[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]





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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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