some standing.

JF: You are right about that.


SB: But in the absence of anybody to move it, even with the White House touting it, negotiations are difficult. You really need buy-in at both places, and somebody who’s willing to stand up and make it their issue.

Editor’s Notes:

The entire Summer 2015 issue of Generations is available on AgeBlog thanks to the generous support of The Benjamin Rose Institute on Aging, Compassion & Choices and Robert Wood Johnson Foundation President's Grant Fund of the Princeton Area Community Foundation. Click here to read more.

This article is taken from the Summer 2015 issue of ASA’s quarterly journal, Generations, an issue devoted to the topic “Medicare at 50” ASA members receive Generations as a membership benefit; non-members may purchase subscriptions or single copies of issues at our online storeFull digital access to current and back issues of Generations is also available to ASA members and Generations subscribers at Ingenta Connect. For details, click here.