    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

       EXAMINING THE FINANCING AND DELIVERY OF LONG-TERM CARE IN THE U.S.

    =======================================================================

                                    HEARING

                                   BEFORE THE

                             SUBCOMMITTEE ON HEALTH

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 1, 2016

                                   __________

                               Serial No. 114-122

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov
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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman
    JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
      Chairman Emeritus                    Ranking Member
    ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
    JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
    JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
    GREG WALDEN, Oregon                  GENE GREEN, Texas
    TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
    MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
    MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
      Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
    STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
    ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
    CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
    GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
    LEONARD LANCE, New Jersey            JERRY McNERNEY, California
    BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
    PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
    DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
    MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
    ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
    H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
    GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
    BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III,
    BILLY LONG, Missouri                     Massachusetts
    RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
    LARRY BUCSHON, Indiana
    BILL FLORES, Texas
    SUSAN W. BROOKS, Indiana
    MARKWAYNE MULLIN, Oklahoma
    RICHARD HUDSON, North Carolina
    CHRIS COLLINS, New York
    KEVIN CRAMER, North Dakota
                             Subcommittee on Health

                         JOSEPH R. PITTS, Pennsylvania
                                     Chairman
    BRETT GUTHRIE, Kentucky              GENE GREEN, Texas
      Vice Chairman                        Ranking Member
    ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
    JOHN SHIMKUS, Illinois               LOIS CAPPS, California
    TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
    MICHAEL C. BURGESS, Texas            G.K. BUTTERFIELD, North Carolina
    MARSHA BLACKBURN, Tennessee          KATHY CASTOR, Florida
    CATHY McMORRIS RODGERS, Washington   JOHN P. SARBANES, Maryland
    LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
    H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
    GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
    BILLY LONG, Missouri                 JOSEPH P. KENNEDY, III,
    RENEE L. ELLMERS, North Carolina         Massachusetts
    LARRY BUCSHON, Indiana               TONY CARDENAS, California
    SUSAN W. BROOKS, Indiana             FRANK PALLONE, Jr., New Jersey (ex
    CHRIS COLLINS, New York                  officio)
    JOE BARTON, Texas
    FRED UPTON, Michigan (ex officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Joseph R. Pitts, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................     1
        Prepared statement...........................................     2
    Hon. Doris O. Matsui, a Representative in Congress from the State
      of California, opening statement...............................     3
    Hon. Michael C. Burgess, a Representative in Congress from the
      State of Texas, opening statement..............................     5
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     6

                                   Witnesses

    Alice Rivlin, PHD, Co-Chair, Long-Term Care Initiative,
      Bipartisan Policy Center, Senior Fellow, Economics Studies
      Program, The Brookings Institution.............................     8
        Prepared statement...........................................    10
    William J. Scanlon, PHD, Consultant, West Health Institute and
      National Health Policy Forum...................................    13
        Prepared statement...........................................    16
    Anne Tumlinson, CEO, Anne Tumlinson Innovations LLC and Founder
      of Daughterhood.org............................................    28
        Prepared statement...........................................    30

                               Submitted Material

    Statement of Hon. Debbie Dingell, a Representative in Congress
      from the State of Michigan, submitted by Ms. Matsui............    62
    Statement of the Christopher & Dana Reeve Foundation, submitted
      by Ms. Matsui..................................................    63
    Statement of the National Academy of Elder Law Attorneys,
      submitted by Mr. Pitts.........................................    65
    Statement of the American Health Care Association and the
      National Center for Assisted Living, submitted by Mr. Pitts....    67
    Statement of America's Health Insurance Plans, submitted by Mr.
      Pitts..........................................................    71

       EXAMINING THE FINANCING AND DELIVERY OF LONG-TERM CARE IN THE U.S.

                                  ----------

                             TUESDAY, MARCH 1, 2016

                      House of Representatives,
                                Subcommittee on Health,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:15 a.m., in
    room 2322 Rayburn House Office Building, Hon. Joe Pitts
    (chairman of the subcommittee) presiding.
        Members present: Representatives Pitts, Barton, Guthrie,
    Shimkus, Murphy, Burgess, Lance, Bilirakis, Long, Ellmers,
    Bucshon, Brooks, Collins, Schakowsky, Butterfield, Castor,
    Sarbanes, Matsui, Schrader, Ca AE1rdenas, and Pallone (ex
    officio).
        Staff present: Rebecca Card, Assistant Press Secretary;
    Graham Pittman, Legislative Clerk, Health; Michelle Rosenberg,
    GAO Detailee, Health; Chris Sarley, Policy Coordinator,
    Environment and Economy; Jennifer Sherman, Press Secretary;
    Heidi Stirrup, Policy Coordinator, Health; Josh Trent, Deputy
    Chief Counsel, Health; Christine Brennan, Minority Press
    Secretary; Jeff Carroll, Minority Staff Director; Tiffany
    Guarascio, Minority Deputy Staff Director and Chief Health
    Advisor; Rachel Pryor, Minority Health Policy Advisor; Samantha
    Satchell, Minority Policy Analyst; Matt Schumacher, Minority
    Press Assistant; and Andrew Souvall, Minority Director of
    Communications, Outreach and Member Services.

    OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
             CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

        Mr. Pitts. The subcommittee will come to order. The chair
    will recognize himself for an opening statement.
        Today the Health Subcommittee will examine the financing
    and delivery of long-term care in the U.S. Long-term care
    largely differs from health coverage or medical care. I know
    every member of this committee wants to ensure that frail,
    elderly seniors, or disabled individuals across the country
    receive high quality care.
        We want to see each person treated with the dignity and
    respect that they deserve, and we want a long-term care system
    that empowers each person and respects individual preferences.
    Unfortunately, as we will hear from our witnesses today, many
    experts warn that we are facing a coming crisis in the
    provision of long-term care. Most notably, we face a
    demographic headwind with 10,000 baby boomers turning 65 every
    day.
        Additionally, as life expectancy increases so too does the
    need to provide care for aging individuals, yet our private
    market is not as robust as needed. Our public payers are
    strained and many individual Americans face high out-of-pocket
    costs for providing a long-term care for themselves or a loved
    one. Unfortunately, too few Americans are currently prepared to
    pay for even a modest amount of long-term care whether through
    insurance or savings.
        As we engage in today's hearing, I think it is important to
    remember our long-term care crisis affects all Americans. If
    the long-term care challenge is left unaddressed it will impact
    the elderly who require services, the middle-aged who are often
    responsible for caring for their aging parents, and the
    children who could be left responsible footing the bill for
    public programs.
        As we embark on examining how we can confront the long-term
    care challenge, it is important we learn from failed ideas of
    the past. For example, in 2010, the ACA created a new federal
    entitlement program called the CLASS Act. The statute required
    that the CLASS Act be solvent over a 75-year period, and the
    program failed to meet tests for actuarial solvency. CLASS Act
    was found to be fiscally unsound; was ultimately repealed in
    subsequent legislation.
        This committee knows all too well what financially unsound
    programs look like. Medicaid and Medicare are both facing
    growing financial strains as costs soar and demand increases.
    Medicaid is consuming increasing portions of state budgets,
    Medicare's long-term unfunded obligations are estimated over
    $35 trillion in today's dollars. So it is understandable that
    many members of this committee are wary of proposals that
    resemble a new entitlement, but caution against new
    entitlements does not equal close-mindedness to new approaches.
        There are many ideas about ways to improve the outlook for
    financing and delivering of long-term care in the country. For
    example, just in February, three bipartisan proposals have been
    offered. So today's hearing provides members an opportunity to
    learn more about the state of long-term care in our country and
    to examine the types of policy choices facing Congress if it
    wants to reform the current system to provide high quality care
    without bankrupting future generations.
        Clearly, we need to find better ways to encourage private
    market solutions. We need to understand what the research tells
    us about what is working in the private and public sectors. We
    need to know barriers to efficient high quality care exist in
    our public programs, and we need to better understand how to
    encourage individuals and their families to plan for the
    future.
        I appreciate our witnesses being here. We look forward to
    your testimony. Is anyone seeking time on our side? If not, I
    yield back, and at this point recognize Ms. Matsui of
    California filling in for Ranking Member Green as ranking
    member.
        [The prepared statement of Mr. Pitts follows:]

                   Prepared statement of Hon. Joseph R. Pitts

        The Subcommittee will come to order.
        The Chairman will recognize himself for an opening
    statement.
        Today, the Health Subcommittee will examine the financing
    and delivery of longterm care (LTC) in the U.S. While long-term
    care largely differs from health coverage or medical care, I
    know every member of this Committee wants to ensure that frail
    elderly seniors or disabled individuals across the country
    receive highquality care.
        We want to see each person treated with the dignity and
    respect that they deserve. And we want a long-term care system
    that empowers each person and respects individual preferences.
        Unfortunately, as we will hear from our witnesses today,
    many experts warn that we are facing a coming crisis in the
    provision of long-term care. Most notably, we face a
    demographic headwind, with 10,000 Baby Boomers turning 65 each
    day. Additionally, as life-expectancy increases, so too does
    the need to provide care for aging individuals.
        Yet, our private market is not as robust as needed, our
    public payers are strained, and many individual Americans face
    high out-of-pocket costs for providing longterm care for
    themselves or a loved one. Unfortunately, too few Americans are
    currently prepared to pay for even a modest amount of long-term
    care--whether through insurance or savings.
        As we engage in today's hearing, I think it's important to
    remember our long-term care crisis affects all Americans. If
    the long-term care challenge is left unaddressed, it will
    impact the elderly who require services....the middle aged who
    are often responsible for caring for their aging parents...and
    the children who could be left responsible footing the bill for
    public programs.
        As we embark on examining how we can confront the long-term
    care challenge, it's important we learn from failed ideas of
    the past. For example, in 2010, the ACA created a new federal
    entitlement program called the CLASS Act. The statute required
    that the CLASS Act be solvent over a 75-year period, and the
    program failed to meet tests of actuarial solvency. The CLASS
    Act was found to be fiscally unsound and was ultimately
    repealed in subsequent legislation.
        This committee knows all too well what financially unsound
    programs look like. Medicaid and Medicare are both facing
    growing financial strains, as costs soar and demand increases.
    Medicaid is consuming increasing portions of state budgets, and
    Medicare's long-term unfunded obligations are estimated over
    $35 trillion in today's dollars.
        So it is understandable that many members of this Committee
    are wary of proposals that resemble a new entitlement. But
    caution against new entitlements does not equal closemindedness
    to new approaches.
        There are many ideas about ways to improve the outlook for
    financing and delivering long-term care in the country. For
    example, just in February, three bipartisan proposals have been
    offered.
        So, today's hearing provides Members an opportunity to
    learn more about the state of long-term care in our country--
    and to examine the types of policy choices facing Congress if
    it wants to reform the current system to provide high quality
    care without bankrupting future generations.
        Clearly, we need to find better ways to encourage private
    market solutions. We need to understand what the research tells
    us about what's working in the private and public sectors. We
    need to know barriers to efficient, high-quality care exist in
    our public programs. And we need to better understand how to
    encourage individuals and their families to plan for the
    future.
        I appreciate our witnesses being here and we look forward
    to your testimony.
        I yield the remainder of my time to ----------------------
    ------------------.

    OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Ms. Matsui. Thank you, Mr. Chairman. And thank you very
    much for having this important hearing on a critical issue that
    affects millions of Americans--the financing and delivery of
    long-term care. And I want to thank our witnesses for being
    here today.
        Long-term services and supports are medical and personal
    care assistance services for people who have difficulty
    completing daily living activities over a prolonged period of
    time, from feeding or bathing to meal preparation or management
    of medications. Approximately 12 million Americans of all ages
    require long-term care for medical needs associated with
    developmental disabilities, traumatic injuries, behavioral
    health or chronic conditions. Elderly individuals in particular
    are at increased risk requiring long-term care.
        So who is providing and paying for this care in our
    country? Unfortunately, we don't have a robust system in place
    that works for families. In fact, much of both the care and
    financing often falls on the family. Unpaid caregiving service
    as a front line across the country, 70 percent of working
    adults provide unpaid care for family members or friends. This
    is an estimated $470 billion annually in labor costs. This lost
    productivity is estimated to the economy $34 billion a year.
        Oftentimes, women are the ones who disproportionately bear
    the burden of providing unpaid long-term care. Women often are
    called on to care for their family members at a time when they
    may not be able to reenter the workforce. Women also live
    longer. They find themselves unable to save for retirement when
    supporting family members. Our daughters, granddaughters, or
    mothers should not have to carry the weight of this broken
    system any longer.
        Despite the growing need for long-term care due to our
    aging population, there is no viable financing system in this
    country to support it. It is a common misconception that
    Medicare covers the long-term care in this country. However, it
    only covers limited circumstances such as care immediately
    following a hospital stay.
        In fact, Medicaid is the single largest payer of long-term
    care in the United States. However, most middle class families
    do not qualify for Medicaid and must pay out of pocket to spend
    down their assets before receiving benefits. And for Americans
    with disabilities, successful employment can lead to a loss of
    Medicaid coverage and thus create a disincentive to participate
    in the workforce. We need to create a system that allows
    recipients to receive services and support while remaining
    employed.
        Without Medicaid or private insurance, on average families
    are spending about $140,000 on long-term care for their loved
    ones. For working families who are trying to pay their
    mortgage, send their children to college and take care of the
    long-term medical needs of their loved ones these costs are
    devastatingly high. The reality is clear. Long-term care
    financing is in a crisis state in this country and is one of
    the greatest threats to retirement security for seniors and the
    adult family members who care for them. It is time for us to
    act to protect our seniors, people with disabilities and those
    who care for them.
        Today we will hear about major bipartisan reports which
    have independently agreed on three major actions Congress must
    take. First, we must strengthen and simplify Medicaid long-term
    care. Second, we need to build a more consumer-friendly long-
    term care private insurance market. Finally, we must create a
    program that will be there for those with catastrophic long-
    term care costs. Together we must commit to finding a
    sustainable means for financing and delivering quality long-
    term care to our loved ones because our families deserve more.
        Mr. Chairman, we received many statements for the record
    for this hearing. I ask unanimous consent to submit statements
    from our good friend and colleague Representative Debbie
    Dingell who has certainly worked on these issues for a long
    time, the Christopher and Dana Reeve Foundation, and the
    National Academy of Elder Law Attorneys. And I ask that these
    be submitted for the record.
        Mr. Pitts. And I will add to those statements from the
    American Health Care Association, the National Center for
    Assisted Living, and America's Health Insurance Plans.
        Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Ms. Matsui. Thank you, and I yield back.
        Mr. Pitts. The chair thanks the gentlelady. Now in the
    place of Chairman Upton, the chair recognizes Dr. Burgess 5
    minutes for an opening statement.

    OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
                  IN CONGRESS FROM THE STATE OF TEXAS

        Mr. Burgess. Thank you, Mr. Chairman. I appreciate the
    recognition. I actually had not prepared or planned on
    delivering an opening statement, but it does occur to me that
    we have had similar hearings multiple times in the past. Ms.
    Matsui just asked the question who is paying for long-term
    care. Mr. Chairman, you wondered aloud if there was a private
    sector solution, and indeed there are private sector solutions.
        The private insurance market in long-term care was hurt by
    the introduction of the CLASS Act and then the abandonment of
    the CLASS Act. I think it was very disruptive in the market.
    Look, long before I ran for Congress, my father was disabled
    and my mother told me that I needed to get long-term care
    insurance. She said if you don't buy it now before you are 50,
    you won't be able to afford it when you really need it. And it
    turns out that was good advice that she gave. Long-term private
    long-term care policy is expensive. Premiums run between 1,500
    and $2,500 a month. Yes, they are after-tax dollars.
        But I can really think of no more loving gift that a parent
    can give their child than to prepare for what may happen in the
    future. For me, it just seems like responsible financial
    planning and I do wonder why it is not more of the financial
    planning that people do in their lives.
        Look, 11 years ago, this committee, this subcommittee and
    this full committee passed language in the Deficit Reduction
    Act for what was known as the Partnership Program. This allowed
    for the protection of some assets in an estate. If a person had
    a private long-term care insurance policy, then the amount of
    the spend-down was protected to the extent of the private
    policy that they had. It was not as robust as perhaps providing
    full deductibility of a long-term care insurance premium, but
    it at least provided some incentive for people to consider a
    private long-term care insurance policy.
        Again the CLASS Act was very disruptive. It was disruptive
    to the marketplace. We have seen our premiums go up over the
    last 10 or 15 years. That is unfortunate. But I do think this
    subcommittee and this committee should do what it can to get
    people my age to understand that this is important for you to
    do for your family.
        Yes, there need to be safety net programs. No argument
    there. There need to be valuable programs for people who don't
    have other resources or other places to go. But I just remember
    my mother who was the primary caregiver for my father who was
    disabled by a stroke in 1989 and lived until 2005. You need to
    be prepared for these sorts of things. They can happen to you.
        So Mr. Chairman, I appreciate the time that you have given
    me today. I will be happy to yield back and I am anxious to
    hear the testimony of our witnesses and what has happened over
    the last ten years in this space. I yield back.
        Mr. Pitts. The chair thanks the gentleman, and now
    recognizes the ranking member of the full committee, Mr.
    Pallone, 5 minutes for an opening statement.

    OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Pallone. Thank you, Mr. Chairman, and thank you for
    holding this hearing today to discuss long-term care, an issue
    that is very important to me.
        Today we face a long-term care crisis that is forcing
    millions of Americans to drain all of their resources before
    they get any support from the federal government. This crisis
    is not only affecting those that need long-term care but also
    their families, sons and daughters who have no other choice
    than to spend hours every week caring for their parents.
        This simply cannot continue and I hope that today's hearing
    is the beginning of an ongoing conversation that leads to real
    action to address this crisis. After all, the crisis is not
    new. Congress has been discussing a solution for decades. I
    worked with the late Senator Kennedy and Mr. Dingell on the
    inclusion of a public benefit for long-term care in the
    community setting as part of the Affordable Care Act. While
    this provision known as the CLASS Act was not a perfect piece
    of legislation, the ideas behind it were worth fighting for,
    namely, the idea that there is a desperate need for a strong
    federal program to help with long-term care costs.
        This hearing is timely in that it falls just weeks after
    three separate and independent reports authored by those across
    the political spectrum have agreed on just that point. The
    three reports have all independently agreed on three actions
    Congress must take. The first is to strengthen and simplify
    Medicaid long-term care; the second, to build a more consumer-
    friendly long-term care private market; and third, to create a
    strong federal program that will be there for those with
    catastrophic long-term care costs when they need it.
        And I could not agree more and that is why I plan to
    introduce legislation some time this year to provide a federal
    role in long-term care financing. Seventy percent of Medicare
    seniors will someday need long-term care services and support
    and they deserve a better option when faced with catastrophic
    out-of-pocket costs rising into the hundreds of thousands of
    dollars. Congress must do more to improve the quality and the
    affordability of these services, and I believe that we can
    achieve some of these goals by establishing a Part E option in
    the Medicare program to provide for this care. Now this can be
    done in many different ways, but whatever form this effort
    takes we must act with a sense of urgency.
        The current system forces people to sell off all their
    assets in order to become eligible for Medicaid. While Medicaid
    was put in place to help our most vulnerable, it is currently
    funding 51 percent of long-term care expenditures, a full third
    of the program's total spending. And because many people never
    purchase one of the available albeit expensive plans on the
    market, private insurers only pay for about eight percent of
    care.
        The fact that both public and private insurance plans
    provide so little in terms of long-term care benefits means
    that these costs are left to be shouldered by the elderly, the
    disabled and their families. These direct out-of-pocket costs
    account for $53 billion of long-term care spending and this is
    too great a burden for many who do their best to manage without
    care, who often depend on family caregivers to provide health
    assistance free of charge.
        An estimated 52 million unpaid caregivers make it possible
    for their loved ones to stay out of nursing homes and
    hospitals. As anyone who has ever cared for a loved one knows,
    this is often an arduous task and often means missing work.
    These costs to society add up and not fully tracked, but
    conservative estimates have found that 17 percent of working
    adults provide unpaid care for family members or friends
    providing an estimated $470 billion annually in labor costs.
        The federal government must be part of the solution and I
    stand ready to work with anyone on any of these options to
    start addressing this crisis because I think I simply can't, I
    just don't think we can afford to wait any longer. I thank you,
    Mr. Chairman. I yield back.
        Mr. Pitts. The chair thanks the gentleman. As usual, all
    members' written opening statements will be made a part of the
    record.
        That concludes the opening statements and now we will go to
    our panel. And I would like to thank our panel for coming
    today. I will introduce them in the order of their
    presentation. First, Dr. Alice Rivlin, Ph.D., Co-chair, Long-
    Term Initiative, Bipartisan Policy Center, Senior Fellow,
    Economic Studies Program, The Brookings Institution. And then
    Dr. William J. Scanlon, Ph.D., Consultant, West Health
    Institute and National Health Policy Forum. And finally, Ms.
    Anne Tumlinson, CEO, Anne Tumlinson Innovations, Founder of
    Daughterhood.org.
        Welcome. Your written testimony will be made a part of the
    record. You will each be given 5 minutes to summarize. So at
    this point, the chair recognizes Dr. Rivlin 5 minutes for your
    summary.

       STATEMENTS OF ALICE RIVLIN, PHD, CO-CHAIR, LONG-TERM CARE
    INITIATIVE, BIPARTISAN POLICY CENTER, SENIOR FELLOW, ECONOMICS
    STUDIES PROGRAM, THE BROOKINGS INSTITUTION; WILLIAM J. SCANLON,
      PHD, CONSULTANT, WEST HEALTH INSTITUTE AND NATIONAL HEALTH
        POLICY FORUM; AND, ANNE TUMLINSON, CEO, ANNE TUMLINSON
            INNOVATIONS LLC AND FOUNDER OF DAUGHTERHOOD.ORG

                       STATEMENT OF ALICE RIVLIN

        Ms. Rivlin. Thank you very much, Chairman Pitts. And glad
    to see my old friend, Congresswoman Matsui, and especially to
    have Mr. Pallone here because he has been such a champion for
    long-term care for such a long time. I am happy to be back
    before this subcommittee which is never afraid to take on
    complex issues and to work in a bipartisan manner. The last
    time I was here we were talking about the SGR, so you are not
    afraid of the tough stuff.
        I have worked on long-term care services and supports for a
    long time and I have recently had the privilege of co-chairing
    the Long-Term Care Initiative at the Bipartisan Policy Center
    along with several distinguished former elected officials.
    Nobody ever elected me to anything. But we produced just last
    month a report entitled ``Initial Recommendations to Improve
    Financing of Long-Term Care,'' which is appended to my
    testimony and which is one of the three reports that have been
    referred to already.
        I don't need to remind this committee that the need is
    increasing and that the burden on families, on seniors
    themselves and on the public programs, especially Medicaid, is
    increasing very, very rapidly and will certainly increase more
    as the baby boomers age.
        Many efforts have been made to find a comprehensive
    solution to long-term care financing. The chairman and several
    of you have referred to the CLASS Act. Recently, a growing
    consensus has formed among a number of groups that steps,
    incremental steps, could be taken to improve the availability
    and affordability of long-term services and supports to
    America's most vulnerable populations. And so we have addressed
    ourselves to that problem.
        One thing that is important and this committee knows very
    well is that over the last few years the whole emphasis has
    shifted from institutional care and nursing homes to ways of
    keeping people in the community where they are happier and
    where they often can be served cheaper.
        So the group that I worked with addressed ourselves to the
    question, is there a set of practical policies that could
    command bipartisan support and improve care for older Americans
    with disabilities, take significant pressure off families and
    Medicaid and not break the bank? We came up with four
    proposals. One is a major effort to make private long-term care
    insurance more affordable and more available. Long-term care
    should be an insurable risk and if more people bought long-term
    care insurance during their working years there would be less
    pressure on their savings, their family resources and Medicaid
    when they became disabled.
        Our report recommends developing a new type of private
    insurance product, which we call retirement long-term care
    insurance, which would cover long-term care for a limited
    period after a substantial deductible or waiting period and
    would have co-insurance. This is not Cadillac long-term care
    insurance. This is bare bones but we believe it would help. It
    would have inflation protection and a nonforfeiture benefit.
    Employers would be encouraged to offer such policies as the
    default option as part of a retirement package. These policies
    if offered through employers and public-private insurance
    exchanges could, we estimate, cut premiums in half. We also
    suggest that penalty-free withdrawals be allowed from
    retirement plans such as 401(k)s beginning at age 45 for the
    purchase of such insurance.
        We will also recommend designing a long-term care option, a
    federal long-term care option, for those with catastrophic
    costs. We would recommend streamlining the Medicaid home and
    community-based care options to encourage more effective care
    in lower cost settings. The Congress has already moved in this
    direction, but the waiver process is unbelievably complicated
    and we think it could be simplified.
        And finally, we recommend ensuring that working people with
    disabilities in need of long-term care services and support do
    not lose their access to those services under Medicaid as their
    earnings increase, a cheaper buy-in for just those services.
    Thank you, Mr. Chairman and members of the committee, and we
    will be happy to work with you over the longer run and to
    answer any questions.
        [The prepared statement of Ms. Rivlin follows:]

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        Mr. Pitts. The chair thanks the gentlelady and now
    recognizes Dr. Scanlon five minutes for your summary.

                      STATEMENT OF WILLIAM SCANLON

        Mr. Scanlon. Thank you very much, Mr. Chairman and members
    of the subcommittee. I am very pleased to be here as you
    discuss the issue of financing and delivery of long-term care
    services. Long-term care services and financing have been an
    area of concern during my entire career on health policy which
    is now about a 40-year period. Much of what you are going to
    hear from me also will be in agreement of what you heard from
    Dr. Rivlin, because I think we have recognized the nature of
    the problem for the long term and that the issue is finding the
    right set of options in terms of trying sort of to address it.
    The need to address it has become more acute as the aging of
    the baby boomer generation sort of adds sort of to the numbers
    of people needing long-term care so that it is a critical issue
    today.
        In my view, long-term care is quite distinct from other
    health care services both in the nature and the provision of
    those services and its financing. Unlike medical care, which
    aims at treating or managing diseases or conditions, long-term
    care as you have heard involves assistance that determines how
    one lives one's life in the presence of a disability. It is the
    assistance with activities to daily living like bathing,
    dressing, eating, and toileting that we all would do ourselves
    but those with disabilities cannot. Long-term care is not
    provided solely by health professionals, as you have heard
    family members are probably the principal suppliers of sort of
    long-term care services. Long-term care is also quite distinct
    in its financing. There is very little sort of insurance. The
    predominant payer is state Medicaid programs which constitute
    about two-thirds of all spending, with out-of-pocket spending
    comprising another one-fifth of total spending.
        Medicaid as the primary source of payment is problematic
    for both individuals and the programs. Only individuals with
    limited resources are eligible for Medicaid. Some people
    outlive their savings and become Medicaid-eligible when a long-
    term care need arises, others exhaust their savings paying for
    long-term care needs that they have incurred.
        What services a Medicaid beneficiary receives depends
    greatly on where one resides. The options for home versus
    nursing home care differ by state. Medicaid offered in-home
    services supplement what families provide, do not replace them.
    An individual's preferences or relief of the burden on family
    caregivers may not be significant enough factors determining
    what services are offered.
        For Medicaid programs, long-term care is the largest share
    of their spending and generally has been the fastest growing
    part of the program. States have had some success in moderating
    spending growth as there has been a substantial shift from
    nursing homes to home and community care following the
    enactment of the Medicaid waivers. States have also restricted
    the number of nursing home beds through moratoria on new
    construction of new beds and sort of a stricter certificate of
    need. As a result, today we have one million fewer beds than we
    would have expected given the size of the elderly population.
        The challenge for the future magnified by the Baby Boom
    generation involves reforming long-term care financing in ways
    that improve the well being of people with disabilities and
    their caregivers and that are affordable and sustainable.
    Unlike medical care, a solution is unlikely to be found in
    finding efficiencies that reduce spending. Medicaid programs
    efforts and individuals paying out of pocket sensitivity to
    costs have likely prevented considerable inefficiency already.
        The need to find another way to finance long-term care is
    not a new idea. Serious discussions about alternatives to the
    current system began in the early '80s and with the primary
    focuses on expanding private long-term insurance. This seemed
    and is a reasonable approach as needing long-term care is an
    insurable event, a risk not a certainty, and insuring for that
    risk rather than saving for it makes more sense.
        Despite multiple efforts, the private long-term care
    insurance market remains limited. Only three percent of adults
    and 11 percent of elderly currently have any coverage at all,
    and recently the number of policies sold sort of annually has
    declined. While the limited growth in long-term care insurance
    has generally been seen as a demand problem, today there is a
    need to consider the potential for a supply side problem as
    well. In 2002, 102 companies were selling long-term care
    insurance. The number declined to 20 by 2014 and additional
    companies have since left the market.
        Long-term care insurance has always been a difficult
    product for insurers. There was and is uncertainty about the
    likely benefit use with the presence of insurance. There is an
    additional problem now though and that is the limited returns
    on the investment of premiums that have been associated with
    the low interest rates we have experienced over the last 8 to 9
    years. The ability to invest premiums is key for insurers in
    setting premium rates and having a sustainable product.
        I would like to conclude with some considerations that
    might be taken into account as you are examining sort of long-
    term care financing options. Encouraging personal preparedness
    should be a priority. While that might be perceived by some as
    limiting public expenditures, I see it as essential to
    providing individuals with more choice in how they live their
    lives when they have a disability and how their families will
    be impacted.
        Insurance as I mentioned is preferable to savings as the
    primary means of preparation, yet we now have concerns about
    insurer participation. What actions can be taken to assure that
    insurers will be interested and able to market long-term care
    policies with reasonable benefits and premiums? The proposals
    that you are going to hear today sort of offer some sharing of
    risk which may be sort of key to the participation of insurers.
    It may also be key to giving a clear message to individuals
    that preparation sort of is an important personal
    responsibility.
        Finally, what the Baby Boom generation means for state
    Medicaid programs deserves attention. States already differ
    significantly in the shares of their population needing long-
    term care and the cost of providing services. As the numbers
    needing long-term care increases and as economic activity may
    shift geographically, some states may be disproportionately
    affected. What assistance they may need should be considered.
    Thank you very much, Mr. Chairman.
        [The prepared statement of Mr. Scanlon follows:]

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        Mr. Pitts. The chair thanks the gentleman and now
    recognizes Ms. Tumlinson 5 minutes for her summary.

                      STATEMENT OF ANNE TUMLINSON

        Ms. Tumlinson. Thank you. Chairman Pitts and members of the
    committee, thank you very much for the opportunity to testify
    today. I really appreciate your focus on this issue.
        The perspective that I am about to share comes from a
    variety of experiences over the past 25 years. I work at the
    Office of Management and Budget on the Medicaid program as a
    researcher and a consultant to long-term care providers and
    most recently serving as a facilitator between the economic
    modeling work done at the Urban Institute and Milliman and
    several of the very brave groups working on long-term care
    financing reform. I also write a blog for family caregivers.
        We have a very serious and significant financing gap
    between the services and supports that people need and the
    funds available to pay for them. I am going to make just three
    points that I hope will frame today's discussion and shape the
    work of this committee.
        First, as we have heard already, having a need, a high need
    for long-term care in old age is not an inevitable part of old
    age. And what I mean by high level of long-term care need is
    when you get to the point that you need help with two or more
    activities, basic activities of daily living like bathing,
    eating or dressing, or if you are living with a severe
    cognitive impairment.
        And what we are learning from the recent work done by the
    Urban Institute and Milliman is that there is a huge variation
    in whether and the degree to which individuals will actually
    experience this high level of long-term care need in old age.
    The researchers project that over the older adult population
    there is roughly a 50 percent chance that if you live to age 65
    that at some point over the rest of your old age you will
    experience that high level of need for long-term care.
        Now there is also a smaller, a 15 percent chance that a
    person will live with that level of need for five or more
    years. Just imagine living with two or more activities of daily
    living limitations for five or more years. These situations are
    incredibly expensive. If you are among the top 15 percent of
    spenders, the Urban Institute projects that your care will cost
    at least, at least $250,000 over your lifetime. The bottom line
    is that the risk here is large and it is uncertain.
        So the second point I want to make is the way we finance
    these costs as we have all heard is inadequate to the need.
    Individuals and families face huge financial risks. Generally
    what the Urban Institute research is telling us is that on
    average over half of lifetime costs are actually financed
    through individuals' income and savings through out-of-pocket
    spending. But when and if these resources run out, Medicaid
    plays a very important role. It finances about a third of
    lifetime costs on average and makes the biggest contribution
    for people who need care for very long periods of time.
        The reliance on individual resources and Medicaid has
    created huge gaps in the system. We have already talked about
    this, but we rely very heavily on unpaid family caregiving and
    this is in part because this is often the only option that
    families feel like they have.
        But I want to talk about another gap that we see, which is
    that we often simply just fail to meet needs. In a recent
    survey, about a third of individuals with long-term care needs
    reported serious consequences from going without needed
    services. For example, individuals who have difficulty
    preparing their own food or difficulty eating and can't get
    help with that often go without eating, and this unmet need
    gets addressed in the emergency room and the hospital which is
    of course where Medicare pays.
        So my third point is that the risk of needing long-term
    care is one that is well suited for insurance, but shifting all
    or even a part of our financing to insurance will be very
    challenging, so I am the Debbie Downer here. So even when we
    estimate a twofold increase, a twofold increase, in voluntary
    participation in long-term care insurance we still don't see it
    moving the needle that much on how much we spend on Medicaid
    and how much out-of-pocket contributions are made. So I want to
    be careful here and say that this doesn't mean it wouldn't be
    helpful to increase insurance participation under a voluntary
    approach. It would. It just wouldn't dramatically change the
    role of Medicaid or out-of-pocket spending. To do that, we need
    everyone to participate. But even when we assume that everyone
    is covered it is still hard because that new coverage soaks up
    so much of the unmet need that it increases overall spending
    almost as much as it offsets other sources of payment.
        So in grappling with these tough issues, where the groups I
    have worked with have landed as you have heard is that some
    sort of private market and public insurance partnership
    solution is needed and that the appropriate role of public
    insurance is to cover that catastrophic risk; that 5 years or 4
    years or 3 years, but the part that is the most expensive for
    individuals. But that is only going to work, that catastrophic
    risk coverage will only work as long as we can stimulate the
    private market and reform Medicaid to better cover the earlier
    risk.
        But everyone has more work to do. We have to develop
    details. We still have to work on financing strategies. But we
    have to move forward no matter how challenging it might be,
    because our stopgap patchwork system has serious implications
    for future economic productivity, public program spending and
    for the functioning of the American family. Thank you.
        [The prepared statement of Ms. Tumlinson follows:]

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        Mr. Pitts. The chair thanks the gentlelady. That concludes
    the opening statements. We will now go to questioning and I
    will recognize myself 5 minutes for that purpose.
        Dr. Rivlin, you have suggested Congress create a state plan
    amendment for home and community-based services in Medicaid. If
    home and community-based services are more cost effective and
    offer preferred settings, why aren't states making full use of
    existing authorities to provide such services under Medicaid?
        Ms. Rivlin. I don't know the answer to that for all states.
    Many states would like to and get caught in the complicated
    waiver process, and we are simply saying let us make it easier.
    Let us make it simpler for states to do this and hope that they
    do and that therein can be encouraged broadly to get with it
    and use the authorities that are there.
        Mr. Pitts. And why does the Bipartisan Policy Center feel
    the federal government needs to create incentives for states to
    increase the adoption of home and community-based options?
        Ms. Rivlin. Because it is not happening and we think that
    some incentives might help.
        Mr. Pitts. OK.
        Ms. Rivlin. And the simplification is really very
    important. The Congress has wanted to do this and has done it,
    but as so often happens in policy as you know we end up with a
    complexity that could be simplified.
        Mr. Pitts. Ms. Tumlinson, I was particularly struck by the
    sentence in your written statement, ``it is important to
    remember that because the system is currently underfinanced,
    any change that ensures a significant portion of the population
    with need will result in more overall spending rather than
    less.'' Would you explain more about what you are suggesting?
    Is it that there is cost shifting currently going on, or we
    just buckle up and spend more nationally, or are you suggesting
    we need to approve large new expenditures now for promised
    savings tomorrow?
        Ms. Tumlinson. Oh, there we go. No. The way that our system
    works right now, we have a lot of care that is being financed
    so to speak without paying for it, so we are financing care
    through unpaid family caregiving. We are financing care through
    unmet need, so to speak, and we are financing care kind of back
    door through the health care system.
        So when we put an insurance program in place, what the
    modelers estimate is that we have something called induced
    demand. In other words that people do actually, who have been
    essentially kind of holding back will actually come in and use
    their insurance benefits as we would expect them to. And as a
    result of that we will see, absolutely, we will see a
    replacement of some Medicaid dollars. It does reduce Medicaid
    dollars. It reduces out-of-pocket dollars.
        But the insurance itself is, there is also kind of a place
    in the spending where the insurance brings in new dollars so we
    will have new dollars in the system. It is actually, it is good
    news. It is just that I think that this idea that our system
    somehow is, is we have out of control spending is a fallacy. We
    actually have a very tight, very efficient long-term care
    system right now.
        Mr. Pitts. All right. Dr. Scanlon or Dr. Rivlin, do you
    want to comment on that?
        Mr. Scanlon. I would agree with Ms. Tumlinson. It is very
    clear that there have been pressures to control costs that are
    present for both Medicaid programs as well as individuals
    buying out of pocket. And the reason that we will have an
    expansion of spending if we were to get insurance is the fact
    that at this point families are probably doing more than they
    really can bear in terms of the burden of caregiving and if
    given an option they will seek to provide some additional
    outside resources. We don't want to supplant family caregiving,
    but we want to make sure that we do not have it sort of create
    too much of a cost or burden on those family members.
        Mr. Pitts. Dr. Rivlin, do you have any thoughts on this?
        Ms. Rivlin. No, I agree with that.
        Mr. Pitts. Dr. Scanlon, in your written testimony you state
    that Medicaid as a primary source of payment is problematic for
    both individuals and the programs. Can you explain why you
    believe it is problematic for Medicaid to be the primary payer
    for long-term care?
        Mr. Scanlon. I feel it is problematic for the Medicaid
    program because of the sort of the enormity of its obligation
    in terms of trying to deal with sort of long-term care as the
    only financer. Secondly, there is the difficulty of defining
    what services should be provided by Medicaid programs.
        Historically, we have relied exclusively on nursing home
    care and we recognize the shortcomings of that but as we move
    to having more care in home, we also have to face the
    difficulty of deciding how much care is appropriate to both
    benefit the individual as well as protect the program. And the
    reality there is we do not want to supplant sort of family
    care, we want to support it in a very positive way.
        Mr. Pitts. The chair thanks the gentleman. My time has
    expired. The chair recognizes Ms. Matsui 5 minutes for
    questions.
        Ms. Matsui. Thank you, Mr. Chairman. Our long-term services
    and support system are challenges that threaten our seniors'
    retirement security, young people with disabilities, the
    ability to both work and afford needed services, and our
    nation's families who are attempting to either pay for their
    loved ones' services or to provide the care themselves.
        Unpaid caregiving particularly impacts women, as daughters
    most likely step out of the workforce to take care of their
    aging parents and mothers are most likely to take care of their
    disabled children. This leaves women with less retirement
    savings and Social Security accrual, and women need more as we
    also live longer. As we know, approximately 12 million
    Americans require long-term care and that number is expected to
    grow as the baby boomer population ages.
        Given that the need for long-term care is driven by
    increased functional limitation whether it be from the aging
    process or untoward circumstances in life, isn't it fair to
    assume we need to approach this issue from a point of
    universality so that all Americans have a safety net without
    being required to become poor and significantly disabled in
    order to access the services and supports that they need? And I
    would like each of you to comment on that. Dr. Rivlin?
        Ms. Rivlin. In an ideal world I think I would say yes, let
    us cover this in a universal way. But right now the idea of and
    creating a new entitlement program primarily for older people
    seems to me both unlikely to happen and probably not desirable.
    I worry that we are spending so much on older people for good
    reasons that we are squeezing out investments in the young and
    in education both at the federal level and at the state level
    and for which reason I think it was important to take some of
    the burden off Medicaid.
        Ms. Matsui. Right. Mr. Scanlon?
        Mr. Scanlon. Yes. I agree that in an ideal world we would
    have a system where there is all needs that are going to be
    met, but I think that we need to also look at long-term care as
    something that is not just another health care service; that
    long-term care is about how you live your life in the presence
    of a disability. So it is not just the question of need, it is
    the question of your preference and your satisfaction.
        And while we can have insurance that is aimed at making,
    and public programs aimed at making needs being met, there is
    this question of what additional services one might want. That
    is where I think personal preparation comes into play, where
    individuals can be able to exercise their preferences and the
    preferences of their family.
        Ms. Matsui. Ms. Tumlinson?
        Ms. Tumlinson. Yes, thank you. Well, I can't figure out how
    to change the current system unless everybody is in it. We have
    three different populations that need that universality--
    children born with developmental disabilities, adults who
    develop disabilities, or individuals who develop disabilities
    as adults and older adults.
        And I think that as somebody who has worked on the budget
    side of Medicare and Medicaid for many years, I share Dr.
    Rivlin's concern about spending on older adults. At the same
    time, I think that we cannot back door finance this off of
    women who are giving up huge amounts of work time and their own
    financial resources in order to take care of their parents.
        I certainly know from my work with caregivers that not only
    do they spend a lot of time, they also spend a lot of their own
    money. And that is not even in our model right now. We don't
    model that.
        Ms. Matsui. I want to address long-term care insurance. The
    vast majority of employers as we know do not offer long-term
    care insurance to their employees. The federal government does
    offer long-term care insurance. However, over 80 percent in the
    general workforce does not have access through employers. Some
    have recommended requiring or incentivizing employers to offer
    long-term care insurance as an opt-out basis. What roles do you
    recommend employers play in education and enrollment in long-
    term care insurance? Dr. Rivlin?
        Ms. Rivlin. I think employers could play a major role,
    especially if it were not so expensive and if they thought of
    it as the selling point as protect your retirement resources,
    your savings, by buying this relatively inexpensive long-term
    care insurance which we are offering you, and not only that we
    are enrolling you unless you opt out.
        Mr. Scanlon. I agree that the employers would be a trusted
    source of information, and I think education is the key to sort
    of having consumers understand sort of the value of insurance.
        Ms. Tumlinson. I agree with Dr. Scanlon and Dr. Rivlin.
        Ms. Matsui. OK. Thank you, and I yield back.
        Mr. Pitts. The chair thanks the gentlelady. I now recognize
    the vice chair of the subcommittee, Mr. Guthrie, 5 minutes for
    questions.
        Mr. Guthrie. Thank you. Thank you for all being here for
    this important issue that we need to figure out a way to
    address. And I have a question for the panel, a couple
    questions for the panel. Generally, the home represents the
    individual's largest asset. Medicaid payments prevent certain
    individuals with substantial home equity from receiving
    coverage for long-term care. After adjustments for inflation,
    states' current home equity limits range from $552,000 of home
    equity to $828,000.
        I have introduced H.R. 1361, legislation to encourage the
    use of home equity to finance long-term care by eliminating the
    option for states to increase the home equity allowance above
    $500,000 adjusted for inflation. Are there other policies that
    could be implemented to encourage--this is a question. Are
    there are policies that could be implemented to encourage
    individuals, especially elderly individuals, to tap the equity
    interest in their home to help finance long-term care needs?
        Ms. Tumlinson. OK. So first of all, thank you for that
    question. We also know that individuals--one of the ways, the
    main ways that individuals access assisted living is by selling
    their homes and getting access to the home equity and then
    spending that down. That is what we hear from assisted living
    providers. So it is a really important set of assets that we
    would like to be able to tap better. I think we have been
    around and around about reverse mortgages, and I think that
    that is definitely an area where we could definitely do some
    more work in understanding how to make those financial
    instruments that basically allow people access to that equity
    without having to move out of their house.
        Mr. Guthrie. OK. Thank you. OK, the second question then,
    use of personal care in home health services in Medicaid has
    been growing rapidly. For example, in 2011, Medicaid costs for
    personal care services totaled 12.7 billion, a 35 percent
    increase since 2005. At the same time, the Office of Inspector
    General found that fraud in personal care services is on the
    rise, representing more cases investigated by state Medicaid
    fraud control units than any other type of Medicaid fraud.
        Another bill I have introduced is H.R. 2446, which would
    reduce the level of fraud and improper payments in personal
    care services by requiring the adoption of electronic visit
    verification systems for personal care and home health services
    under Medicaid. We can protect some of the most vulnerable
    Medicaid beneficiaries and ensure they receive the care they
    need.
        Given most people's preference to remain at their home and
    growing demand for long-term care services, do you each think
    it is important to use technology such as electronic visit
    verification systems to ensure that the vulnerable
    beneficiaries receive the services they need and for which
    Medicaid is paying?
        Mr. Scanlon. I definitely do. I think that in the statistic
    that you have cited in terms of the growth of expenditures
    there is actually a positive side of that which is those
    expenditures have been growing because we have been reducing
    reliance on nursing homes. I saw some data recently that in
    2013, while the numbers of dollars spent by Medicaid programs
    on home care increased significantly, the numbers of dollars
    spent on nursing homes had actually declined, which is rather
    surprising.
        Monitoring the integrity of home care is one of the most
    difficult things to contemplate if you are running a program
    when you think about it, this care being delivered in homes
    across one's jurisdiction. Using any technology that would aid
    in that is a plus, but I also think we need to think for the
    future in terms of this, if we are talking about service
    delivery for long-term care, what other roles can technology
    play?
        To be quite honest, as the Baby Boom generation grows and
    needs more long-term care, the idea of withdrawing people from
    the labor force to provide that care has very serious
    implications for our economy.
        Mr. Guthrie. Yes. Thank you very much. And the third
    question for Dr. Rivlin, I understand the recommendations the
    Bipartisan Center released last month are just an initial
    recommendations in that the Center continues to work on
    additional recommendations regarding the financing of long-term
    care. Can you share with us some of the additional areas that
    will be the focus of the Center's continued efforts?
        Ms. Rivlin. The primary one is to work out some details for
    the catastrophic insurance. That we believe has to be a federal
    program and universal, but it is complicated to work out and we
    wanted to put some more effort into that. We also want to work
    on how long-term supports and services could be integrated with
    Medicare Advantage.
        Mr. Guthrie. Thank you very much and I yield back the
    balance of my time.
        Mr. Pitts. The chair thanks the gentleman. I now recognize
    the ranking member of the full committee, Mr. Pallone, 5
    minutes for questions.
        Mr. Pallone. Thank you, Mr. Chairman. I wanted to ask Ms.
    Tumlinson, we will see how much time there is. Maybe the others
    could respond as well. Two things about the spend-down
    provision and just about affordability of long-term care. I
    don't want to put words into Dr. Burgess' mouth because he is
    not here right now, but I think he said between $1,500 and
    $2,500 a month for long-term care insurance. Was that accurate?
    Let us assume it is $2,000, which is halfway between, right.
        Mr. Shimkus. For over 50.
        Mr. Pallone. For over 50. So you think about that that is
    what, $24,000 a year, right. Will we say nursing home care now
    is about maybe $100,000, a little less than that? So I mean, it
    doesn't even seem worth it, I mean in the sense that you could,
    say you are 50, or of course even if you were younger and you
    put away that $25,000 for 10 years or so that would be--I don't
    know. That would pay for at least 2 years of nursing home care.
        So it seems to me that--and then a lot of times those
    policies don't even cover more than 6 months or a year of care.
    So I think a lot of people just look at this and say it is not
    worth it. In other words--and that is what I wanted you to
    comment. I think a lot of people just look at it and say, look,
    it is so expensive I could just as easily put the money in the
    bank or in some kind of a mutual fund and have enough to cover
    it.
        The real issue really is catastrophic, if you had to be in
    a nursing home for 5 years or so which I know is unusual but
    not totally unheard of. So I just wanted you to comment on
    that. I mean, I don't see, practically speaking it doesn't even
    seem like the long-term care insurance is even worth it given
    its cost and limitations. And is that why you talk, all of you
    were talking primarily about catastrophic and what would that
    catastrophic entail?
        Ms. Tumlinson. All right. So I think it is the case that
    today it is very hard to buy private long-term care insurance
    for catastrophic risk. Most of the insurers are not interested
    in lifetime policies, selling lifetime policies anymore, so
    policies that would cover the care that you might need after a
    certain period of time. And so that is one of the reasons why
    we have all, all of these groups have been interested in a
    public program to cover the catastrophic risk.
        Mr. Pallone. And the catastrophic would be covering like
    what, after a couple years?
        Ms. Tumlinson. So, right. After, well, defining that is
    part of the work that we have to, still left to do, but in the
    modeling that we did we started it after 2 years. So you have 2
    years of high need and that at year two that is when the
    catastrophic piece of the insurance would kick in.
        Mr. Pallone. Well, see that seems to me to make the most
    sense if we are talking about a public program, extension of
    Medicare or something else after that 2 years, because
    otherwise from what I see on the market it is just not worth
    it.
        Well, let me ask you the second question. We haven't really
    talked much about it, but to me the biggest scandal, if you
    will, in this whole system is the spend-down provision. I don't
    like to talk about values, but I mean, from a value, we say
    that we are trying to instill certain values in what we do
    here, and it seems to me that that is like the most valueless,
    if that is the right word, thing that we ever created is the
    spend-down provision. And all I hear from my constituents is
    how do I get around it. What can I do to transfer my assets
    before the deadline so that I don't have to spend my savings or
    whatever, and then I can go on Medicaid.
        I mean, I have to go be honest with you, practically
    speaking is one thing, but just from a value point of view I
    think it is outrageous because this is what people do. Yes,
    would you comment on that? I mean, in your experience this
    whole spend-down and people's efforts to get around it and what
    does that do to the family and the fabric of things from a
    moral point of view, I guess, is what I am asking.
        Ms. Tumlinson. Sure. Well, so what I observe in what we are
    seeing, I think, in the data, is actually that in part because
    of Medicaid, because access to, even though access to home and
    community-based services is much better than it used to be
    through Medicaid, but because it is not guaranteed, in many
    cases, still, the only way you can use Medicaid is if you are
    in a nursing home.
        And many, many, many families, most of the families that I
    talk to or that I deal with would much prefer to spend their
    own money in assisted living, senior housing, they would prefer
    to provide unpaid caregiving. One of the home care providers in
    California told me they had folks maxxing out their credit
    cards to pay for home care themselves. So I don't really see
    people really working to sort of get rid of their assets in
    order to qualify for Medicaid because in many cases that just
    simply means a nursing home for their family member and they
    would prefer to avoid that.
        Having said that there is a huge amount of diversity out
    there, and absolutely, once you have made that decision that a
    nursing home is where it is going to have to be there is, maybe
    the incentives are in place to try to figure out how to make
    that work in a way that is financially best for your family.
    But generally speaking, I don't really see people gaming it
    given how much out-of-pocket spending is happening.
        Mr. Pallone. I appreciate what you are saying, but I hear
    it so often and it just galls me to think that we have set up a
    system where people are encouraged to basically get around it.
    And I know we can talk about it another day, but it is one of
    my biggest concerns. Thank you.
        Mr. Pitts. The gentleman yields back. The chair recognizes
    the gentleman from Illinois, Mr. Shimkus, 5 minutes for
    questions.
        Mr. Shimkus. Thank you, Mr. Chairman. Welcome. This is a
    great hearing and something that we have been struggling with
    forever since I have been on the subcommittee. And I really
    appreciate Ranking Member Pallone's comments, because I do have
    frustrations with that and elder law attorneys who try to find
    these ways to protect assets when those assets should be used.
    I mean, we can't take it with us when we die, right. So I think
    maybe we will continue to talk about that because there has got
    to be a way to incent and keep and encourage, and I think a lot
    of different ideas are being thrown out here.
        And I have always been, I have spent a lot of time talking
    about the budget as a whole, Dr. Rivlin, and whatever 2014
    numbers, the 3.4 trillion and really the 1.900 billion or the
    1.1 trillion discretionary budget that we always seem to fight
    about when the real challenge is our entitlements. People are
    entitled to these services and then the mandatory money then
    follows because you are entitled for these programs. So those
    are the right words and I think are rightly used.
        But in the Bipartisan Policy Center when we talked about
    the failure of the CLASS Act, because you all talk about the
    new programs, how would we fund something like a CLASS Act to
    help people coverage? I mean, what would be a possible funding
    mechanism? Or is that to be answered in--it is kind of a
    follow-up from the other discussions.
        Ms. Rivlin. The CLASS Act was very expensive and that was
    one of the problems. If you are funding something less
    expensive like catastrophic care, then I think you still have
    the usual options. It could be a small payroll tax. It could be
    some other kind of tax. And I don't know exactly what the cost
    would be because we haven't done that work yet, but I think it
    has to be funded, in my opinion, and the less pressure you put
    on the federal budget, the easier it is to fund it obviously.
        Mr. Shimkus. Because we are going to continue to fight
    budget debt, deficits, and the like and we will have to make
    sure that we have a funded program so it doesn't add to the
    deficit because then we are just continuing in the spiral down.
    Let me also go, we know the benefits of employing our disabled
    community and keeping them, but long-term services and long-
    term support and services help them stay in the workforce.
        But there is that balance, right, of how you continue to
    provide Medicaid support so that they can then be active
    citizens and in employment without getting into the other--oh,
    now, you are making money or you are not making money and we
    are going to kick you off services or we are going to add you
    to services. So do you have any comments on that?
        Ms. Rivlin. Yes. We suggest a limited buy-in to Medicaid
    just for the long-term supports and services not for the whole
    Medicaid package because they may not need that. They may, if
    they are employed have insurance.
        Mr. Shimkus. Ms. Tumlinson, you are smiling, so do you want
    to add?
        Ms. Tumlinson. Well, I agree with the Dr. Rivlin side. The
    BPC has got a really interesting solution that they have put
    forward, but I go back to if we had, the other option of course
    is to create an insurance system that if you, so that if you
    sort of unexpectedly face a disability as a working age adult
    that you have access to those long-term support and services
    through that insurance program. That is what the CLASS Act was
    designed to do, but it was a voluntary program.
        Mr. Shimkus. Right. Thank you. And I want to finish up.
    There has also been debate, we are talking Medicaid, but
    recently we are also following the Puerto Rican debt crisis,
    health care dilemma, et cetera, et cetera, et cetera. But there
    is some confusion. I want to go to Dr. Scanlon. I don't think
    all Americans understand that the Puerto Ricans do not pay
    federal income tax as a protectorate, but the question is does
    Puerto Rico even provide long-term care which is mandatory
    Medicaid service?
        Mr. Scanlon. My understanding of that and this is based on
    some GAO work that was done in 2000 and sort of in '05, is that
    Puerto Rico does not cover either nursing facilities, or at
    that point it was identified as home health. The home health
    portion sort of is not really long-term care. I think one of
    the things in educating the public is to stop confusing them
    about sort of what home health is. In terms of the nursing
    facilities there is the question of whether they, outside of
    Medicaid, support any other types of residential care.
        Mr. Shimkus. Yes. So the only way--if Mr. Chairman, I will
    just in my summary--it is a debate between block grants and per
    capita grants and there is a confusion, then to lump what
    states are doing with what is going on in Puerto Rico is not
    appropriate. So with that I will yield back.
        Mr. Pitts. The chair thanks the gentleman and now
    recognizes the gentlelady from Florida, Ms. Castor, 5 minutes
    for questions.
        Ms. Castor. Thank you, Mr. Chairman, and thank you to the
    panel for sharing your expertise with the committee.
        It is very important as you know to families across America
    and it is in our national interest to strengthen long-term care
    across the spectrum from home and community-based care to
    skilled nursing. And Dr. Rivlin, you suggested working on
    practical bipartisan solutions and I wanted to recommend one to
    my colleagues.
        Congressman Gregg Harper, my Republican colleague, and I
    are cosponsoring H.R. 3009. That is the RAISE Family Caregivers
    Act. RAISE means Recognize, Assist, Include, Support and Engage
    Family Caregivers Act. It would create a national caregiving
    strategy based upon the input from advocates and experts and
    families across the country. And the reason I really recommend
    it to you is it passed the Senate. The Senate version has
    passed, and we the House should take action. So I would ask my
    colleagues to take a look at that and help us move forward on
    some of these practical solutions.
        And Ms. Tumlinson, thank you very much for bringing up the
    fact that long-term care right now is often funded in a back
    door way by women and families who take time off their job, who
    cut into their salaries and overtime, and there must be a
    solution for that. And all of the witnesses have mentioned this
    as well. So thank you.
        Another concern I have is that American families do not
    fully understand the availability or more accurately the lack
    of availability of financed long-term care services.
    Specifically, many Americans mistakenly believe that Medicare
    provides for long-term care services. Ms. Tumlinson, in your
    testimony you described Medicaid's role in long-term services
    and supports. Can you briefly talk about Medicaid's current
    role, and if no Medicaid reforms are taken here in the near
    future what do you believe is the outlook for financing long-
    term care through Medicaid?
        Ms. Tumlinson. So in other words what happens under status
    quo.
        Ms. Castor. Yes.
        Ms. Tumlinson. We do nothing for Medicaid. So the modelers
    did what we call a baseline estimate of Medicaid, so what
    happens to Medicaid spending in the absence of current law, and
    it certainly starts to decline fairly rapidly. Just the long-
    term service and supports portion for older adults is the piece
    that they did, and it starts to decline very rapidly hitting
    500 billion fairly soon, and so we are going to see rapid
    growth. But that is just kind of a modeler's view of the world,
    not that there is anything wrong with that.
        But asking of myself practically, what does that mean
    because can states and the federal government actually really
    absorb that? And I think that what I worry about is that when
    you have all of these people coming through the system who are
    entitled to these services and you can't change that
    entitlement, your only other choice is to use all of the
    leverage at your disposal to reduce spending on a per person
    basis.
        So that what we will start to see is this compression
    around what is available through Medicaid, further putting
    pressure on families and personal finances at exactly the same
    time when we are going to see this rapid decrease in the
    availability of family caregivers relative to the number of
    older adults. So this is a perfect storm of unsustainability.
        Ms. Castor. So could you expand on some of the most
    promising Medicaid reforms going on at the state level? It
    would seem that to your point a moratorium on skilled nursing
    beds is a false reform. And that is what you are talking about
    is the compression and the--if we don't have the ability to
    make these reforms it is simply going to shift costs to
    families.
        Ms. Tumlinson. Right. That is a good example of ways in
    which it is, states can reduce spending on a per person basis
    for home and community-based services, they can increase
    waiting lists, they can put moratoriums on beds, they can
    reduce payments to nursing homes to the point where their
    margins are negative for Medicaid.
        But in the states that are very innovative, what we see,
    for example, in Minnesota is a combination of efforts to use
    sort of central information systems called aging and disability
    resource centers to help people who are starting to have a need
    for a long-term services supports and have potentially
    financial eligibility to actually get tracked into the right
    level of appropriate care for them so that they don't end up in
    an institution unnecessarily, and so that, for example, if all
    you really need is a wheelchair ramp then you get a wheelchair
    ramp. You don't get 12 hours of personal care a week if that is
    not what you need. So developing personalized care plans that
    are specific to the individual needs of the people.
        The thing about long-term care is that it is a universal.
    Universally it is an issue that we all in our families and our
    lives may face, but each situation is in fact fairly
    personalized. And so what I like about what Minnesota is doing
    is that it is allowing those individuals to get the right level
    of care.
        Ms. Castor. Thank you very much.
        Mr. Pitts. The chair thanks the gentlelady and now
    recognizes the gentleman from Texas, Dr. Burgess, 5 minutes for
    questions.
        Mr. Burgess. Thank you, Mr. Chairman. And first off, let me
    apologize to Mr. Pallone if I misspoke, or if he misheard let
    me correct him. The premium that I pay for a long-term care
    insurance policy right now is $1,500 to $2,500 per month. Now I
    am used to talking about the exorbitant premiums I pay in
    healthcare.gov--did I say it is per month again? I meant per
    year. The healthcare.gov premiums are per month.
        And so I am used to the exorbitant premiums per month, but
    that is for the ACA coverage. The long-term care coverage is
    $1,500-$2,500 per year. Still a significant amount of money out
    of a household budget, $100 or $200 a month amortized over the
    course of a year, but an amount of money that perhaps is
    achievable for middle-class families. And what worries me about
    what we are doing or what we have done with the discussions we
    have on long-term care insurance is we pretty much have taken
    the middle class out of it. Sure, we are going to provide
    benefits, we are going to provide the safety net for the most
    vulnerable populations--the blind and disabled children--that
    continues unabated. But what we are talking about are people my
    age, people in the 55- to 75-year age group who are aging into
    a situation where their families now may be called upon to
    provide long-term care.
        So wouldn't it be great if people would at least consider
    whether or not that makes sense for them and their families?
    And again I am not even talking about the tax consequences. I
    am talking about the actual consequences for your family.
    Again, I referenced the loving gift that a father, mother,
    father can give their children, which is to provide for that
    care and not be a burden to their offspring at a time when,
    correctly, under the normal circumstances of living their
    offspring are actually raising their offspring and life goes
    on.
        But back to practicalities. Now, Ms. Castor just talked
    about bipartisan solutions, so Dr. Scanlon, let me just ask
    you. Independence at home was something that was worked on in
    this subcommittee and this committee. Actually, the
    demonstration project was then, I believe, extended and that
    was just signed into law during this Congress, so that is one
    of the achievements in health care that can be correctly
    attributed to this Congress. But can you perhaps fill us in a
    little bit more on the Independence at Home program and ongoing
    what it actually means for families?
        Mr. Scanlon. Certainly. The Independence at Home program
    also could be called the Home Based Primary Care program in
    which sort of individuals are enrolled in primary care
    practices that will deliver their medical care services in
    their homes. It is aimed at individuals that have very serious
    chronic conditions that make it very difficult to be receiving
    their medical care in physicians' offices and other settings.
        The idea behind it is that it will generate savings by
    preventing these individuals from having their conditions be
    exacerbated where they will have to visit emergency departments
    or end up being hospitalized. As you mentioned, the
    demonstration is underway. I think we are now in the third year
    of that demonstration and the early results have been positive
    in a number of the practices.
        And so there is this question of how can we make this
    potentially practical on a widespread basis, what are the types
    of patients that are best served, what kind of practices should
    be serving them?
        Mr. Burgess. And would you suggest that the results are
    positive? Not just positive from a family care-patient care
    standpoint, also positive from a standpoint that it was self-
    sustaining and in fact did result in a negative score by the
    Congressional Budget Office; is that not correct?
        Mr. Scanlon. In the first year results. We do not yet have
    the second and third year results. But I would say again, in
    terms of this hearing, this is about your medical care needs.
    This is not about your long-term care or long-term service and
    support needs.
        Mr. Burgess. Well, let me just ask of the panel for anyone
    who wants to answer. I referenced the Partnership Program that
    we did, now, I guess, 10, 11, 12 years ago under the Deficit
    Reduction Act of 2005. Those hearings that led up to that
    inclusion in the Deficit Reduction Act, the inclusion of the
    Partnership Program, there are lawyers who make a business of
    impoverishing families so that they can then be Medicaid
    eligible.
        And the idea of the Partnership Program was there are a
    certain number of assets that you can then protect as a family
    and you don't have to do this to yourself. And one of the
    unfortunate things about people who enter into long-term care
    is most will not actually overspend or outlive, if you will,
    the ability of premiums to cover their term in long-term care.
    There are limits on the policies, but most people don't exhaust
    those. Unfortunately, whatever the problem is that brought them
    to long-term care is going to claim them before the amount is
    exhausted.
        But for families to have that option to fall back on, to
    give an incentive for families to actually participate in this
    program, do any of you have any thoughts on that?
        Mr. Scanlon. Well, I think it is a positive to allow
    families to have this option. And in my discussions sort of
    with people in the insurance industry, they have said that it
    has had a positive impact in terms of the number of people
    buying policies with there is maybe a 15 to 20 percent increase
    sort of in sales of policies.
        The problem, overall, for what we are discussing today
    though is we are talking about a 15 to 20 percent increase on
    an incredibly small base. If you raise 5 percent by 15 or 20
    percent, as you know we only are increasing it by one or two
    percentage points.
        Protecting your assets in order to pass them on to heirs is
    potentially one very positive thing that families may value in
    terms of partnership policies, but I also think that they
    shouldn't overlook the fact that the policy is going to
    increase your purchasing power. It is going to be able to allow
    you to get more services that are potentially going to relieve
    families of some of the excessive burdens that they may be
    incurring. That is a second aspect of insurance that I think we
    really have to focus on.
        Mr. Burgess. OK. Thank you, Mr. Chairman, I will yield
    back.
        Mr. Pitts. The chair thanks the gentleman and now
    recognizes the gentleman from Oregon, Dr. Schrader, 5 minutes
    for questions.
        Mr. Schrader. Thank you very much, Mr. Chairman. I
    appreciate it. I appreciate the hearing. This is a good area of
    bipartisanship. We can all agree that the rising cost of the
    baby boomers coming into long-term care need situation is going
    to be untenable and unacceptable.
        My state has been a pioneer, I guess, in the community-
    based services. We don't emphasize nursing homes at all. We are
    primarily an assisted living, foster care, or in-home-based
    long-term care state. We have great success. It is wildly
    popular. People prefer to be in these settings than a nursing
    home, at least in my area. It is also a lot cheaper for the
    taxpayer and I think for the individuals that are at risk here.
    So I urge the rest of my colleagues to look at the Oregon
    program and maybe try and create some similar situations in
    their own home state.
        We have talked a lot about Medicaid. The ranking member and
    others have talked about the spending down provisions that seem
    relatively unconscionable. You can't get good care until you
    are poor, until you spend yourself into poverty. And that is
    certainly not a great pattern for success, I don't think. It is
    something that the greatest nation on earth should not be
    striving for as a way to provide long-term care services.
        And Medicaid is expensive for the taxpayer. Now, as was
    alluded to by several of my colleagues, it is one of the
    fastest growing parts of our budget. The safety net programs
    are the long-term debt deficit conundrums that we face. And I
    think it has also been said here today that it is a little
    untenable to have another program added into these otherwise
    already slightly untenable programs at high cost to the
    taxpayer.
        So there has got to be some other alternatives out there.
    Dr. Rivlin, you mentioned very briefly about before we get into
    the higher cost Medicaid programs that maybe there is something
    that could be done in the Medicare Advantage arena for seniors
    seeking home and community-based services. Could you elaborate
    on that please?
        Ms. Rivlin. I mentioned that in the context of a question
    of what else do we need to work on, and I think that is
    certainly one. A Medicare Advantage plan, which is a
    comprehensive approach to health care anyway or should be,
    could, if we figure out how to do it, offer long-term supports
    and services as part of a package and that would help with
    integrating the health care with the LTSS.
        Mr. Schrader. And I appreciate that. And to that end, there
    is a bill that Congressman Lance, Congressman Meehan,
    Congresswoman Linda Sanchez and I are putting forward, H.R.
    4212. It is a bill based on Community-Based Independence for
    Seniors Act, and basically it is a demonstration project
    picking five MA plans across the country. It is budget neutral.
        Please look at a way that these MA plans, which we have
    great success with in the state of Oregon, most of our seniors
    are frankly on MA plans not fee-for-service, and see if they
    can't integrate with a cap so you can't spend too much, but a
    cap on how much senior per month so that they can get this in-
    home care in their home care setting or at least in their
    community before they have to spend themselves down into the
    much more expensive Medicaid programs, which are much more
    expensive for the individual and their family as well as the
    taxpayer.
        So I would urge the committee to please look favorably upon
    Mr. Lance and my proposal and see if we can't at least get
    something going, one part of this problem with long-term care
    our country faces. So I appreciate the opportunity and would
    yield back my time then.
        Mr. Pitts. The chair thanks the gentleman and now
    recognizes the gentleman from New Jersey, Mr. Lance, 5 minutes
    for questions.
        Mr. Lance. Thank you very much. And Congressman Schrader
    and I are working together and I hope the panel will look at
    the proposal we have. And our cosponsors are Linda Sanchez and
    Pat Meehan of Ways and Means, so we have Ways and Means and
    Energy and Commerce working together for precisely the reasons
    the distinguished congressman has suggested as a model moving
    forward.
        Does anyone on the distinguished panel know how many
    Americans age 65 or older are currently in nursing homes?
        Mr. Scanlon. It is probably about 1.75 million.
        Mr. Lance. All right. And I know there are others who go to
    nursing homes, younger people, for other reasons, but the
    Medicare, Medicaid, the Medicare population 65 or older, about
    1.75 million. How many in those nursing homes in that age
    category are funded by Medicaid?
        Mr. Scanlon. About 60 percent of them are funded by
    Medicaid.
        Mr. Lance. Sixty percent of those 65 years or older in
    nursing homes funded by Medicaid, so not private payment at
    all?
        Mr. Scanlon. That is correct. But at the same time, one of
    the features of the Medicaid program is that if you become a
    nursing home resident that you pay your entire income less a
    personal needs allowance for your care, which in the personal
    needs allowance is around $50 a month.
        Mr. Lance. Yes. Yes. And Medicaid is a program funded
    partially by the federal government and partially by the
    states. And in the state of New Jersey, for example, we fund it
    mightily. Our contribution is significantly higher than many
    other states. Is that accurate?
        Mr. Scanlon. That is correct.
        Mr. Lance. And this may be a more difficult figure. Of the
    Medicaid population in nursing homes, 60 percent of almost two
    million so it is roughly a million people, I suppose, what
    percentage have had their assets spent down and have been
    impoverished?
        Mr. Scanlon. That is a number I can't give you. I do not
    know it.
        Mr. Lance. Yes. I come from a family law firm, and on
    occasion people come into the law firm saying we want to
    impoverish our parents. And I am vigorously opposed to that and
    we don't do it, so they just go next door to somebody else who
    helps them. Has there ever been a study as to this phenomenon
    in the United States?
        Mr. Scanlon. There has been some GAO work sort of on this
    issue. It has been a number of years, I think, since it has
    been looked at.
        Mr. Lance. And I want to work with others in the Congress
    on a program that helps senior citizens stay in their
    residences. I think it will be cheaper, vastly cheaper over the
    foreseeable future and that is why the congressman and I are
    working on a bill that we hope that you will examine.
        Is there any discussion in the academic community or the
    fine work you do at Brookings as to this challenge regarding
    impoverishing one's parents? Dr. Rivlin?
        Ms. Rivlin. I think we are all aware that we are not doing
    research on it.
        Mr. Lance. Anyone else on the panel? Ms. Tumlinson?
        Ms. Tumlinson. Yes. Well, I think a lot of people have
    tried really hard to research this because it is has been this
    persistent question for years and years, as long as I have
    worked on long-term care for 25 years, and it is hard to get
    any real conclusive evidence. And the reason is because there
    is so much--well, it is challenging to analyze what is really
    going on in people's financial lives, and there is some data
    sets that we have used.
        But Josh Wiener and I did some work and we were not able to
    find evidence of a significant amount of asset transfer or
    improper use of assets in order to gain eligibility for
    Medicaid. And again, I would just emphasize that even though
    that certainly does happen and it sounds like quite a bit in
    New Jersey from what I am hearing from you----
        Mr. Lance. I don't think in New Jersey to any differently
    from any other state that I might respectfully place on the
    record.
        Ms. Tumlinson. Certainly. Sorry. But that there is in fact
    quite a bit of----
        Mr. Lance. New Jersey is a state, if I might reclaim my
    time, that sends funds to Washington. We are either number one
    or number two in the percentage we send as opposed to what we
    get back. I am sure that this is a state where we send a lot of
    money to Washington, Ms. Tumlinson.
        Ms. Tumlinson. So we know that at least a third of all
    spending on assisted living comes from adult children. So for
    as many children who are seeking to impoverish their parents
    there are probably just as many who are seeking to pay for
    them.
        Mr. Lance. I am sure that is the case. That doesn't mean
    there isn't a problem with the former category. Thank you, Mr.
    Chairman.
        Mr. Pitts. The chair thanks the gentleman and now
    recognizes the gentlelady from Illinois, Ms. Schakowsky, 5
    minutes for questions.
        Ms. Schakowsky. Let me just say I would hope that those who
    are interested in figuring out how many ordinary families are
    trying to figure out how to be able to pay for long-term care
    that we might look at how the wealthiest among us figure out
    how to pay lower taxes than many of their secretaries. So I
    would urge that.
        I just came from, the National Institute on Retirement
    Security is having their national conference. I spoke to them.
    And they just issued a report today, ``Shortchanged in
    Retirement: The Continuing Challenges to Women's Financial
    Future.'' And among the things that I pointed out in my speech
    was that the average yearly out-of-pocket costs for a patient
    living with dementia is $61,522, and the average annual cost of
    a semi-private nursing home is over $80,000 a year. And we are
    talking about significant, ending up with significant out-of-
    pocket costs.
        But it is also as Bankrate tells us, two-thirds of
    Americans don't have enough savings to handle a $500 emergency
    car repair. A lot of people are not able to set money aside for
    the kinds of contingencies that we are talking about, or
    perhaps inevitabilities that we are talking about.
        So I am really happy that we are having this conversation.
    I think it is just the beginning of how we can work together to
    truly improve or maybe even create a long-term care system in
    the United States. We have to improve the quality of our long-
    term care facilities. We need to increase access to community
    and home-based services. We need to drastically expand our
    caregiving workforce, and most importantly we need to have that
    serious conversation, in my view, about universal social
    insurance for long-term care.
        I would like to just address quickly one of the most
    persistent issues in long-term care and that is nursing home
    quality. And I believe one of the best ways to find
    efficiencies in our long-term care system and better protect
    taxpayer dollars is to improve the quality of patient care
    offered at long-term facilities and especially nursing homes
    and skilled nursing facilities.
        So currently, federal law only requires a nurse to be
    present 8 hours a day at nursing homes and skilled nursing
    facilities. I personally was shocked to find that out and I
    think most Americans, especially putting their parents in
    nursing homes, would be. This means that for 16 hours a day
    patients can be left without a nurse on staff at all, and as a
    result residents are experiencing avoidable injury, increased
    illness acuity and premature death due to the lack of direct
    care from an R.N. So I have legislation, H.R. 952, to put, it
    is called Put a Nurse in the Nursing Home Act that would
    require nursing homes and SNFs to have an R.N. on staff 24
    hours a day.
        But Mr. Scanlon, do you believe that efforts to improve the
    quality of care offered at nursing homes and SNFs would improve
    efficiencies in our long-term care system and help save federal
    tax dollars?
        Mr. Scanlon. Those types of efforts to improve quality in
    nursing homes would certainly improve sort of our long-term
    care system. And in fact we actually have experience with what
    you are suggesting. If you go back into the 1980s, there was a
    demonstration program called the Teaching Nursing Home where
    the amount of nursing services in nursing homes was increased.
    What resulted was both an increase in the quality of care and a
    reduction in hospitalizations which are very expensive. Because
    the reality is that nurses in nursing homes can deal with many
    of the kinds of problems that lead today to hospitalizations
    such as pneumonia and other infections.
        Ms. Schakowsky. Thank you so much for telling me that
    because I think that would be good evidence for this
    legislation.
        The other thing, where was it that I wanted to ask you. So
    the National Association of Insurance Commissioners, again Mr.
    Scanlon, you mentioned, previously worked to develop model laws
    and regulations for long-term care insurance. Unfortunately,
    the regulations surrounding long-term care insurance have not
    been updated for over, well, a decade and a half. I previously
    introduced legislation with Congressman Lloyd Doggett to
    require HHS to ask the insurers to update their model laws and
    regulations for long-term care insurance every 5 years and to
    require their update to be incorporated into the model act and
    regulations used by HHS.
        Do you believe that Congress should work with NAIC to
    update the standards and regulations pertaining to long-term
    care insurance?
        Mr. Scanlon. I think we need to assure ourselves that the
    standards are up to date. I don't know what is on NAIC's agenda
    at this point. In the past it would appear that sometimes that
    they have updated the standards, the model laws and regs, in
    response to some crisis that has appeared. That has actually,
    might alleviate the problem for the future, but it has the
    negative effect of the crisis erodes consumer confidence and
    really undermines sort of the ability to convince people that
    long-term care insurance may be a positive idea.
        Ms. Schakowsky. Thank you. I want to thank all the
    witnesses, but I want to say a special welcome to Dr. Rivlin.
    It is so good to see you once again.
        Ms. Rivlin. Very good to see you.
        Ms. Schakowsky. Just wanted to comment, if I could, Mr.
    Chairman.
        Mr. Pitts. The chair thanks the gentlelady. I now recognize
    the gentleman from Florida, Mr. Bilirakis, 5 minutes for
    questions.
        Mr. Bilirakis. Thank you so very much, Mr. Chairman. Thank
    you also for holding this hearing, and I thank the panel for
    their testimony.
        This is a question for the entire panel. Back in the 1990s,
    Congress experimented with a demonstration program called the
    Cash and Counseling. This allowed Medicaid recipients with
    disabilities to pay for long-term services. The government
    provided funds to the beneficiary to establish a personal
    budget for personal assistance services that would best meet
    the personal needs and paid financial counseling services. This
    participant-directed personal assistance service allowed
    flexibility for caregivers and flexibility for beneficiaries to
    pay for nontraditional services such as respite services and
    hiring family members as the caregiver. Can you take lessons
    from this program and other programs to build a better system
    to promote greater flexibility within the long-term care
    program, and can we promote more home and community-based care
    so that seniors may tailor the program to best fit their needs?
    Who would like to begin?
        Ms. Tumlinson. I will just go first. Yes, I think that that
    program, the Cash and Counseling programs have been game
    changers in the way that we think about how we finance and pay
    for long-term service and supports. In the sense that as I was
    saying earlier the experience of having a long-term care need
    is very personal and the individual and the family caregiver is
    very integral to that. And so making the funds available based
    on that person's need as opposed to what the services that they
    buy is a way that we can actually incentivize, I think, a lot
    of innovation in the marketplace and give people control over
    their own personal care needs.
         Mr. Bilirakis. Very good. Thank you.
        Mr. Scanlon. I think this program illustrates an important
    aspect of long-term care that long-term care is not like
    medical care, where you are willing to accept a prescription
    because you hope there is science behind that prescription
    which says this is going to deal with your condition or your
    disease. Long-term care is about how you live your life. And
    having personal direction and sort of affecting sort of that is
    a critical dimension of sort of the satisfaction you are going
    to get sort of in terms of living your life.
        The counseling part of this, I think, is very important
    because it is not just a question of money. It is very
    difficult to navigate the market for long-term care services
    even if you have money. It is not the kind of very visible
    market that we have for many other services. So being able to
    assist people to be able to exercise their choices is a very
    critical piece.
        Mr. Bilirakis. Thank you.
        Ms. Rivlin. I agree with all of that. Let me just pick up
    on one thing you mentioned and that was respite care. And I
    think that is in our list of things we would like to work more
    on because it is very important.
        Mr. Bilirakis. I agree. Thank you.
        Dr. Scanlon and Ms. Tumlinson, the Deficit Reduction Act of
    2005 provides states the option to create a Long-Term Care
    Partnership Program which is a joint federal-state policy
    initiative to promote the purchase of private long-term care
    insurance. What can you tell me about the success of this
    program both in terms of the extent to which it increased use
    of private long-term care insurance and the extent to which it
    reduced Medicaid costs? Are there changes that we could make to
    improve the program? Yes, please.
        Mr. Scanlon. At this point I think it is too early to look
    for its impact on Medicaid costs, because the issue of the
    long-term insurance is one buys a policy and then hopefully
    over, say, a 20- or 30-year period, there is going to be a 20-
    or 30-year period before one goes into benefit and starts to
    receive the benefits under the policy.
        My conversations, as I mentioned with the insurance
    industry executives, have indicated that the Partnership
    Program has a positive effect on the sale of insurance
    policies. It is a modest effect of maybe 15 to 20 percent on a
    base that is small, of maybe five or six percent.
        One of the difficulties in the Partnership, for while it
    has got positive aspects, actually adds to this problem. If you
    talk to brokers or agents for long-term care insurance they
    will tell you this is a complicated product to explain to
    consumers; that is not fun to try and sit down and convince
    somebody that they should buy a policy. The Partnership aspect
    of this creates additional value to that product, but is also
    another complexity to have to explain sort of how that is going
    to work.
        Ms. Tumlinson. Yes. I will just add very quickly that part
    of the challenge is that brokers tell us is that they are both
    selling against Medicaid and then also for Medicaid at the
    same--so you want long-term care insurance to avoid Medicaid,
    but then if it runs out you get Medicaid. So that is a hard
    sell, but the concept of the partnership is a really powerful
    one, and I think it is one that the groups have built on to try
    to, maybe if it is not Medicaid as the backstop it is something
    else. So the idea that the private insurance could sell against
    a public backstop is still a really good idea.
        Mr. Bilirakis. All right. Well, thank you very much. I
    yield back, Mr. Chairman.
        Mr. Pitts. The chair thanks the gentleman and now
    recognizes the gentleman from Maryland, Mr. Sarbanes, 5 minutes
    for questions.
        Mr. Sarbanes. I want to thank the panel. This is a
    fascinating and sobering topic. Speak a little bit to the
    actuarial dimension of needing to come up with some products,
    whether they be hybrid, public-private products or whatever
    they may be, sooner rather than later, just because the way the
    trajectory is going you are going to get this huge influx of
    people hitting at a certain time in terms of their needs and at
    that point it will be prohibitively expensive to try to solve
    the problem. You want to have had the benefit of people paying
    in obviously earlier when they are healthier.
         So against where we are headed with the demographic
    trends, I don't know if anyone has computed with each passing
    year what the extra cost is that we are talking about in terms
    of even the kind of bare bones solution that you are offering
    up. But I imagine that dynamic is something very present in all
    of these considerations, so maybe you could just speak to that.
        Mr. Scanlon. I think that is a very important point. One of
    the strong differences between medical insurance where actually
    premiums are covering the cost of services during a single
    year, what we are talking about with long-term care insurance
    is trying to build the reserves that are going to be able to
    pay for benefits 25 or 30 years later. And as we talked about
    premiums for long-term care insurance here today, if you look
    at those premiums they rise dramatically with age, essentially
    telling everyone if you start too late this is going to become
    prohibitively expensive and that applies both at the individual
    level and for the population of the whole.
        Ms. Rivlin. That is clearly right, and that is why we were
    looking for ways to get people in their earning years to more
    likely buy long-term care insurance, even if it is a limited
    long-term care insurance, and to establish a catastrophic
    program which will take some of the pressure off both the
    carriers and the beneficiaries.
        Ms. Tumlinson. This is definitely one of the most
    challenging parts of thinking about the financing of anything
    that we are contemplating, because we have a lot of cross, what
    we call cross-cohort challenges with asking very young people
    to pay as much as we ask older people to pay who are going to
    be in that level of need much more quickly. And so there are
    ways in which I think we need to continue to work on the
    financing so that we can arrange it so that we have kind of the
    ability to not shift the costs for that population that is
    nearly there onto the younger people entirely, so we are asking
    them to pay more, for example.
        Mr. Sarbanes. There is a little bit of a moral hazard
    dimension here in that you can imagine people saying, well, I
    don't necessarily want to step in now and be the guinea pig if
    it doesn't look like structurally the system is actually going
    to get fixed. I will just assume that at some point when the
    whole thing crashes we are not going to let people just be
    without any kind of recourse, and then I will step in and
    benefit from whatever that fix is at that time. So you have
    that dynamic at work too.
        It is not helped by the fact that people don't really
    understand this product. That many as was mentioned, I think,
    by Representative Castor have gotten confused and assume that
    it is somehow bound up in Medicare and Social Security and
    these other programs and benefits that are available to them.
    So I appreciate your testimony. Thanks very much.
        Mr. Pitts. The chair thanks the gentleman and now
    recognizes the gentleman from Indiana, Dr. Bucshon, 5 minutes
    for questions.
        Mr. Bucshon. Thank you, Mr. Chairman. I am going to take a
    little bit different approach. I am going to, well, our
    conversation today has mostly been addressing coverage and how
    to finance a system in a system that needs to be changed in
    another area and that is how much it costs on the front end,
    not just how to finance a system that has been growing in cost
    for decades much faster than the rest of our economy. The ACA
    addressed mostly coverage. That is one of the issues I have
    with it not really affecting cost.
        And what I mean by cost is I am not talking about the cost
    to a program overall, what I am talking about is the cost to
    the government or private insurance companies on an individual
    care basis when services are rendered. So even if less services
    are rendered overall, yes, the cost to the Medicaid program is
    down, but on a case by case basis that is probably not the
    case. The cost to the system continues to go up.
        And if we are going to reform many of these programs, one
    of the things we really are going to have to do is figure out
    on the front end how it costs us less, but rather than just
    talking about how we are going to figure out how to pay for
    what it currently costs or what the cost in the future will be.
    Does that make sense?
        Mr. Scanlon. Yes.
        Mr. Bucshon. And so I am going to get to the question in a
    second. So one of the things that I am really focused on is
    trying to work on that and in a number of areas. Price
    transparency for the consumers is extremely important. Quality
    transparency for consumers is extremely important. And we are
    really going to have to look at a number of things that are in
    place legally and otherwise that are impinging on our ability
    to address those issues.
        Why can't consumers know exactly what something costs? It
    starts all the way from the bottom at a hospital or at a long-
    term care facility, the cost of a gauze pad or the cost of a
    diaper or whatever in the health care system. It can be way up
    there compared--a gauze pad is essentially a little square of
    cotton fabric, but it is sterile and it--it costs almost
    nothing except if you have to buy it, if you are a hospital and
    you have to buy the product. I am a free market guy so we need
    to look at how to fix this in a free market way, in my opinion.
    Price fixing is not an answer to the question.
        So my question for all of you is, are any of you looking at
    what the actual cost of providing long-term care is on the
    front end and so that we can help decrease the actual outlay of
    payments on the back end, and what are the drivers, currently,
    drivers of the actual increasing costs to provide the care?
    Again, not the cost of what the insurance company or the
    government has to pay, but buying the product. What are the
    drivers? Have you looked at it? Because we are going to have to
    address that.
        Ms. Tumlinson. One of the sad things about long-term care
    is that because so much of it is paid for out of pocket there
    is more natural transparency in the system. And so I would, I
    am sure Dr. Scanlon will want to say this too, but I just want
    to stress that there really are some--medical care and what we
    are used to in terms of the lack of transparency in medical
    care that is so frustrating to everybody, especially consumers,
    is it is medical care and long-term care act very differently
    sometimes.
        And one of the ways that they do is that much of the
    spending is out of pocket and the other way is that long-term
    care is primarily labor. It is not a high tech business, it is
    a hands-on business. So you really just have two things. There
    is a price for the hour of labor and then you have the amount
    that people are using per person. And so we know fairly well
    what it costs to hire a home care aide, for example, per hour.
        Mr. Scanlon. I have spent a lot of my caree looking at the
    differences between Medicare and Medicaid and looking at
    exactly at this issue that you are talking about which I will
    call unit costs. And I will have to say that the Medicaid
    programs, in terms of nursing homes at least, have done sort of
    much more sort of effective job in terms of trying to keep
    those costs down. I wish that actually sometimes we could take
    some of the lessons from those Medicaid programs and apply them
    sort of within sort of Medicare.
        There is actually a concern that I think should be raised
    that relates to your question for the future, which is that as
    we have sort of more what I will call purchasing power, more
    people wanting to buy services, we have to worry about what is
    going to be the impact then on unit costs, because we don't
    want to necessarily create a system that is so formalized that
    we build in a lot of overhead. That gauze pad is expensive in a
    hospital because you pay the overhead as well as the cost of
    the pad. And we want to avoid that when we are paying for more
    long-term care services.
        Mr. Bucshon. Briefly, my time is running low.
        Mr. Pitts. The chair thanks the gentleman and now
    recognizes the gentleman Mr. Ca AE1rdenas for questions.
        Mr. Ca AE1rdenas. Thank you very much, and thank you, Mr.
    Chairman, for holding this hearing. But I just, for those of
    you who came here and had to change your schedule, I want to
    quote a very knowledgeable famous legislator in California, and
    I will clean up the phrase a little bit because it was made
    about 70 years ago. He says, hold on to your horses and your
    spouses, the legislature is in session. So let us just hope
    that we have some good constructive not only dialogue but
    outcomes from this hearing, this legislative hearing.
        My first question is for you, Ms. Tumlinson. Until the new
    policy options are available, what is your thoughts on ensuring
    that Medicaid remains stable and adequately funded? I mean, in
    our current environment.
        Ms. Tumlinson. So I think that what probably the most
    productive thing that we can do around Medicaid right now is
    just continue to work on ways in which we can ensure that
    individuals who are eligible and for the program are getting
    the supports and services that they need in the most
    appropriate setting and the most efficient way possible through
    the use of aging and disability resource centers, for example.
        I think that from a budget perspective it is funded through
    general revenues and the challenge, really, is on the per
    person level for the states to manage those funds as
    efficiently as they can while at that same time ensuring access
    to high quality care.
        Mr. Ca AE1rdenas. Now when it comes to access to high
    quality care the dynamic is changing, because the demands on
    that care with the baby boomers seems to be shifting this whole
    environment. So that being the case, what should we not do
    right now before we have a more comprehensive solutions and
    changes? Yes, Ms. Rivlin. Dr. Rivlin.
        Ms. Rivlin. Well, I think we should do some of the things
    that the three reports that have been mentioned are
    recommending. And one, to come back to the question of saving
    costs as well as improving quality, is to make it easier to use
    home and community-based care and make it easier for the states
    to do that because there is plenty of evidence that it is just
    better and cheaper if it is done well.
        Mr. Ca AE1rdenas. And also, when it comes to home care I
    think of the information that I have received, not speaking ill
    of hospitals or what have you, just because it is an
    environment where you have so many people with an array of
    illnesses and reasons why they are there, there is a higher
    likelihood that somebody is going to catch an infection in a
    hospital, correct, than they would maybe if they were in a
    different adequate environment, et cetera.
        So there are other tertiary reasons why we should make sure
    that our panoply of solutions takes into account the whole
    range of reasons why it is a better solution, or better way in
    which we should deliver care.
        Ms. Rivlin. Right. Hospitals are dangerous places to be.
    But I think working on hospital safety is another aspect.
        Mr. Ca AE1rdenas. And I just want to make sure that I am
    not casting aspersions on hospitals. One of the most unfair,
    dumbest statements I have ever heard is that more people die in
    hospitals than anywhere else. Well, for god's sakes that is
    where the people are in the worst condition, but more people,
    their lives are saved because that hospital is there and they
    have the facility and the professionals to actually put people
    back together and keep them alive for god's sakes. So I just
    want to make it clear that this is not a bashing point, it is
    just trying to remind everybody how involved this very
    important issue is especially with an aging population.
        You were going to say, Doctor?
        Mr. Scanlon. No, I mean, I am in total agreement, I think,
    and physicians and hospitals, I think, would also agree with
    you. I mean, we have seen this decline sort of in length of
    stay because they recognize that it is in their patients'
    interests to have them out of there as quickly as possible.
        Mr. Ca AE1rdenas. And these are not funny issues. I will
    use a very personal example. My father used to say, why do I
    want to go to the doctor, so they can tell me I am sick? But
    little did he realize that when he finally went to the doctor
    he was 60-some years old, only God knows how long he was a
    diabetic and had he gone to a doctor and enlisted the help of
    professionals he would have had a better quality of life. He
    would have lived longer, et cetera.
        And it is not just about my father, it is about the kids
    and grandkids, et cetera, who don't have him around because
    unfortunately he thought he was being funny and cute, but what
    he should have been is a little bit more responsible with all
    due respect. And so I just want to point out that this is
    incredibly serious. And again, seriously, Chairman, thank you
    for holding this hearing.
        Mr. Pitts. The chair thanks the gentleman and now
    recognizes the gentlelady from Indiana, Mrs. Brooks, 5 minutes
    for questions.
        Mrs. Brooks. Thank you, Mr. Chairman. The figures I have
    seen and that we hear repeated over and over are that we have
    about 10,000 Americans turning 65 every day and aging into the
    system, and so the numbers are off the charts. But what we
    also, I think, are realizing is that the retirees are
    astoundingly unprepared.
        In my district, in 5th district of Indiana, CNO Financial,
    one of the nation's largest long-term care insurers is
    headquartered in my district, and I have talked with them on
    many occasions and they have studied this issue pretty
    significantly and some of the stats they have found are pretty
    astounding. What they have found is that half of middle income
    boomers report investable assets of less than $100,000, with a
    third reporting assets of less than $25,000. And so they have
    found at CNO two-thirds of the middle income boomers express
    doubts whether or not they will have money to live comfortably
    throughout retirement, eight in ten have not received any
    specialized training or education on retirement financial
    security, and six in ten don't receive any professional
    financial guidance at all.
        And so my question to the panel is, I think there is a
    severe lack of education and of understanding for middle income
    America about what is coming at them and what they should
    expect with respect to retirement, and so I am really curious
    as to what your thoughts are about how we as a country do a far
    better job. And I would like each of you, what do we need to be
    doing to share with people what is happening because so many
    people actually, I think, believe that Medicare is going to
    take care of them in long-term care and that is not the case.
    And so how do we bridge this gap of a significant under
    education?
        Dr. Rivlin, any ideas?
        Ms. Rivlin. Well----
        Mrs. Brooks. The reports are great with a lot of ideas, but
    we just have so few Americans really understanding what is
    coming at them in retirement.
        Ms. Rivlin. That is certainly true. And it is hard to know
    how to reach the people. It is the people in their middle
    earning years that you really need to reach. If you do
    education in school, nobody is going to pay attention because
    they are too young to worry about it. And so I don't know
    exactly how we do this, but I think employers are key.
        One of the things that I think has come out of behavioral
    economics in recent years--economists do some useful things--is
    the notion that if you tell people you can opt out of this,
    whether it is a savings plan or a long-term care plan, we are
    not forcing you to take it but the default option is you are in
    that really works. More people save and we think more people
    would buy long-term care insurance if it were the default
    option.
        Mrs. Brooks. Thank you, Doctor.
        Mr. Scanlon. I think approaching this as a retirement
    question is really the right way to go as opposed to thinking
    that this is only a health care issue. This is a portion of
    sort of your thinking on planning for retirement. Now the
    reality is that as some of the statistics that you indicated
    for us, it is a challenge to think about all your needs in
    retirement given the resources that you are going to have
    available. But we need to think about bringing this into the
    discussion so that people can recognize it and, if possible,
    prepare for it.
        On the issue of being confused that Medicare is going to
    cover this service, I think we have to stop doing a disservice
    to Americans at the federal level by talking about Medicare
    covering some long-term care. It covers no long-term care.
    Skilled nursing facilities and home health agencies may provide
    long-term care services, others, but they are paid by another
    source when they are providing long-term care services. The
    services they provide to Medicare are not long-term care. We
    cannot expect the public to read the footnotes to understand
    that Medicare is not covering long-term care.
        Mrs. Brooks. Thank you. Ms. Tumlinson?
        Ms. Tumlinson. Yes, I just agree very much with what Dr.
    Rivlin and Dr. Scanlon said. And the only thing I would add
    here is just that I think that this is an odd kind of silent
    crisis in every American family, and for whatever reason we are
    not having a national dialogue about the fact that our whole
    demographic structure is going to shift from now on and that
    retiring at age 65 is maybe not a reasonable expectation if you
    are going to live to be 95.
        So we have to rethink how we think about work, how we think
    about our old age and that I guess my brilliant idea is I think
    we need to have much more of a public conversations in our
    districts, at national level with leadership and even among the
    private capital and investor community.
        Mrs. Brooks. Experts--oh, I am sorry. I guess my time is
    up.
        Mr. Pitts. That is all right.
        Mrs. Brooks. Thank you.
        Mr. Pitts. That is all right.
        Mrs. Brooks. I yield back.
        Mr. Pitts. The chair thanks the gentlelady and now
    recognizes the gentleman from New York, Mr. Collins, 5 minutes.
        Mr. Collins. Thank you, Mr. Chairman. I want to thank the
    witnesses from coming in. I am the last one, I think, to ask
    questions.
        Just a little brief history in my case. My dad passed back
    in January of 2010, but prior to that he was through some
    levels of dementia unable to care for himself at all. So for 3
    years we had a team of seven women who cared for him 24/7. It
    took seven full-time individuals to care for one person 24/7.
    Six hour shifts with four individuals with him every second of
    every day, and then you throw in the weekends. That is the
    staggering amount of individual time it takes. And the cost for
    seven full-time individuals was a significant burden, but we
    determined in our family's case my dad had earned money, it was
    the right thing to spend it for him to be safe, clean, and well
    fed. But that was not an easy thing to do.
        But when I come back again to what Mrs. Brooks was talking
    about and Dr. Scanlon, would you think it would make sense in
    the Medicare & You handbook in some bold print to point out
    Medicare pays no part of this? I mean, we have got a federal
    handbook that people get.
        Mr. Scanlon. I think the no has to be sort of in bold
    print. I mean, I think that this issue of trying to kind of
    split hairs and tell them what it covers and what it doesn't
    cover is confusing people. Because years ago we were doing a
    survey and 80 percent of the people would say Medicare covers
    long-term care. It is now maybe around 50 percent would say
    that.
        Mr. Collins. Big bold letters right, top, bottom, in the
    middle, Medicare does not cover any type of long-term care. I
    think we have got a vehicle in the Medicare & You handbook that
    we could do a better job at.
        My other question, really, carrying it in the same vein is
    about advance directives, individuals making sure the family
    knows. I know in our case again with my dad we had a DNR on the
    refrigerator for emergency personnel just to make sure the
    wishes of the family were well known, my dad's wishes as well.
        But in that regard, I think the federal government now is
    trying to address that problem of very few people having these
    advance directives for long-term care in talking about paying
    physicians to have a small conversation. And Representatives
    Diane Black, Peter Welch and myself introduced H.R. 4059 which
    would actually have a small incentive paid by Medicare to
    individuals to put together a plan. If you are putting together
    a plan you have to be thinking it through.
        I mean, what we were just talking about with
    Representative--and myself is the lack of education, people
    being in denial and so forth. So the bill we are promoting is a
    very small payment to get somebody attention just would ask if
    you have any opinions on something like that.
        Ms. Tumlinson. Yes, sure. I think that is really creative,
    actually. And it is absolutely the case that you can even, once
    somebody is even educated about advance directives that they
    are still very reluctant to have that conversation. Having that
    conversation between the family member and the older adult is
    very hard to do. I have tried to do it and my mom said, ``do
    you think I am dying?'' Not yet.
        So I think it is a really creative idea. I think we have to
    continue to come up with it those because ultimately having a
    good advance directive someplace can be cost saving.
        Mr. Collins. Well, it lets the family be more at ease with
    what we are talking about. End of life decisions is what our
    country seems to be unwilling to have discussed.
        Mr. Scanlon. I think our education efforts, some clearly is
    sort of not working, part of it is the message that we have
    been delivering, but also a part of it is getting the attention
    of the people that we want to deliver the message to. So your
    idea is very innovative.
        Ms. Rivlin. And part of it is medical education in medical
    schools, getting young doctors to recognize this is part of
    your practice. You need to be talking about death and dying.
        Mr. Collins. Well, I want to just thank all the witnesses
    for coming in. This is a discussion we need to be continuing to
    have as more and more old folks are--since I was there last May
    I can joke about it. I have got my card.
        Mr. Chairman, I yield back.
        Mr. Pitts. The chair thanks the gentleman and now
    recognizes the gentleman from Missouri, Mr. Long, 5 minutes for
    questions.
        Mr. Long. Thank you for recognizing me, Mr. Chairman, even
    though Mr. Collins failed to do so, and when you are talking
    about elderly you would think that you would at least recognize
    me.
        Dr. Rivlin, I am interested in the Bipartisan Policy
    Center's recommendation for creating lower cost, limited
    benefit, retirement long-term care insurance policy options.
    Can you provide more details on what a policy like that would
    look like and how it differs from existing options?
        Ms. Rivlin. Yes. What we are suggesting, what we call
    retirement long-term care insurance, is a bare bones policy. It
    is not fancy. It would have a high deductible or waiting period
    and it would have co-insurance and a limited period for which
    it covered benefits. That doesn't make it sound very desirable.
    It has other desirable features, but it would cost much less
    than long-term care insurance typically costs now. And we think
    if it was marketed properly as part of a retirement plan by
    employers, and if it were the default option in your retirement
    plan and if you were allowed to pay the premiums out of your
    401(k) beginning at age 45, those are all small changes that we
    think would make it more attractive and more people would buy
    it.
        Mr. Long. Are there any current statutory or regulatory
    barriers to preventing companies from offering those policies
    today?
        Ms. Rivlin. Yes.
        Mr. Long. There are?
        Ms. Rivlin. There are in that as you know this kind of
    regulation is at the state level, and so what we are suggesting
    is that the NAIC be asked to prepare model regulations that
    states could then adopt.
        Mr. Long. So legislative action that would be something
    that you would recommend even with at the state level?
        Ms. Rivlin. Right.
        Mr. Long. OK. And this is for any of you or all of you on
    the panel that want to respond. In recent years, state Medicaid
    programs have been shifting long-term care into a managed care
    environment. From 2004 to 2012, the number of states with
    managed long-term services and support programs doubled from 8
    to 16, and the number of beneficiaries receiving these services
    grew from 105,000 to 389,000. What have been the experiences of
    these new programs in terms of improving services for
    beneficiaries and controlling costs?
        Ms. Tumlinson. So there is really a diverse set of
    experiences with managed long-term services and supports
    throughout the country, but certainly in certain states what we
    have seen is that the states have been able to use the managed
    care mechanism to enable a fairly dramatic shift out of nursing
    home setting and into home and community-based services
    settings, because the managed care plans are on the ground
    level with care managers helping to ensure appropriate, and
    with significant financial incentives to do so to ensure a
    persistent home care.
        I think that it is not, from my perspective, a way that
    necessarily the state is going to save money over the long term
    and in many cases the managed care plans are actually able to
    get paid based on their costs and their experiences, and so I
    am not sure it is--I think it is a great mechanism for shifting
    the services and maybe over time the state would realize some
    savings from that. But at the same time, I am not sure that I
    see it as an immediate cost saver.
        Mr. Long. Dr. Scanlon, do you care to weigh in?
        Mr. Scanlon. No, I would agree, because I think that states
    when they have not used managed care have been still managing
    the benefits sort of much more than for medical care services.
    In looking to the managed care organizations, I think they are
    working to sort of make sure that there is a capacity to
    continue to sort of manage that benefit as best as possible,
    but over time it is likely to be inflation in the numbers of
    people that need services is going to drive the cost.
        Mr. Long. Dr. Rivlin, last 30 seconds, do you care to weigh
    in on that?
        Ms. Rivlin. No, I think it is a work in progress.
        Mr. Long. OK. Thank you all and thanks for being here
    today. Mr. Chairman, I yield back.
        Mr. Pitts. The chair thanks the gentleman, and I have a UC
    request. I would like to submit a statement from the National
    Association for Home Care & Hospice into the record, and
    without objection, so ordered.
        That concludes our questions of members present. We will
    have some follow-up questions in writing. We will send those to
    you. We ask that you please respond. I remind members they have
    ten business days to submit questions for the record and that
    means they should submit their questions by the close of
    business on Tuesday, March 15.
        Excellent, excellent hearing. Excellent testimony. Thank
    you very much for being here on this very important issue. This
    is a discussion that our society really needs to have today.
    Without objection, the subcommittee hearing is adjourned.
        [Whereupon, at 12:22 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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