[Senate Hearing 107-106]
[From the U.S. Government Publishing Office]
S. Hrg. 107-106
LONG-TERM CARE: WHO WILL CARE FOR THE AGING BABY BOOMERS?
=======================================================================
HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
JUNE 28, 2001
__________
Serial No. 107-9
Printed for the use of the Special Committee on Aging
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74-686 WASHINGTON : 2001
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SPECIAL COMMITTEE ON AGING
JOHN B. BREAUX, Louisiana, Chairman
HARRY REID, Nevada LARRY CRAIG, Idaho, Ranking Member
HERB KOHL, Wisconsin CONRAD BURNS, Montana
JAMES M. JEFFORDS, Vermont RICHARD SHELBY, Alabama
RUSSELL D. FEINGOLD, Wisconsin RICK SANTORUM, Pennsylvania
RON WYDEN, Oregon SUSAN COLLINS, Maine
BLANCHE L. LINCOLN, Arkansas MIKE ENZI, Wyoming
EVAN BAYH, Indiana TIM HUTCHINSON, Arkansas
THOMAS R. CARPER, Delaware PETER G. FITZGERALD, Illinois
DEBBIE STABENOW, Michigan JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri CHUCK HAGEL, Nebraska
Michelle Easton, Staff Director
Lupe Wissel, Ranking Member Staff Director
(ii)
C O N T E N T S
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Page
Opening statement of Senator Russell Feingold.................... 1
Statement of Senator Thomas Carper............................... 3
Statement of Senator John Breaux................................. 4
Statement of Senator Larry E. Craig.............................. 17
Panel I
Hon. Tommy G. Thompson, Secretary, Department of Health and Human
Services....................................................... 5
David F. Durenberger, Chairman, Citizens for Long-Term Care...... 24
Carol V. O'Shaughnessy, Specialist in Social Legislation,
Congressional Research Service................................. 68
Robert B. Blancato, Executive Director, The 1995 White House
Conference on Aging; and President, Matz, Blancato &
Associates, Inc................................................ 87
(iii)
LONG-TERM CARE: WHO WILL CARE FOR THE AGING BABY BOOMERS?
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THURSDAY, JUNE 28, 2001
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The committee met, pursuant to notice, at 11:20 a.m., in
room SD-226, Dirksen Senate Office Building, Hon. John Breaux
(chairman of the committee) presiding.
Present: Senators Breaux, Feingold, Carper, and Craig.
OPENING STATEMENT OF SENATOR RUSS FEINGOLD
Senator Feingold. We will call the committee come to order.
The chairman, Senator Breaux, is on his way from the floor
and is very involved with the patients' bill of rights. He will
be here shortly, but I would like to begin the hearing.
This is the first in a series of hearings that Chairman
Breaux has called on the subject of long-term care, and I am
just delighted that he has done this. I can't imagine an issue
that is more important for the future of our country, and I
commend him for taking this step.
I am especially pleased, of course, to have the honor of
starting this hearing because the first witness, Secretary
Thompson, who I still prefer to call Governor Thompson, is the
very first witness.
There is no more appropriate witness that we could have
here today than the Secretary.
I have worked on long-term care issues for nearly 20 years
now, first as a member of the Wisconsin State Senate, where I
chaired the Aging Committee for 10 years, and now as a member
of the U.S. Senate and this committee. And when I was elected
to the State Senate in 1982, Senator Thompson was already a
distinguished legislator and a part of the leadership in the
State assembly.
Four years later, he was already overseeing the State's
long-term care programs as our Governor. The State experience
in long-term care he brings with him to his current position is
extremely valuable, because it is really at the State level
that most of the work on long-term care reform has been done.
As Secretary Thompson will attest, long-term care is not a
partisan issue, at least it has not been in Wisconsin. The
reforms we have been able to enact in Wisconsin, and especially
the Community Options Program, which is the centerpiece of
those reforms, was very much a bipartisan effort.
The program was actually begun under Governor Lee Dreyfus,
a Republican Governor. It was greatly expanded under Governor
Tony Earl, a Democrat, and then further expanded and fostered
under then-Governor Thompson.
This kind of bipartisan political consensus should not be a
surprise. Members of both parties in State government know all
too well what we face. They know that the current system is a
train wreck waiting to happen.
In Wisconsin we saw the train wreck beginning to happen
earlier than other States, in large part because we had so many
nursing homes. And the prospect of an exploding Medicaid budget
actually motivated policymakers to initiate some structural
reforms to help alleviate the problem.
And let me emphasize, however, that Wisconsin has been able
to buy itself some time because of those reforms but not
completely avoid the coming crisis.
States cannot rely solely on their own resources to tackle
this problem. A sustainable solution can only come with
fundamental Federal reforms of our long-term care system.
In previous Congresses, I introduced legislation that I
believe is a sustainable solution based on Wisconsin's long-
term care reforms. It allowed States to provide those needing
long-term care with the kind of flexible, consumer-oriented,
consumer-managed services that we have seen in Wisconsin that
will actually lower long-term care costs.
It paralleled the long-term care reforms that had received
bipartisan support during the larger health care reform debate
of the early 1990's, reforms that were the result of a
multiyear effort by long-term care reform advocates.
Long-term care reform has not been on the national agenda
in a serious way, in my view, since that time. With the
exception of a few improvements, such as the family caregiver
provisions included in the reauthorization of the Older
Americans Act, we have only really treaded water at the Federal
level, and we have left States to fend for themselves in this
area.
Despite this lack of support, some States have done some
wonderfully creative things with the resources they have.
And in this regard, Secretary Thompson deserves a great
deal of credit for the work done in Wisconsin to create the
Family Care Program, which utilizes existing Federal Medicaid
waivers to package together a much more flexible system of
long-term care services. This is something I think other States
will want to examine, and I want to touch on that with the
Secretary later.
So let me again thank the chairman for calling these
hearings. Long-term care reform has been a long time coming. It
has been 7 years since the Senate has considered it in a
serious way. I hope we will not wait another 7 years before
finally taking action.
With that, I am delighted to turn to my friend and the
Secretary, Tommy Thompson.
Secretary Thompson. I wonder if Senator Carper would like
to make an opening statement?
STATEMENT OF SENATOR THOMAS CARPER
Senator Carper. Well, I do, but I don't want to delay
Governor Thompson's testimony.
But I do have--let me just do this first thing.
I just left the Senate floor. Senator Breaux was awaiting
the outcome of the vote on his amendment. He said: I don't want
to leave until I am sure what is going to happen.
So he should be along very, very shortly.
Let me just say welcome to my old colleague--I shouldn't
say old colleague--my former colleague. [Laughter.]
And it is great to see you, great to be with you. And I
wish you, as you know, all the best in your new job.
All right, if the chairman were here, I would thank him--or
ranking member--for calling today's hearing. And I certainly
thank our witnesses, including our lead-off witness, for
testifying.
It seems like the most important issues do not always
receive the most attention, either here in the halls of
Congress or from the media. And I think it is great that this
committee today is shining the light on a potential crisis and
one that is under appreciated but is very serious nonetheless.
And as I get older--I am 54 this year--I continue to
appreciate more the seriousness of this issue.
I often say that our health care system in this country
resembles what I describe as a patchwork quilt and one that,
for that matter, is fraying a bit at the edges for many of our
people.
If our system of health insurance is a patchwork quilt, I
think it is fair to say that our system of long-term care is a
crazy quilt. [Laughter.]
As Senator Durenberger will testify later on, ``There is no
national cohesive long-term care system,'' in this country. And
Senator Durenberger will also attest this makes what system we
do have, ``inefficient, inequitable, and often ineffective.''
Most Americans believe that Medicare will cover their
health care needs when they retire. Most Americans don't know
if they end up in a nursing home, Medicare won't cover the
cost. Most Americans don't know that the single largest payer
of long-term care, Medicaid, requires that people effectively
impoverish themselves in order to access public assistance.
I have seen firsthand the high cost of long-term care. My
mom, who is almost 79 years old, today lives in a terrific
nursing home in Ashland, KY, where she battles Alzheimer's
disease and requires constant care to maintain her quality of
life.
As the father of two young boys, I also worry that our
children will someday face the same problems as our generation,
my generation, ages.
The cost of long-term care will be a growing burden for our
nation to bear. In the absence of reform, I question whether we
can carry that burden.
The magnitude of this challenge suggests the needs for some
significant Federal response.
At the same time, as a former Governor who made use of a
Medicaid waiver to expand options for home and community-based
long-term care, and to help people stay out of institutional
care wherever possible, I know that sometimes the best thing
the Federal Government can do is to give States and local
communities the flexibility that they need to meet local needs.
We all know that this is a complicated issue. That is why
hearings like this one are so important. I look forward to
hearing from our witnesses, and I am especially pleased to
welcome Governor Thompson.
STATEMENT OF SENATOR JOHN BREAUX, CHAIRMAN
The Chairman. Thank you, former Governor Carper and former
Governor Thompson, and thanks to the committee for getting
started.
I was on the floor with an amendment. We were just kind of
waiting on the outcome of it. And----
Senator Carper. Well, what happened?
The Chairman. It passed. [Laughter.]
If it had failed, I wouldn't have shown up. [Laughter.]
But, no, it passed, and we are happy.
I won't delay the Secretary's statement any longer. And I
do want to say that this committee is particularly concerned
about the questions that longevity bring to us as a society and
us as a Congress in particular.
I have often said that the good news is that people are
living a lot longer; the bad news is that people are living a
lot longer.
And what I mean by that is that we certainly are happy that
medical technology and science has allowed life expectancy of
women to be almost 80 years of age and men almost 75 years of
age, and that is good. But it also presents society an
incredible number of problems on how we take care of those
people in their golden years.
It is not enough for people just to live longer; they also
must be allowed to live better. And I think that is the real
challenge that we have.
And when you look at the fact that most of the Federal
dollars that are spent on helping seniors, in terms of how they
spend those years, so much of it is spent in institutionalized
care, which I think is not necessarily the best way to be
spending those dollars.
I mean, what you have done in your State, in Wisconsin, as
a leader, is something that is very important to the rest of
the country to hear about.
And we are spending anywhere from $40,000 to $80,000 a year
in putting people in nursing homes. I seriously question if
that is the best procedure for the majority of senior citizens
in this country.
We have 77 million baby boomers who are rapidly approaching
that period of time when they are in their golden years. So we
are going to have a lot more people living a lot longer. I
mean, that is the huge challenge that we face as a society.
And this hearing is really to try and hear, Mr. Secretary,
what you did in your State and what your ideas are about what
we might be doing as a Nation under your leadership as
Secretary of Health and Human Services, and what we might do as
a committee and as a Congress to try and help you to reach that
goal of allowing people to live longer but also allowing them
to also live better lives.
So we are happy that you are here. We apologize for the
delay, and happy to hear from you.
[The prepared statement of Senator John Breaux follows:]
Prepared statement of Senator John Breaux
I have called for this hearing-the first in a multi-part
series on long-term care in an effort to provide a forum for
examining the potential crisis we face given the changing
demographics in this nation. Advances in medical technology
ensure that most of us will live into our 70s and 80s. When one
pairs that fact with the statistic that there are 77 million
baby boomers who are aging, it is apparent that there will be
increasing demands on our long-term care system in the next
couple of decades.
I am especially grateful to Secretary Thompson for taking
the time out of his busy schedule to be here with us today. The
Secretary was committed to finding innovative solutions to
funding long-term care when he was Governor of Wisconsin and he
brings that same commitment to his new capacity. I look forward
to hearing about the federal initiatives that I know that the
Department of Health and Human Services has commenced in an
effort to support states in their long-term care efforts.
I believe today's hearing will provide an opportunity for
all of us to gain an improved understanding not only of the
current status of long-term care services and how they are
financed but also a sense of what the future is likely to
behold. We all know that the population aged 85 and older is
the group most likely to need assistance with daily living.
Whereas in 1998 there were 4 million Americans in that age
group, the U.S. Census Bureau expects that number to jump to 7
million by the year 2020-a vivid illustration of the new
demands that will be placed on the system in the near future.
I feel that the time is ripe for a call-to-action on the
issue of long-term care-and that is the purpose of today's
hearing. Policymakers, providers and consumers need to partner
to determine the most appropriate avenues for reform. Today's
hearing will provide all of us with a better sense of what this
nation's long-term care population is facing and I look forward
to subsequent national dialog on this issue so vitally
important to America's seniors.
STATEMENT OF HON. TOMMY G. THOMPSON, SECRETARY, DEPARTMENT OF
HEALTH AND HUMAN SERVICES
Secretary Thompson. Thank you so much, Chairman Breaux.
And let me just start out by thanking you for your
leadership and your vision. Congratulations on your amendment.
And the nice thing about being in front of you, Senator
Breaux, is it gives me an opportunity to thank you for your
leadership in so many issues. And this issue is probably the
most important one of all the ones that you have taken such
strong and passionate leadership. And I just want to take this
opportunity to thank you and compliment you.
My good friend, Russ Feingold, truly was a leader back in
Wisconsin on aging problems. He was the chairman of the Special
Committee in the State Senate, and he led the efforts on our
very good and comprehensive Community Options Program so
elderly citizens could stay in their own home, and he also took
a very strong and passionate leadership on Alzheimer's.
And I am sorry he is not here so that I could compliment
him in person. But I am sure that somebody will tell him that I
said nice things about him. And they are well-deserved, and I
want to applaud him.
Senator Carper. I will tell him. [Laughter.]
Secretary Thompson. And, Senator Carper, it is always a
pleasure--it is difficult for me to call you Senator, because--
I know it is difficult to get over the word ``Governor.''
Senator Carper. I still call people on the phone, I say,
``Hello, this is Governor Carper,'' and they say, ``Oh, no, it
isn't.'' [Laughter.]
``Wait a minute. What happened?'' But I thank you so very
much for your friendship and partnerships on so many efforts
that we have teamed up together on in the past, and I am sure
we will in the future. And I thank you so very much for being
here.
This hearing is so important regarding the long-term care
needs of our Nation's elderly and our disabled citizens.
In 1900, a person born in the United States could expect to
live 49 years from birth. In the course of the past century, we
have added nearly three decades to the life expectancy of a
newborn.
Three decades is also about how long we have had Medicare
and Medicaid. These programs have served millions of Americans
very well. Yet as the population of older Americans has grown
and as the possibilities for new kinds of long-term care have
increased, Medicare and Medicaid have pretty much remained the
same as when they were first begun in the mid-1960's.
And I know that, Senator Breaux, you have taken a
leadership in this effort, and I absolutely compliment you on
that.
For example, Medicaid will pay for your care in a nursing
home. But if a State, like Delaware, Wisconsin, Louisiana,
wants to pay for respite care--that may help keep families
together and be a better alternative--it has to come to
Washington, DC., for a waiver. That just doesn't make any sense
to me, and I am sure it doesn't make any sense to you.
It is time to modernize Medicare and Medicaid, to customize
them to meet the wide array of needs of our growing population
of senior and disabled Americans.
And one of the key elements of this modernization is the
transformation of long-term care.
Long-term care used to be limited almost exclusively to
nursing homes, as you mentioned, Senator Breaux, which consumed
a substantial amount of the Medicaid budget. Now long-term care
can be provided in a wide range of settings and today accounts
for one-quarter of total Medicaid long-term care expenditures.
There are more choices than ever for persons who are
elderly or have a disability, and I think that is great. But I
think we can do a much better job.
The States are providing long-term care with the aid of
about 250 home and community-based waivers from the Department
of Health and Human Services. These waivers provide
approximately $7 billion of care, funding that enables the
State governments to serve more than 1 million people. We are
working with a few States to pilot waivers that allow for a
much more positive, complete, coherent system.
Public service at every level of government must do a
better job of preparing for the future. That is why the
proposals outlined in the President's New Freedom Initiative
are so promising and encouraging.
The New Freedom Initiative is designed to break down the
barriers faced by the 54 million disabled Americans. His
proposals will give our elderly and disabled the freedom to
participate more fully in the community and, yes, in the
workforce as well, a goal that everyone shares. And it is a
goal shared by all three political parties: the independent,
the Republican, and Democrat.
Mr. Chairman, we have no time to lose. Today the 35 million
people aged 65 or older account for about 13 percent of the
total population. It is projected that this population, or one
in five, will be age 65 or older in a few years.
Preparing for the future requires us to rethink the
strategies of the past. Innovative approaches to delivery of
long-term care services have the potential to preserve the
independence and enhance the quality of life of all of our
seniors, and be able to enjoy it in a cost-efficient manner.
The Federal Government now provides 60 percent, nearly 60
percent, of the funding for nursing home care. Providing
quality, cost-effective care is going to become increasingly
important as the baby boomers age.
Community-based care could save individuals and families
and taxpayers and the government a substantial amount of money.
More importantly, it promises to help seniors more fully
sustain their independence and their personal freedom.
In addition, while today's hearing is focused on community-
based alternatives to nursing homes, let me touch briefly on
the subject of nursing homes.
Nearly 3 million Americans spend at least some portion of
the year in our nursing homes.
Let me share some good news. According to the second annual
CMS report--that is the old HCFA, now Centers for Medicare and
Medicaid Services, CMS--their report on nursing homes quality,
several quality indicators point to some very positive emerging
technologies and trends.
For example, since 1998, there has been a 35 percent
decrease in the proportion of deficiencies for care problems
resulting in actual harm to nursing home residents.
That is going in the right direction. Am I satisfied? No.
Should anybody be satisfied? No.
But nursing homes cited for immediate jeopardy represent
fewer than 2 percent of all nursing homes. Improper use of
physical and chemical restraints has also declined. And the
problems of involuntary weight loss is on a downward trend.
This news is encouraging. Is it good enough? No, but it is
encouraging, and we are going in the right direction, and we
want to continue to build upon it.
But we face serious nursing home worker shortages that
compel us to look for creative solutions to this problem. To
help us address these issues, I have discussed with Labor
Secretary Elaine Chao to ask the Labor and HHS to work
collaboratively to find effective solutions. Our staffs plan to
meet early next week to map out a new strategy that would join
the DOL's training dollars with nursing programs supported by
HHS.
I plan to investigate other cross-departmental
opportunities to see if we can address this nursing shortage on
a governmentwide basis.
We also are going to make a fresh examination of the
Medicare and Medicaid regulations to determine if current
regulations actually present barriers to training needed
workers.
And we are also working to identify and publicize promising
State-developed practices.
In Wisconsin, we have utilized the single-task workers for
several years in situations that are safe and appropriate. So
today I am announcing that the Centers for Medicare and
Medicaid Services will be providing administrative guidance to
the States to enable greater use of single-task workers in
transporting nursing home residents from one area of the
facility to another, under supervision and under training. CMS
will issue a proposed regulation to address other types of
single-task as well.
But even with these improvements in nursing care, States
are still facing the barriers in the development and
implementation of community-based care systems, including the
Medicaid program itself.
Medicaid seems to have a bias toward institutional care, a
bias rooted in the experience of earlier years when nursing
homes were almost the only alternative. That is apparent in
kinds of services that are offered, as well as in determining
the eligibility.
But institutional care is only one of several options. As
Governor of Wisconsin, I had the opportunity, under the
supervision of the Federal Government, to get a waiver to pilot
another approach, the Family Care, the Pathways to Independence
Program.
As we redesigned our own State's long-term care system, we
introduced the Family Care benefit to our Medicaid programs.
This benefit offers State coverage of long-term care services
for elderly Wisconsin citizens, as well as other adults with
disabilities.
Aging and disability resource centers were then established
in each participating county. Seniors, as well as others
eligible for the benefit, are now able to go to the centers to
obtain program information, seek counseling and be enrolled in
a care-maintenance organization, the entities responsible for
managing those benefits.
The Family Care Program allows seniors to choose their own
personal care setting and integrates personal and family as
well as physician assessments into a care plan, which is
individualized for each individual senior.
Its principles are simple: Give people the information they
need to make the positive decisions. Do it in a way that they
can understand it, and in a one-stop shop environment so they
can go there and get the necessary treatments that they need.
And make the funds flexible so that they follow the individual,
not the funds flowing to the institution, so they follow the
person to the most appropriate setting, paying for what that
individual person needs.
Another initiative, which is called the Program of All-
Inclusive Care for the Elderly, or PACE, also offers very good
promise. PACE operates from a managed-care model and provides
comprehensive and high-quality medical, social and long-term
care services to the frail elderly eligible for nursing home
care. This helps these older citizens maximize their autonomy
as well as their continued community residence.
Finally, we should support those families that provide the
majority of long-term assistance to the loved ones requiring
help due to injuries, accident of birth, disability, or long-
term illness. Their efforts are providing those in need with
what is usually the best care available.
The Caregiver Support Program, which was recently announced
by our Administration on Aging, is a dynamic new initiative.
And I hope our efforts with community-based long-term care will
continue to reveal additional ways that the Federal policies
are able to be made more family friendly.
Personal savings are going to become an increasingly
important component of long-term care financing as our elderly
population continues to grow. We must take the steps today that
will encourage people to start saving for tomorrow.
Specifically, the president has proposed that individuals
be allowed to deduct the cost of purchasing eligible, private
long-term care insurance. This will provide, hopefully, the
incentive, or an additional incentive, for people to take
greater financial responsibility for their long-term care needs
and will encourage the use of long-term care insurance.
By providing tax deductibility for policies that meet the
eligibility standards, quality long-term care insurance will
play a larger role in the financial security of older
Americans. And by making such incentives available, more
employers will join the trend in offering long-term care
benefits to their employees.
This concept recognizes that individuals have a
responsibility to plan for their future and empowers them to do
so with the help of their employers.
Employer-sponsored long-term care plans would be subject to
ERISA and the protection it affords participants and
beneficiaries.
We have also proposed allowing the taxpayers to claim an
additional personal exemption for providing long-term care to
qualified family members who live in the taxpayer's home.
Providing such an exemption would recognize the formal and
informal costs to family caregivers that provide long-term
care.
Community-based care can be tailored to the needs of the
individual and can maximize the independence of the men and
women who need assistance. It can also alleviate some of the
burdens that our family caregivers are currently facing,
enabling more individuals to remain in their homes.
To get started on the enormous task at hand, I have asked
Tom Scully, the CMS administrator, to begin identifying issues
that we must consider as we evaluate how to improve our long-
term care service delivery system.
He will be reaching out to the States and to other parties,
and especially to this committee, with interests in long-term
care, including ordinary citizens, medical associations,
nursing facilities, and senior citizen groups. Mr. Scully will
discuss with these groups the critical decisions that must be
made as we determine how we can best provide long-term care to
those who need it.
We have taken some important steps in helping our
States transition to community-based care, and I can assure you
that the administration looks forward to working with you on a
bipartisan basis as we begin to equip our States for such a
shift.
And so, therefore, thank you, Mr. Chairman, for your
concern, your passion for this important issue. And at this
time, I am pleased to answer your questions and those of other
committee members.
[The prepared statement of Secretary Thompson follows:]
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The Chairman. Mr. Secretary, thank you very much for a very
detailed and very fine statement about the principles and
things you are trying to accomplish, as well as what you have
done also in your State of Wisconsin.
We have been joined by our ranking member, Senator Larry
Craig.
Senator Craig, do you have any comments you would like to
make?
Senator Craig. Well, Mr. Chairman, first let me ask
unanimous consent that my statement be a full part of the
record.
The Chairman. Without objection.
[The prepared statement of Senator Craig follows:]
Prepared Statement of Senator Larry Craig
Good morning. I am pleased to join John today in helping
launch what promises to be a valuable series of hearings
examining the challenges of assuring affordable, accessible,
and flexible long-term care to America's seniors--particularly
now, as the first of the massive Baby Boom generation approach
retirement age.
Medicare prescription drugs and Social Security may be
getting more ink at the moment, but the looming demands of our
faltering long-term care system are perhaps of equal weight and
concern. By the time all the Baby Boomers have retired, in
approximately 2030, more than 70 million older Americans will
be in need of some form of long-term care. And perhaps even
more alarmingly, the number of Americans 85-and-older, those
most likely to need daily assistance, will nearly double by
2020.
As we prepare to meet this challenge, one issue of
particular concern to me--and, I know, to Senator Breaux--is
the reality that despite decades of well-intentioned talk, this
country continues to devote the lion's share of its limited
long-term care funding to institutional nursing home care,
rather than to assisting seniors in living independently in
their own homes and communities. In addition to being more
cost-efficient than nursing home care, home and community based
care is vastly preferred by America's seniors and their
families.
When a mother or a spouse is only one bad fall away from
permanent institutionalization, just a few hours of simple in-
home assistance with difficult tasks can make a tremendous
difference, not only to the older person's quality of life, but
also to his or her family and to the taxpayers. It is families
and taxpayers, of course, who often must shoulder the cost of
long-term institutionalization--a cost that now averages a
staggering $40,000 per year per resident.
Initiatives such as the Older Americans Act Family
Caregiver program, which I strongly supported, and which this
Committee recently examined, offer modest steps in the right
direction. But much more remains to be done. For example, a
look at efforts undertaken by many states--including Secretary
Thompson's Wisconsin--offers much in the way of encouraging
innovation. I understand that state experimentation with long-
term care solutions will be the focus of our next hearing, one
I am very much looking forward to.
Finally, I would just add that no serious review of our
long-term care system will be complete without a serious effort
to simplify the current disjointed hodgepodge of long-term care
programs and benefits. Navigating the current maze of Medicaid,
Medicare, Older Americans Act, block grants, and other long-
term care programs is a daunting challenge even for well versed
policy experts, not to mention seniors themselves.
We have our work cut out for us, and I am eager to get
started. Thank you.
STATEMENT OF SENATOR LARRY CRAIG
Senator Craig. Welcome, Mr. Secretary.
We are extremely pleased you are with us today. And I am
extremely pleased that John has started a series of what I
think are most valuable hearings on the issue of long-term
care.
And of course you have outlined some of the concerns, my
concerns, about affordability and accessibility and flexibility
and all those kinds of things that really begin to fit as we
recognize this massive wave coming at us out there in our
demographics.
I am part of that wave, ultimately, as many in this room
are. And if we don't have the sense to shape it now or help
begin to shape it, I think it is a very, very real problem.
Obviously, Medicare and prescription drugs and Social
Security are the items that get the bulk of the ink today. But
out there in our future is this long-term care issue that you
have clearly recognized and are beginning to take action on it.
I look at these numbers that, by 2030, 70 million older
Americans will be in that status of long-term care, and then
you keep looking outward and seeing those numbers double, and
it says to us so loudly. And that is why we in this committee,
I think, can effectively use the committee as a bully pulpit,
not only to get attention to and to help you all, but, most
importantly, to dramatize the importance of moving in this
direction.
Mr. Chairman, I do have some questions.
The Chairman. OK.
Senator Craig. But let me ask you to proceed with
questions, and I will come back to them, because I am anxious--
--
The Chairman. That will be fine.
Senator Craig [continuing.] To see where the Secretary is
going and where we might assist him.
The Chairman. That will be fine. Thank you, Senator.
Let me start by asking maybe sort of a generalized
question. I am interested in, how do we as a Nation compare, if
you know, with how other developed nations treat their elderly?
It seems to me that in other countries that are developed
countries around the world that it seems to be that there is
more at-home care for seniors then we do in this country. Is
there any indication of what other nations are doing in this
area that we can compare with and get some ideas?
Secretary Thompson. I am sure there are, Senator. I am not
that familiar with what other countries are doing. I haven't
taken enough study. I have certainly done a lot of study about
what we are doing in the United States, and I just don't think
we are doing enough.
I think the way the system was set up in the mid-1960's
with Medicare and Medicaid, it was very much, as you have
indicated, a bias toward institutionalized care, and we have
continued to do that.
And only recently in the 1990's have we started to address
alternative care, respite care, and stay-at-home, and setting
up programs for that. And it is so much more important for us
to continue to do so, and to modernize Medicaid to allow us to
provide for the services at home rather than just an
institutionalized setting.
And so I think that we have to do a better job. But I can't
point to a country that is doing that much better job, but I am
sure there are some examples.
The Chairman. I think particularly in Asia it is sort of a
cultural thing that is very important. I like the idea.
I am one of the sponsors of the tax credit for long-term
care insurance. I think that is a no-brainer; we should be
encouraging that.
I like the idea that you talked about; the Administration
has proposed that taxpayers be allowed to claim an additional
personal exemption for providing long-term care services to
qualified family members who live in the taxpayer's home.
If you think about it, we do that for children. I mean, you
have the child tax credit if you are taking care of children.
And now if you want to encourage people to help take care of
parents or perhaps grandparents in a home setting, is it not
appropriate to also have some type of assistance to provide for
that?
And I think the concept of a grandparent credit, if you
will, whatever you want to call it, would be something that
would be good public policy.
Let me just ask, you talked about the waivers, that you
have all these States that have applied for 250 waivers to use
their Medicaid dollars to do things other than just place
people in nursing homes, and you talked about home and
community care and the PACE program.
Explain to the committee exactly what do you mean when we
are talking about alternatives other than nursing homes, your
community-based type of things that the department is allowing
States to use their money to do. What are we talking about them
doing?
Secretary Thompson. Well, there are so many programs out
there.
There is the Cash and Counsel program, that has just set up
a waiver in four States, in which the money is going to be able
to be used for individuals to come in. And they are being
counseled and to be able to actually get the cash to purchase
services in the community.
There is the COP program, Community Options Program, in
which elderly citizens can make the option of staying home. It
used to be only with State dollars that you could do it, but
then the Federal Government allowed us to come in and get
waivers and to be able to use the Medicaid waiver dollars to be
able to purchase services.
And what I tried to do in Wisconsin is to set up so that
caregivers in the Community Options Program are put into an
overall comprehensive program, where, if your uncle or aunt or
your mother or father needed services, you would go to a
central place and get the information, and actually have the
doctor make an assessment, have the parent or brother or sister
or son or daughter make an assessment of what that individual
needs.
And then the community, that collection point, that center,
would purchase the services, whether it would be food, come in;
maybe it would be nursing home nursing care for 3 or 4 days a
week; maybe come in and just take care of the parent or parents
one night a week so that the son and daughter could get out and
get away.
It depends upon the individual, but it makes it much more
localized, much more individualized, and allows the dollars to
follow the individual instead of just flowing to the
institution.
The Chairman. I take it, Secretary, now the State really
has to go through a waiver process to be able to use any of
that.
Secretary Thompson. Absolutely.
The Chairman. And you would recommend that we would amend
the Medicare law when we are doing the reform and
modernization, to not make that a necessary step?
Secretary Thompson. That is absolutely correct, and allow
for the flexibility to do so in order to get the job done,
because States have got a lot of things going, and we should
allow and encourage that kind of flexibility to look for
alternatives to provide long-term care.
The Chairman. You have given us two good ideas: change the
waiver process to allow more flexibility for the States and
local communities to do more; plus the so-called--I would call
it the grandparent tax credit for caring for people in the
home, which are two good, helpful ideas.
Secretary Thompson. I think it is good, common sense,
Senator.
The Chairman. OK.
Governor Senator Carper. [Laughter.]
Senator Carper. Thank you, Senator Chairman Breaux.
[Laughter.]
Secretary Thompson, when you were chairman of the NGA, I
think you started something, really kicked into gear something
called Center for Best Practices to identify those practices
within the States which serve as laboratories and showed the
way for the rest of us.
Are there any States that come to mind, including your own,
any States that come to mind where they are doing an especially
good job, a creative job, in approaching these challenges? And
how we might incent those States, how we might spread that
word, how we might build on those successes?
Secretary Thompson. There are a lot of States doing a lot
of things, but I am not sure that any one State is doing
everything.
Oregon has got some good programs and has taken a
leadership role in long-term care. Minnesota has got some good
programs. Arizona has got a family care program like we have in
Wisconsin. Delaware has some programs.
The new Cash and Counsel waivers that were just granted,
three States and one more is coming in. I think it is Arkansas
is doing a good job under Governor Huckabee. I believe it is
Florida and Arkansas have got these waivers.
But to point out the best State, besides Wisconsin.
[Laughter.]
I would be a little bit hard-pressed to do that. But there
are good examples out there, and we should encourage that.
Senator Carper. Are there any arguments against the kind of
change in waivers that you have called for?
Secretary Thompson. Am I against it?
Senator Carper. No, are there any arguments--what would be
the arguments against doing what you have suggested?
Secretary Thompson. Well, you are going to have competition
from the nursing home industry, for sure.
And you are going to have competition and opposition from
people that think the Federal Government should set all of the
standards and make all the programs fit one mold.
I just don't think that is the right--especially in this
area. You have to encourage a lot of things.
Louisiana, for instance, under Senator Breaux's leadership,
got a nice waiver through at the beginning of the year for
children. I think about--if I remember correctly--3,900
children were able to live at home, if I am correct about that
waiver.
You know, if it was just the Federal Government, Louisiana
would not have been able to get that waiver. If we had just,
you know, a one-size-fits-all, Wisconsin could have not tried
this Family Care plan that I think is going to be a model for
the country.
Senator Carper. About a year and a half ago, almost to the
day, my sister and I were down in Florida at my mother's home.
And my mom, we had just moved my mom to this nursing home, I
mentioned earlier, up in Ashland, KY, close to where my sister
lives.
And we were going through my mom and dad's home, packing
things up, a lifetime of memories. One of the things we came
across as we were going through--my dad died about a decade
ago.
But one of the things we came across as we went through all
these boxes and things and papers and through the attic and
all, we found an insurance policy. ``What is this?'' It turned
out to be an insurance policy for long-term care that my mother
had purchased several years earlier for herself.
And my mom was one of those people in Florida who got phone
calls all the time from others who were trying to sell her
things--a vacuum cleaner that I remember she paid three times
more than it was worth. [Laughter.]
Getting the roof replaced on the house, which was perfectly
fine.
But she bought this long-term care policy, which was now
about to expire but lasted a couple of years.
You talked earlier about providing some incentives through
the tax code to encourage employers to provide and people to
acquire. I want you to just go back and just talk about this a
little bit more.
My mom did it without the incentive, even without the
encouragement of my sister and me. But it was a stroke of
genius on her part.
Secretary Thompson. Yes, it was.
Senator Carper. But, what--could you go back and talk a
little bit more about the kind of incentives we need to provide
through the tax code for employers to offer and for individuals
to take advantage of long-term care.
Secretary Thompson. What we need to do, Senator, we need
to--first off, we need to get information out there.
I don't think we do a very good job of advising seniors,
you know, about what is available under Medicare, what is
available under Medicaid, what is paid for and what isn't. And
to tell them that it is not--if they really want to do what is
necessary, they need to have a long-term care insurance policy.
And we should be doing more of that.
And, you know, until this committee started holding
hearings, I don't think that subject was ever discussed. But to
use the tax code, you know, to be able to deduct it.
It is really an investment by the Federal Government,
because that long-term care insurance, as your mother had, it
certainly helps you and your sister, but it is also helping the
Federal Government, because if she didn't have that--or the
State governments, through Medicare and Medicaid. It is just an
investment, you know, that is going to save the Federal
Government future expenditures.
And so we should use the tax code to encourage them. We
should use it so that employers see this is an opportunity for
them to give expanded coverage for their employees, to be able
to take care of their employees, you know, in their retirement
years.
These should be the best years for everybody. They should
be beyond their worries. They have raised their children, paid
their debts to society. And they should be able to pick and
choose where they are going to live and be able to have the
opportunity to have long-term care insurance that is going to
help subsidize and give them the independence and the quality
of life that they deserve and that you certainly want them to
have, Tom.
Senator Carper. Do you have any idea if a dollar sign has
been put on this particular proposal, or the other one that you
laid on the table, with respect to what was the extra exemption
for those who take into their home----
Secretary Thompson. That is for the Caregiver program.
Senator Carper. Any ideas what the price tag on those might
be?
Secretary Thompson. I did have that figured, and I--but I
will send it to you, Tom.
Senator Carper. Thank you.
Secretary Thompson. Thank you, Governor Senator.
[Laughter.]
The Chairman. Thanks so much, Governor.
Questions, Senator Craig?
Senator Craig. Well, I think most of them have been
covered.
Obviously, to create these kinds of flexibilities, waivers
can be granted now to some extent.
Mr. Secretary, are there other legal, structural obstacles
within the law that you think we ought to focus on, beyond
creating new components, as the chairman was delineating, from
a tax credit or deduction?
Have you scanned the law, as it relates to Federal
involvement today, to see what other obstacles might be out
there that we could reform or adjust to deal with this?
And of course with your, you know, Family Care Program in
Wisconsin and the flexibility it gave, what might you suggest?
Secretary Thompson. Well, it took us 2 years to set the
stage in weekly discussions with the former HCFA, now CMS.
And then, once we had the knowledge base and the
discussions how far we could go, then the waiver only took
about 90 days to get approved, which is fairly rapidly, but it
took 2 years of preparatory time to get there.
And the big obstacle always has been is that when Medicare
was set up, it was to pay for nursing care services in a
nursing home. And it never really realized or expected that our
elderly were going to live as long as they did or that there
would be other alternatives--respite care in the community. And
so the system pays for the services in a nursing home.
And they now provide for home-care services, but you still
get a waiver for it. And Medicaid does not provide for respite
care unless you get a waiver. And so what you need to do, is
you get the waiver.
We are very, very much--we are eager to give these waivers,
because they allow for new alternatives. You have provided a
grant, you and the Federal Government, of $70 million for
States to apply for this money to make changes, and that is a
wonderful program.
I went to the National Governors Conference and told them
that there was $50,000 planning grants and all they had to do
was fill out--and I made up a two-paragraph form that all you
had to do was sign. And out of the 56 States and territories,
54 have already since February applied for the $50,000. And so
we have only got one territory and one State left to do it.
But it tells me there is a tremendous degree of excitement
out there at the local level that wants to do something in this
area. And that $70 million, I am sure, you know, when they get
all their applications in, is going to go very rapidly.
Senator Craig. Sure.
Secretary Thompson. And I think we are going to get some
innovative ideas.
And I would like to come back to you with some of those
ideas and discuss with you, you know, how we are going to be
able to fund them and how we should be able to distribute this
money.
Senator Craig. Good. Thank you.
The Chairman. Secretary, thank you very much. I think you
have been very helpful, and we clearly think your ideas that
you have suggested are very, very positive.
And this begins the dialog, which we do need a national
dialog on this issue, and your presence has been very helpful.
Thank you very much.
Secretary Thompson. Thank you.
The Chairman. We would like to invite up a panel,
consisting of our good friend and former colleague, former
Senator David Durenberger, who is chairman of Citizens for
Long-Term Care, which I have had a chance to review their
publication and find it to be most interesting and very
helpful; also, Ms. Carol O'Shaughnessy, who is a specialist in
social legislation for the Congressional Research Service,
which is always very helpful to us; and Mr. Bob Blancato, who
is executive director of the 1995 White House Conference on
Aging.
We welcome all of you.
And, Senator Durenberger----
Senator Craig. Mr. Chairman.
The Chairman [continuing.] Glad to have you back.
Yes, sir?
Senator Craig. Before David starts, let me apologize. I am
going to have to step out.
I also received the brochure and read it, and it is an
impressive concept. And I will look forward to further input on
it.
But I apologize to the panelists.
The Chairman. It is a busy day, I understand.
Senator Craig. Command calls, but thank you.
The Chairman. We have several different things going on at
once, as you can imagine, and we certainly understand that.
David Durenberger.
STATEMENT OF DAVID F. DURENBERGER, CHAIRMAN, CITIZENS FOR LONG-
TERM CARE
Mr. Durenberger. Mr. Chairman, Mr. Mainstream, thank you
very much. It is a pleasure to be here.
Larry Craig, it is a pleasure to see you as well.
Let me begin by thanking you for the invitation to testify.
I think it is very significant. Not as an invitation to me but
I think what you propose doing here, now and in the future has
a great deal of significance.
It is good to be on the other side of the table. I already
know the answers to the questions, as well as the questions.
[Laughter.]
Today I am not here representing the 4.5 million
Minnesotans, who actually invented what someone said earlier,
``Republican, Democrat, and Independent,'' as in our Governor,
but rather, represent a confederation of dozens of membership
organizations from aging, insurance, long-term care providers,
disability advocates, professionals, unions. We call it
Citizens for Long-Term Care.
And I am here to briefly, on their behalf, offer a bit of
history, a word of encouragement, and a promise of help.
I have special respect for the members of, and in the role
of this committee, having served on this committee as well
as on the Finance and what is now called HELP Committee. The
issues here are complex, the stakes are high, the competing
priorities are many.
Change comes hard, but this committee is uniquely
positioned by its nature and its history to make the crucial
contribution to long-term care reform.
Steven Covey creates two categories, which are instructive
in this context. They are dealing with issues which are urgent
and important, and those which are not urgent but important.
As a member of the Senate, I always struggled with the idea
that if something was not urgent, it couldn't be important. And
I came to realize that a tyranny of the urgent kept me from
attending, as you illustrated by your late arrival here today,
to some very, very important things. It is almost the plague of
service in the Senate and the Congress today.
But one exception has been this committee. Over the years
that I am familiar with, going back to 1979, the people of
America have been extremely well-served by this committee. The
leadership of people like John Heinz, David Pryor, Chuck
Grassley, before you, and now you, Mr. Chairman, is really
something that is in the nature of an undervalued national
opportunity.
So God knows we need this kind of leadership now on this
issue.
Citizens for Long-Term Care is an additional resource to
the deliberation of ideas about long-term care issues. I dearly
hope that a rich dialog between all the viewpoints that
Citizens represent--and I will tell you, we represent every one
of them will benefit from your work.
Most of these people used to be adversaries in this
business. They have now found a way to come to make common
cause and to find common ground. And I think Larry Minnix from
AAHSA was in here to see you last week and delivered some of
our reports.
We believe that we can be helpful to you, Mr. Chairman and
members of the committee, to create a work product that will
lead the Nation to a comprehensive approach to the most
important social health and welfare issue of the next three
decades.
Long-term care, as Governor Senator Carper said earlier, is
either a patchwork or a crazy quilt of services, providers,
caregivers, and other supports that people have to access in
times of crisis to help them manage the crisis.
The greatest failure in long-term care is an antiquated
public policy that impedes personal planning, preparation, and
decisions.
On the acute medical care side, we see an industry that has
been defined by advances and innovations in care because public
policy has placed a primacy on developing policies that help
people address their medical needs. People are encouraged and
they are supported in making advance decisions about financing
their acute care needs, even though they don't know what they
might be.
An overwhelming number of people in America have insurance,
a primary care physician, other important protections against
catastrophic medical costs. And the medical profession has
always had a financial incentive to innovate. Public policy
does not do the same thing for long-term care.
In Minnesota, 95 percent of our citizens have health
insurance; 94 percent do not have long-term care insurance.
Too often, people are forced to make their decision about
long-term care in a crisis. When a loved one is faced with a
need for supportive care, we find that people are unprepared to
address the issues involved.
It happened to me with my dad; it happened with my mom.
They are unaware of what the most appropriate type of care
is, where to get it, and what other services might be
available.
Finally, they don't understand how to finance the needed
care, because they assumed it was paid for by Medicare, and
they fail to address the potential need for long-term care.
People are forced to make critical decisions in a time of
crisis.
With all kinds of honorable intentions, government then
steps in to assist people, and we just heard that in the
testimony. Whether it is Federal or State government,
government steps in to assist people who are unable to pay for
care themselves.
But in the end, the recipients, in a sense, become victims,
not only of poverty and a spend-down, but of the system which
takes away their ability to be anything but.
The goal too often is relief, not recovery. For many,
especially aged persons and families, the disablement of the
spirit is as tragic as the disability of Alzheimer's, spinal
cord injury, or cerebral palsy.
Long-term care has been based on such a public assistance
or welfare model for too long. Society does not want to abandon
the disabled or the elderly. Our members in CLTC who represent
people with disabilities recognize their members' need for it,
but they believe there can be a better system.
The compassionate alternative is developing an insurance-
based system that supports all people in times of crisis.
And just for purposes of record, Mr. Chairman--I see my
time has expired--I need to, not to remind you so much as
probably to remind others that we have been here before.
Part of my comments relate to the dependence on State
governments in this joint Federal-state responsibility. Yet
Americans are Americans wherever they may live. I have never
been able to understand why their choices are limited by their
place of residence when it comes to long-term care.
President Reagan recognized that in 1982, and he proposed
as part of his New federalism program the Federalization of the
Medicaid program. And you can imagine the consequence if we had
done that.
In 1985, Ron Wyden and I and John Chafee introduced long-
term care insurance tax reform.
In 1987 and 1988, as you will recall, we did the Medicare
Catastrophic Act, and we included in there changes in the
social insurance approach to long-term care.
In 1990, the Pepper Commission said you can't do this on
welfare, you cannot do this on savings; you have to build
yourself a social and a private insurance system.
So, Mr. Chairman, I cannot adequately express on behalf of
the millions of people that are represented by our 63
association members how grateful we are to you personally, to
your staff, and to the members of this committee for beginning
this national dialog, which I understand you will probably take
across the country over time. And we are all pledged to make it
successful. Thank you.
[The prepared statement of Mr. Durenberger follows:]
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The Chairman. Thank you, Senator Durenberger, very much for
your statement, but also for your long and continued
involvement in these types of issues. It is encouraging to see
that once you leave this place, you can still make a big
difference. And we thank you for that.
Mr. Durenberger. Thank you.
The Chairman. Ms. Carol O'Shaughnessy.
STATEMENT OF CAROL V. O'SHAUGHNESSY, SPECIALIST IN SOCIAL
LEGISLATION, CONGRESSIONAL RESEARCH SERVICE
Ms. O'Shaughnessy. Senator Breaux, good morning, and thank
you for the opportunity to testify before you today. I have had
the pleasure of working with the staff of the Senate Special
Committee on Aging for many years.
Today, I will give an overview of long-term care consumers,
providers, and spending, and will summarize my written
statement.
Long-term care refers to a wide range of supportive and
health services for persons who have lost the capacity for
self-care due to illness or frailty.
You had asked about what kinds of services comprise long-
term care. Services range from care in nursing homes, assisted
living, and boarding care facilities to home and community-
based services through home health and homemaker services,
adult daycare, and home-delivered meals.
The cost of care is related to the type, intensity, and
duration of care that is needed by an individual, as well as
the availability of informal supportive services from family
and friends.
Researchers and policymakers have debated the question of
whether or not home and community-based services are cost-
effective. This question is very complex, and many factors must
be considered, including how best to target home and community-
based services, the effective mix of services to divert persons
from institutional care, and how to assist informal family
caregivers in their responsibilities.
I will say just a few words on a long-term care population.
About 9 million adults receive long-term care assistance, but
the vast majority, or 80 percent, are in community-based
settings, not in nursing homes.
Persons aged 65 and older represent about 60 percent of all
adults who receive assistance, but the need for long-term care
affects persons of all ages.
About 3.5 million adults receiving care are under age 65.
The Chairman. Let me interrupt you, if I can.
You said, 80 percent of the 9 million are in nursing home
facilities----
Ms. O'Shaughnessy. Are in home and community-based
settings, not in nursing homes.
There is a disproportionate expenditure. We are spending so
much money on institutional care, but really there are more
people in home and community-based settings, receiving care
mostly from family and friends.
The Chairman. I had heard it was even higher than that. I
had heard the figure 95 percent.
Ms. O'Shaughnessy. Well, this data comes from the most
recent data from the national interview survey on disability.
The Chairman. OK, please continue.
Ms. O'Shaughnessy. OK.
About one-third of elderly persons who receive care at home
and in community-based settings have severe impairments. That
is, they have limitations in at least three activities of daily
living, such as bathing, dressing, toileting, or getting around
inside the home. And without home and community-based support,
these persons might require care in nursing homes.
The likelihood of needing care increases dramatically with
age. Over half of persons age 85 and older receive long-term
care assistance.
However, regardless of age, persons are more likely to be
in community-based settings rather than in nursing homes. And
there is a chart in the written testimony that displays this
for you, chart 1.
The demand for long-term care, as we heard from the
Secretary, is expected to grow substantially in the future and
will be driven by the aging of the baby boom generation.
Estimates show that the number of elderly persons alone who
need long-term care assistance could grow by 35 percent over
the next 20 years and by 82 percent over the next 40 years. And
in the testimony, chart 2 displays the growth and the need over
the next several decades.
Rapid growth in the number of people over age 85 presents
special challenges, because they have the greatest risk of
needing care. And demand will also increase as a result of the
recent Supreme Court decision in Olmstead and advocacy efforts
on the part of younger persons with disabilities.
These factors will present challenges for some long-term
care providers, who even now face difficulties in meeting
demand for services in certain areas.
I just want to make a point about the role of families and
informal supports. Most long-term care assistance is provided
by unpaid family members, and almost 60 percent of the
functionally impaired elderly receiving care rely exclusively
on informal, unpaid assistance.
Many have argued that while public programs should not and
cannot replace family caregiving, targeted initiatives to
assist family caregivers are needed.
A number of Federal programs--and I have displayed them in
the testimony--support persons with disabilities. However, none
focus exclusively on long-term care.
It is as Senator Durenberger and the Secretary mentioned,
is a patchwork quilt of programs.
Many observers believe that the current system is flawed
because of its overreliance on institutional care, the
impoverishment of many persons as a result of paying for care,
the heavy reliance on informal caregivers, and the uneven
availability of home and community-based services.
In terms of spending, the Nation spent $134 billion on
long-term care in 1999. And this represents about 13 percent of
total personal health care expenditures and amounts to slightly
more than National spending on prescription drugs. And in the
testimony, that is displayed on chart 5.
Of the total long-term care spending, 67 percent is for
institutional care and one-third is for home and community-
based services.
And if you look at the chart on your far right, it displays
the sources of long-term care funding. We see that Medicaid is
the major payer. Personal out-of-pocket spending represents
about 25 percent, with Medicaid at 44 percent. And Medicare and
private insurance play much smaller roles.
I will say a few words about Medicaid. Medicaid's role, as
we heard this morning, is primarily through its financing of
institutional care. And of total Medicaid spending in fiscal
year 2000, 73 percent was for institutional care and just 27
percent was for home and community-based care.
And if you look at the second chart, you see that
Medicaid's long-term care spending is still dominated by
spending for nursing home care, even though home and community-
based services spending has risen over the last decade very
rapidly. In fact, home and community-based has risen seven
times as opposed to about a doubling in institutional care
expenditures.
Many States consider their home and community-based waiver
programs, that the Secretary mentioned as key components in
developing long-term care systems.
And despite the rapid growth, however, many analysts
consider the program to be only a partial step in providing
comprehensive long-term care services because of the
restrictions on eligibility and limitations in service
availability throughout the Nation and within individual
States.
We have done some analysis of fiscal year 2000 expenditures
and found that at least half of the States spend most of their
money on institutional care in fiscal year 2000. Twenty States
spent 75 percent or more of their Medicaid dollars on
institutional care, despite the rapid increase in the waivers.
Changing the way long-term care is financed has drawn
attention of Congress for more than two decades, and proposals
have included both incremental and large-scale approaches. A
wide range of proposals has been advanced including social
insurance, the tax incentives that you mentioned, grants for
expanding home and community-based services, and combinations
of these.
To date, Congress has taken incremental approach.
Obviously, the significant challenge for Congress is to
reconcile the cost, as well as the relative roles of public and
private sectors, in ways to assist family caregivers.
Thank you, Mr. Chairman, and I would be happy to answer any
questions.
[The prepared statement of Ms. O'Shaughnessy follows:]
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The Chairman. Thank you, Ms. O'Shaughnessy.
Next, Bob Blancato.
Bob, welcome. Welcome back.
STATEMENT OF ROBERT B. BLANCATO, EXECUTIVE DIRECTOR, THE 1995
WHITE HOUSE CONFERENCE ON AGING; AND PRESIDENT, MATZ, BLANCATO
& ASSOCIATES, INC.
Mr. Blancato. Mr. Chairman, thank you. Nice to be here.
I commend you for calling these hearings on long-term care
and getting ready for the boomers. You are right, we do need a
plan of action. You will have my complete statement, so let me
make five quick points.
First, this is not a new issue, but there is new urgency.
In 1977, I began work with the House Select Committee on Aging.
We held hearings on long-term care. Fourteen years ago, our
chairman, Claude Pepper, went to the House floor with a long-
term care amendment.
In 1994, to prepare for the White House Conference on
Aging, we went to the American people to set the agenda. Their
top priority issue was comprehensive health care, including
long-term care. And at the conference, five of the top 10
resolutions were on long-term care.
Fourteen years ago, long-term care was an issue with some
foresight; today it is one of urgency. The reasons are many.
Demographics is certainly one. Today our medium age is the
highest ever at 35.3. One key reason: Boomers between 45 and 54
grew by 49 percent between 1990 and 2000.
Second, Boomers and long-term care, public education, and
personal experiences: Long-term care is not a mainstream issue
compelling enough boomers into action. Why? In part because
boomers delayed planning for their future, in part because of
denial about aging.
Also, boomers have a false sense of security that Medicare
will take care of their long-term care. Public education and
awareness efforts must be intensified and improved. Before we
tackle the complicated issues of financing and coverage, let's
get everyone on the same page about what long-term care is, who
pays now, and how.
I hope that the ongoing work of OPM dealing with the Long-
Term Care Security Act will help educate boomers. This
committee should also look at the many private groups who are
doing great work in consumer education on long-term care. It
must be a priority in the plan of action.
Maybe we just need a message. Americans, and especially
boomers, have always responded to messages. One message is, you
never know when.
My example, I have been a boomer all my life. I have spent
more than 25 years in national aging policy, including long-
term care. When did I focus on long-term care in a personal
way? One year ago, because of a long-term care health crisis
affecting my mother.
My take away? The cost of care for her in 2001 dollars is
staggering. What about 20 years from now?
Too many boomers wait for the crisis to land on the
doorstep. That is wrong. Crisis planning is an oxymoron.
Third, a call to action with a timetable: Let's set a
timetable to move long-term care legislation in 2001. Top on
the list is the bill you mentioned, S. 627, the Long-Term Care
and Retirement Security Act.
As president of Americans for Long-Term Care Security, we
strongly support this bipartisan bill and commend you, Mr.
Chairman, for being an early cosponsor.
This is the kind of public-private incentive package that
is needed. ALTCS views all the main pieces of this bill as
critical; they must all stay together and be passed together.
Also this year, let's inventory all Federal programs in
long-term care. How many are there? Are they working? Can we
achieve cost-savings by reducing duplication? What successes
can we build on? Are there State and Federal programs that have
produced what we really need, long-term care service systems
with a continuum of care?
And as work on comprehensive Medicare reform continues
later this year, let's move to a Medicare that does what
boomers want it to do: provide more long-term care coverage,
provide more preventative coverage.
Fourth, family caregivers are key: Let's keep emphasizing
family caregivers in all future long-term care policy. It was a
strong start in 2000 with the National Family Caregivers
Support Program.
Long-term care affects many constituencies--boomers,
seniors, women, families, persons with disabilities. But the
crosscutting issue, especially for boomers, is family
caregiving.
We need to build more policy around caregivers. And if we
do, we will get more of a buy-in from boomers.
It is not only a health issue, it also is an economic
issue. In 1997, a MetLife study revealed that caregiving costs
American businesses as much as $29 billion a year. That is a
wakeup statistic.
And five, long-term care, a Federal investment: Future
long-term care policy decisions will take some political
courage. It is easy to score a bill, get shocked when it is
high, and walk away. But with some long-term care legislation,
the question is, is it in fact an investment that will achieve
future savings, especially for Medicaid?
You know, next year we celebrate the 30th anniversary of
the Older Americans Act nutrition programs. They were set up to
help at-risk seniors from having to be institutionalized
because of poor nutrition.
Has it worked? Absolutely.
Seniors have been in the congregate or home-delivered meal
programs for 20 years or more. This means they are still in
their homes, still in the community, and not in nursing homes.
That was a new appropriation in 1972. It was a good
investment. The same thing with funds spent on research,
especially Alzheimer's research. These are good investments.
Our goal should be long-term care that features
universality, financial security, service availability, a real
commitment to quality care, and a sensitivity to the needs of
different constituencies. And it should specifically change the
existing funding bias of Federal programs toward institutional
care.
The time to act is now. Other timetables are not going to
wait. In 2010, retirees grow from 13 to 20 percent of our
population. And as you well know, in 2011, the first wave of
boomers turns 65 and are Medicare-eligible.
Mr. Chairman, certainly when it relates to boomers, long-
term care, it may not be our issue today, but it could be
tomorrow.
Thank you very much.
[The prepared statement of Mr. Blancato follows:]
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The Chairman. Thank you, Bob, very much.
I thank all three of our panelists for the beginning of
what hopefully will be a national dialog on this issue, to
better educate the folks about the need for long-term care.
Bob, let me ask you, I mean, you have been a leader in
this. Do you have long-term care insurance?
Mr. Blancato. I do.
The Chairman. Congratulations.
Mr. Blancato. I just turned 50, I have to admit. That
proves I am not in denial about aging. [Laughter.]
But I did. I researched it, and I purchased it. And part of
it was motivated by the fact of my mother's situation; they do
not have long-term care insurance, and the cost of care is
quite staggering.
The Chairman. Let me ask anyone on the panel, is there a
market out there now? Or is it an infant market? Or is it
something that you would find companies are interested in
promoting and selling? Or is it not a good market as is
currently structured?
If the concept is, like we are talking, in terms of
prescription drugs under Medicare, is to have the government
help pay for the premium to allow people to buy coverage
insurance in a competitive market, can there be a market for
long-term care insurance that would be viable and workable and
affordable?
Mr. Durenberger. Well, I will just make one comment,
because our recommendation was a restructuring of social
insurance and the incentives for private insurance.
We also made the decision that, as it relates to a previous
question that you asked, it is pretty hard for Americans to go
to some other country. It is OK to learn from other country's
experiences, but we really have to use an American system.
And in America, private insurance combined with social
insurance is the tradition. It is usually bought at work, where
you get earnings and employee benefits and so forth.
So if you look at it from that standpoint, the places to
look probably are at experiments which have taken place, I
think, largely at the State level. I know in Minnesota the
legislature authorized the State government, for employees of
State government, and some other public employees--to offer
long-term care insurance. The employee would have to pay the
premium.
The response was about twice what they expected. I think
they expected something like 5,000 or 6,000 people. And they
ended up with 12,000 or 13,000 people enrolling in the program.
I think 3M, on the corporate side, has had a similar
experience.
But one of the things I am sure we find out, and you will
find out from OPM, is it takes an awful lot of analysis of what
is long-term care insurance and what is long-term care
insurance. And that is one of the roles that an employer, as in
a 3M, an employer as in a Minnesota public employees, at the
current time I think has to play to sort out what is real need
and what is the product that is going to meet that need.
The Chairman. It may be that we are going to have the
insurance folks come in and testify.
But when they provide long-term care insurance, what are
they providing the coverage for? Is it for coverage in a
nursing home or is it also in some of these alternative
settings?
Bob.
Mr. Blancato. They're beginning to cover a wider array of
services than just nursing homes, assisted living coverage and
some home-care coverage.
And I think there is some merit in getting the industry
here to talk about the market, because the market is changing,
the market is growing.
The question is, is it growing fast enough? Maybe in their
mind, it isn't. But I think it is growing in the sense that
there is more interest in it.
But I think that the real question is involved in your
question. The element of choice is going to be key to that
market growing, especially for boomers to go into it, because
this is a different generation.
We are used to having more options and choices. And this is
going to be necessary for that industry to do. And I think a
lot of them are stepping up to do it.
But I think, as the Senator said, what happens in the
interim period--of the Federal employees, military personnel
long-term care legislation, and how OPM chooses the carriers
and goes through the process of selecting them, and the
education process that is involved--is going to be immensely
important to the whole future of long-term care insurance in
this country.
The Chairman. Carol, do you have a comment?
Ms. O'Shaughnessy. If I could, yes, if I could add
something to that.
It is a very fast growing market. I mean, I think the last
data I saw was something like 6 million policies have been
sold. One of the issues to look at is the issue of
affordability of the premiums. Some recent data from HIAA show
that the average income of persons who purchased long-term care
insurance is around, I think, $42,500; in 1995 it was $30,000.
And persons who purchase long-term care insurance tend to have
higher assets.
So even if you were to increase the number of policies
sold, one would have to look at the people at the very low end
of the income spectrum, in terms of how to protect their income
and offer protection for them as well. Affordability is the
main issue.
The Chairman. We have Medigap insurance for prescription
drugs. Unfortunately, only the people who buy it are the people
who have to use high volumes of prescription drugs. Therefore,
obviously, the cost is very, very high.
Is that the same thing that is true for long-term care
insurance now, do we know?
Ms. O'Shaughnessy. In terms of?
The Chairman. That you only buy it--of course, I would
think that if you live long enough, you are going to need some
type of long-term care. It is a question of whether people
believe that. And younger people tend not to believe that, so
you only buy it right before you need it. And obviously it
becomes very expensive.
Is that correct?
Ms. O'Shaughnessy. Well, the recent data on the buyers of
long-term care insurance show that there are certain
characteristics and demographic characteristics. I think the
average age is 67. People tend----
The Chairman. I mean, buying it at 67 will tell you
something.
Ms. O'Shaughnessy. Right. Exactly, exactly.
According to HIAA, people who are planners are more likely
to buy long-term care insurance. It is an issue for planning
for the future.
It is not like we know we have Social Security, and we have
that, but what do we have to do to plan for our future needs.
The Chairman. It is an educational problem, too; I mean, I
think that what we have here is, I think, all of you have said
that, and the Secretary has said it. And not enough people know
that they are going to need it and realize they are going to
need it.
And when they think they are going to need it, they think
that Medicare and Social Security pays for it.
Ms. O'Shaughnessy. That is true.
The Chairman. And then, that is a real educational problem
that hopefully this Congress and this committee can help.
How do we get people to move into this market, Dave,
without just passing a long-term care insurance mandate?
I mean, the average age of people buying this is at 67, I
mean, that really is a problem right there. We ought to be
buying it, you know, just as we buy car insurance or anything
else or health insurance, because it would be a lot cheaper if
more people were in the pool, obviously.
I mean, any thoughts about how we encourage people to get
into this much quicker?
Mr. Durenberger. I would like to make two observations.
They are both personal, as opposed to Citizens for Long-Term
Care, because we aren't at this point in our common ground yet.
First, I believe strongly that it is difficult to, in
today's confused, crazy quilt, patchwork, whatever-it-is
marketplace, to offer as an affordable a product as could be
offered, with all due respect, no matter how good they are at
it.
If you clean up the system, they are going to be able to
offer--the insurance industry will offer you a much more
affordable product.
One of the important things there, as you and I have both
gone through in the early 1990's, is what role is the social
insurance system going to play? I mean, what if we knew what
Medicare was going to provide for at least 5 years and not,
change benefits, coverage and eligibility as in subacute care
every year?
How can you write a good, private insurance policy if you
don't know precisely what the national policy on social
insurance is going to be? That is the first part of it.
The second one is this, and it is just a question I have
that only a few people can answer that I would like to ask the
industry, and that is: Why couldn't you sell me or my children
a disability policy when I am 21, on my first job, that I can
carry until I am, in my mother's case, 89 with Alzheimer's? We
have heard a lot of Alzheimer's here today. I don't know that
that is unusual.
But why can't I buy a policy at 21 that I can carry all the
way through? When I am young, what it does is replaces income
to facilitate the growth of my family, because that is what I
am doing as an earner. When I am older, it helps to protect my
assets.
That, I think, on the private insurance side, is a key
question that needs to be asked.
The Chairman. Well, you know, we are talking about, right
now, about adding $300 billion in the budget-allocated amount
to reforming Medicare by providing coverage for prescription
drugs. That is a huge amount over the next 10 years.
If we were to all of a sudden require that Medicare covered
long-term care with some type of an insurance plan, like we are
talking about for prescription drugs, do any of you have a
ballpark figure about what we would talk about in terms of how
much?
Ms. O'Shaughnessy. Well, I guess cost estimates will
obviously depend on the range of services and numbers of people
who would be covered and the types of services. So it is hard
to----
The Chairman. You say we spend; we spend more on long-term
care now than we do on prescription drugs.
Ms. O'Shaughnessy. Slightly more than on prescription
drugs. One hundred thirty-three billion on long-term care.
The Chairman. So the question then becomes, is that a
ballpark cost for what it would cost us to do long-term care
under Medicare?
Ms. O'Shaughnessy. Well, most of that is from the Medicaid
program. A small amount is from Medicare. It depends upon how
you shift those resources.
Mr. Durenberger. Mr. Chairman, you might take George
Mitchell's proposals from back in 1993, 1994, 1995, something
like that, and run them by CBO. And I think you will get a part
of that.
The Chairman. Yes.
Mr. Durenberger. I forget which one he did, but it was like
Medicare is the catastrophic after 18 months and----
The Chairman. Well, I think that this has been very
helpful.
And I think that this is a busy time for the Congress. We
are trying to finish up the patients' bill of rights bill by
today or tomorrow afternoon, and adjourn for the Fourth of July
recess.
But this has been very helpful. All three of you are really
expert in this area, and I thank you for your participation.
And we are going to call upon you, if it is all right, in the
future as we continue this national effort and this national
dialog.
Thank you very much.
This will conclude this hearing.
[Whereupon, at 11:53 a.m., the committee was adjourned.]