[Congressional Record Volume 142, Number 46 (Friday, March 29, 1996)]
[Senate]
[Pages S3217-S3218]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCONNELL:
  S. 1658. A bill to amend the Internal Revenue Code of 1986 to provide 
improved access to quality long-term care services and to provide 
incentives for the purchases of long-term care insurance, and for other 
purposes; to the Committee on Finance.


                the family choice in long-term care act

 Mr. McCONNELL. Mr. President, the graying of America means 
significant changes for our Nation's families. Traditionally, a family 
member, most likely a wife or daughter, has cared for an ailing spouse 
or parent at home. However, today's pressures of work, child-rearing, 
and family mobility greatly restrict the ability of adult children to 
administer to the day-to-day needs of a chronically ill parent. In 
addition, the rigors of home-based care can have a debilitating impact 
on the health and well-being of a caring spouse.
  Few families are fully prepared for the physical, emotional, or 
financial demands of long-term care. For too many, this difficult 
journey begins with a unexpected jolt from a sudden accident, the death 
of a spouse or parent, or the diagnosis of a debilitating, long-term 
illness.
  As America's population ages, the need for long-term care increases. 
In 1993, almost 33 million Americans were over the age of 65, and by 
2011, the elderly population is estimated to number close to 40 
million. While the opportunity for a happy and healthy retirement is 
better than ever, an October 1995 long-term care survey by Harvard/
Harris revealed that 1 in 5 Americans over age 50 is at high risk of 
needing long-term care during the next 12 months.
  Today, a variety of long-term care services are available, from help 
in cleaning one's home and getting groceries to skilled nursing care 
with 24-hour supervision. However, the means to pay for long-term care 
are still very limited and the expense can be overwhelming. For 
example, $59 billion was spent on nursing home care for the elderly in 
1993, and 90 percent was covered by out-of-pocket payments and 
Medicaid.
  The cost of paying out-of-pocket for 1 year in a nursing home is more 
than triple a senior's average annual income. Long-term care expenses 
put a lifetime of work and investment at risk. To gain Medicaid 
coverage, seniors must spend down their assets in order to meet State 
eligibility requirements. While Medicare takes care of hospital costs 
and home care, it provides only limited coverage for short-term stays 
in skilled nursing facilities.
  The medical side of long-term care has seen enormous advances over 
the years in new technologies, facilities, treatment methods, and even 
psychological studies of the effects of long-term care on patients. But 
the financing side of long-term care has simply failed to keep up, and 
as a result it is ill-prepared for seniors' future needs. Today, 
private insurance pays for less than 2 percent of long-term care costs. 
As Federal mandates for Medicaid coverage have increased, States have 
attempted to contain costs by restricting services for the elderly. 
State-imposed caps on the number of Medicaid-sponsored nursing home 
beds has separated families from their loved ones because the only 
Medicaid beds available were hundreds of miles away from their 
community. Most disturbingly, the remaining assets of a deceased 
elderly couple can be tapped through an estate recovery action to 
compensate the State for the couple's Medicaid expenses.
  Since 1990, Medicaid expenditures for long-term care have been 
increasing by almost 15 percent annually, causing costs to double every 
5 years. Medicaid's service as the sole long-term care safety net for 
middle class seniors may seriously impair the program's ability to 
serve the underprivileged. While low-income families accounted for 73 
percent of Medicaid's beneficiaries in 1993, nearly 60 percent of 
expenditures went to nursing home care and other long-term care 
services. For example, in 1993, Kentucky's Medicaid spending per 
enrollee for children was $964; while the cost for elderly 
beneficiaries was $6,540. Without relief, a harsh battle between 
generations may emerge.

  Mr. President, I rise today to introduce the Family Choice in Long-
Term Care Act, a bill that would alleviate dependence on Medicaid by 
enabling families and seniors to plan ahead for their long-term care 
needs. Currently, our tax code does not define long-term care as a 
medical expense. My proposal would end this discrimination and allow 
long-term care expenses and policy premiums to be tax deductible.
  Like health care insurance, payments under long-term care insurance 
would not be taxable when received. Children would be able to purchase 
policies on behalf of their parents. In

[[Page S3218]]

addition, employer-based plans would be treated like accident or health 
policies. Individuals could convert a life insurance contract in favor 
of a long-term care policy without suffering a tax penalty. Under my 
bill, terminally or chronically ill patients could receive accelerated 
death benefits to pay for their long-term care needs. And my 
legislation would also permit qualified withdrawals from individual 
retirement accounts of 401(k) plans for the purchase of a long-term 
care policy.
  Interest in long-term care insurance is growing. According to the 
American Health Care Association, the average growth rate in long-term 
care policy sales has averaged 27 percent annually since 1987. In 1993 
alone, a total of 3.4 million insurance policies were sold. A study 
conducted by the research firm of Cohen, Kumar & Wallack found that it 
is not just higher-income seniors who are interested in long-term care 
insurance. The study showed that 30 percent of surveyed long-term care 
policy-holders earned less than $20,000 annually.
  While tax clarifications will make long-term care plans more 
affordable to seniors and families, attention must be paid to assure 
investment quality and security. My proposal would establish the 
National Long-Term Care Insurance Advisory Council to advise Congress 
on the market's development and promote public education on the 
necessity of long-term care planning and the options available. The 
bill also outlines consumer protection standards for policies as 
recommended by the National Association of Insurance Commissioners.
  Finally, my proposal would require the Secretary of Health and Human 
Services to develop and distribute a summary of recommended health care 
practices to Medicare beneficiaries. As always, prevention is the first 
step in curtailing the demand for high-cost medical care.
  While there has been a great deal of rhetoric about tax cuts lately, 
long-term care tax clarification benefits everyone. Seniors can invest 
in a quality long-term care plan without fear of losing everything they 
own, and families will have access to the support they feel is most 
appropriate for their loved ones.
  In addition, Medicaid will continue to provide long-term care 
services for seniors in need. A 1994 study published in Health Affairs 
estimates that Medicaid would save $8,000 to $15,500 on each nursing 
home entrant who held a long-term care policy. Also, the probability of 
a senior's spending down to Medicaid eligibility would be reduced by 40 
percent. Private long-term care insurance would preserve the medical 
safety net for seniors and benefit other Medicaid recipients, 
particularly low-income children and the disabled.
  Mr. President, in sum, private long-term care insurance translates 
into quality, flexible care for seniors, more Medicaid funds for low-
income families and the disabled, and essential support for families 
who want their loved ones to be safe and secure. These are priorities 
that all Members of Congress share. We should not miss this opportunity 
to help America's families prepare for the challenges of long-term 
care.
                                 ______