Long Term Care Support Group

Today I talked with the Duke Fuqua School of Business Caregiver Support Group–about 12 persons who are currently caring for a loved one, most typically a spouse. All of the stories are different of course, but there is a thread that runs through them. Medicare pays for lots of physician and hospital care, without regard for whether it is needed or works. But, it pays for very little in the way of Long Term Care–help and support to enable someone to deal with disability. The folks in this room were ready to have a discussion about trading off some types of curative/high costs disease modifying care for low tech custodial Long Term Care. I have a paper coming out later this Summer that sheds more light on such conversations and trade offs…..more on that later.

Another theme running through many people’s story was that changes in setting often reduced hospital and other formal spending paid for by Medicare. However, the impact on the societal cost of care was ambiguous–it was often simple shifted to families.

Increasingly, I think one motivation for seeking cost savings in Medicare should be to reallocate some of the money spent on medical care to Long Term Care.

A Long Term Care Story, ctd.

I wrote this post around two years ago about our family preparing to move to a new house into which my mother in law could move with us because she could no longer live alone. Thinking back, to say that I had no idea what was about to happen to my family is one of the great understatements of my life.

I have come to know that long term care transitions are exceedingly difficult. Moving my mother in law into our house, moving her from a hospital to a rehab facility after a fall last January, and then moving her from rehabilitation to an Assisted Living Facility were very difficult. At each of these transitions, the level of increased confusion and symptoms (wandering, anger, aggression; she has frontal-temporal dementia, a rare form of the disease that greatly impacts behavior before complete memory loss) as she moved from one place she used to hate but that had become where she felt secure, has been jarring and unsettling. At no point in all of this have we felt certain that we were doing the right thing.

My wife is a nurse, I am supposed to be an expert in long term care, and we are doing this with ample resources (my mother in law has a very robust private long term care insurance policy, and extra resources as well)….I have no idea how families survive this experience with less.

We are now undertaking another transition, from Assisted Living to dementia/memory care, as the Assisted Living facility feels they can no longer care for my mother in law safely. To provide a sense of the financial magnitudes, the assisted living facility in which she now lives costs around $6,000/month as a base price, with full care about $85,000 annually. For the past 5-6 weeks, we have been paying for private sitting care 24/7 on top of Assisted Living, as we tried to determine if she would stabilize and be able to remain in her current assisted living sitting. That private sitter care has cost around $3,000/week (not reimbursable by insurance), on top of the assisted living fees.

The supply of memory/dementia care beds in Durham/Chapel Hill is quite tight and she is on the waiting list at the facility linked to her Assisted Living location, but she will almost certainly have to move prior to a spot there becoming open. So, we are looking at multiple locations, including in Raleigh, and Burlington. The price of a private dementia/memory care bed ranges from around $6,000-$11,000/month in these markets.

Our family is blessed with reasonable resources to deal with these difficult issues for my mother in law, but many are not. There is no more important issue that receives less policy and political attention than long term care. That is a bad thing that does and will cost our country dearly.

CBO on Long Term Care

CBO released a great report on Long Term Care for the elderly (what is now most typically being called long term services and supports). Several key figures/graphs. The first shows that most people receiving LTC do not live in Nursing Homes, but in the community.

ScreenHunter_01 Jun. 27 17.18

A little over half of LTC care (in terms of its economic value) is provided by families and others on an informal, unpaid basis.

ScreenHunter_02 Jun. 27 17.20

So, when you see this break down of payments for LTC by type of payer, remember that over HALF of the total economic value of all LTC is not accounted for in the graph below, but is paid for implicitly by family members.

ScreenHunter_03 Jun. 27 17.24

Two quick policy take home points:

  • When evaluating a long term care proposal of any type, the correct cost to compare it with  is not zero; the default costs are huge, it is just that many of them accrue silently via informal care.
  • The lack of a coherent LTC system is causing problems in all sorts of other policy areas. Just two examples are in hospice policy, where long stays are likely driven at least in part by persons seeking care in a way that has turned hospice in some areas into a back door long term care benefit. Similarly, hospital re-admissions are at least partly driven by LTC break downs that are beyond the scope of any hospital-based program to address.

The hope for coherent policy making in this area is negligible in the near future.

The counterfactual in long term care

I was looking at assisted living facilities for my grandmother yesterday and then beginning to navigate the ongoing family discussion about what is best for her (age 89; she still lives alone but has been hospitalized 5 times in recent months) and my mother (age 70), who is increasingly feeling unable to navigate the current situation. There are of course many other people involved: my sister (who lives near both my grandmother and my mother), my step dad, and my uncle who lives about 50 miles from my grandmother. I have become “expert” at assessing such facilities, and have devoted a great deal of my finite creativity over the past 18 months to navigating complicated family long term care situations. I put expert in quotes, because for all that I know about long term care, mixed now with personal experience, it is a truly difficult decision to decide what is best. In large part, this is because there are so many people involved and affected, along with the existence of many sources of uncertainty.

One thing has become clear

  • most people reflexively compare the (truly) high cost of something like assisted living to a cost of zero. “Oh my goodness, that is expensive!” is a correct statement, but it wrongly implies that the default, or current arrangement has a cost of zero.

The costs of the current living/long term care arrangement for my grandmother or anyone else can be difficult to estimate

  • explicit costs such as paying for walkers, home modifications and paying helpers is straightforward
  • implicit costs to caregivers are harder to estimate: the value of time, missed work, worry/anxiety/depression, feeling like you cannot travel, other health impacts, etc.

There are benefits of caregiving, such as connection with loved ones and of course the preferences of my grandmother are important. All of the costs and benefits must be netted out to make a decision. As with the societal level decision of what to do about long term care, having straight the counterfactual is the first step to making the best decision you can.

New book on Long Term Care

Howard Gleckman brings attention to a new book on Long Term Care, that can be downloaded for free. As readers know, LTC is a near and dear topic to this blog (a recent post), and I will look forward to integrating this book into my teaching. This recent post highlights lots of LTC issues.

Long term care is something easily thought about “tomorrow”….but we need to be thinking about constructing a coherent LTC financing and provision system today. The problems won’t just go away.

Long Term Care problems won’t go away

Busy week and little time to blog, but a quick note on this Kaiser story reporting on a SCAN Foundation poll on long term care needs/perceptions/preparations in California, sent my way by Brad Flansbaum. The article nicely summarizes the surprise many families receive when it comes time for a loved one to need LTC:

Long-term care costs can surprise many families who expect Medicare to cover their needs. After a hospital stay, Medicare will pay for 100 days of nursing home care, but after that, families are on their own or are forced to spend down their assets to become poor enough to qualify for Medicaid.

Only 35% of Californians correctly understood that Medicare does not pay for extended nursing home care and only 1 in 5 understood the Medicare home health benefit (they think it is more generous than it is). So, Medicaid is the default nursing home payer in the U.S. and the program pays around half of the nation’s nursing home bill. Block granting Medicaid in a way that reduces fairly costs for the program will pit LTC services for the elderly and disabled against the need for acute care insurance for children and pregnant women, and say to states “tag; you’re it!”.

We desperately need a more coherent LTC policy in this country. Private LTC insurance offers no hope of a population based answer. Families are left to stand in the breach, doing the best they can. As I have said before, one of the worst outcomes of the ACA debate was the demise of CLASS in a way that treated those provisions only through the lens of deficit reduction. Deficit accounting is important, but cannot answer all important policy questions.

CLASS wasn’t a deficit gimmick, it was an attempt to set up a self sustaining LTC insurance benefit that could have helped people age in their homes and delay NH admission. Like so much of health reform, critics know far more about what they are against than what they are for.

The question remains: how will our country insure against the need for LTC?

NPR on Informal Long Term Care

NPR has an interesting story asking “who needs LTC insurance?” because other arrangements can be made to provide for such care (h/t Brad Flansbaum).

This puts a personal face and story on a public policy problem that hits close to home, as my mother-in-law is moving in with my family this Summer. The last 8-9 months my family has been consumed with myriad details to work this out (estate planning, new wills, buying a house, trying to sell two others, getting siblings on the same page, etc). I wrote last week on some of the public policy aspects of LTC; I mostly want to point folks to the NPR story, as it is the best, short representation of the many issues related to thinking through inter-generational living that I have heard.

The essence of planning for long term care

Dan Diamond (@ddiamond) alerted me to a Senate Special Committee on Aging hearing (The Future of Long Term Care: Saving Money by Serving Seniors), that will be webcast live today at 2pm via the committee homepage. I hope they manage to talk about practical solutions to the difficulties of providing long term care, and do not simply spend their time clucking about what they oppose.

I was guest lecturing on Long Term Care and the demise of the CLASS provisions of the ACA in Peter Ubel’s health policy class on Monday and someone asked, “what is the essence of planning for LTC?” My answer was that it entails planning for who will wipe your ass when and if you can no longer do it for yourself.

Now, that it not what the 20 year old’s in the class were dreaming about discussing when they came to Duke, and I get that. It is very easy to put off thinking about LTC until tomorrow.

Around 7 in 10 persons who attain age 65 will use some LTC. Of the users, about half will do so for less than a year, but around 1 in 10 will need such care for longer than 5 years. It is impossible to look at a room of 20 year olds and say who will need LTC among the subset who live to 65; and of course someone in that room could need it much sooner due to a catastrophic event. Almost no one has the assets to self finance a 5-10 year period of LTC use (~$1.5 Million max risk), so nearly every0ne is at risk of needing such care and not being able to afford it. If ever there was a risk profile that called for social insurance it is LTC. Instead we have a default system in which families do their best, availing themselves of an incomplete safety net, and when care needs become too great and assets are exhausted, Medicaid pays for them to live in a Nursing Home until they die (Medicaid pays for about half of the total national NH cost). We can do better.

A few links with many LTC details if you want more (they will still be here tomorrow):

The long term care counterfactual

Cross posted at The Incidental Economist.

I wrote last week about the shrinking private long term care insurance (LTCI) options.

From the comments to that post,wintercow20 asks:

…Wouldn’t it just be simpler to institute a forced savings system in general rather than trying to figure out who may be using LTC or not?…

And I answered that yes, it would definitely be simpler, and noted that the risk profile of LTC use of persons attaining age 65 is best addressed via some sort of social insurance-based approach. At a minimum, it seems clear that private LTCI is unlikely to work well for a variety of reasons (more context on public v. private provision of LTCI: here, hereherehere).

Also in the comments Theodore Whitfield provides a reasonable back of the envelope calculation of what a Medicare or Social Security-based LTCI program might cost and notes:

…Admittedly this is just a quick, approximate analysis, so I would put much faith into the specific estimates. But it does suggest that funding LTC through SSI or Medicare might be very expensive…

Lets take away the uncertainty–LTC funding via Social Security or Medicare would be very expensive. However, providing LTC is very expensive now. Most of it is provided by family members on an informal (unpaid basis) and there are a variety costs (lost wages for caregivers, negative impacts on caregiver health, etc.) that are not so easy to estimate. The AARP estimated the costs of informal care provided to adults with limitations in Activities of Daily Living to be $450 Billion in 2009. And Medicaid is the payer of last resort for nursing homes and finances around 4 in 10 dollars spent on NHs (~$150 Billion annually), the most expensive LTC setting that exists.

All of that happens now and will continue to do so by default. Much of the debate about the CLASS act, or about any discussion of expanding social insurance to cover LTC implies that the admittedly big cost of doing anything new is correctly compared to zero.* That is incorrect. The correct counter factual for any LTCI proposal is the piecemeal system that we currently have and its costs, including the already large public expenditures.

The most important thing in public policy is counter factual thinking, and many seem to struggle with understanding the correct LTC counterfactual.


An interesting long term care idea

A commenter LT posted in response to this post:

a little OT (off topic), but what if LTC insurance were handled like health insurance is now. Your employer can purchase LTC insurance tax free as a benefit for you the employee….

If Duke paid LTC insurance premiums on my behalf, the amount Duke paid  for my premiums would not be subject to income tax and therefore preferenced in the same way that the premiums paid by Duke for my major medical insurance are. These premiums would also be deductible as a business expense by an employer, again like major medical.  Duke offers employees LTC insurance, but pays no premium; the employee pays the full cost to the insurance company, though it is payroll deducted, making it pre-tax, which does convey a tax advantage (I am fairly sure; checking on this).

The commenter goes on to offer an interesting suggestion that I have never heard:

Have LTC insurance be “tokens” where for each amount put in you gain a fixed amount of coverage, rather than as a policy that needs to be continually held. So for example your employer could purchase you 5000$ worth of coverage for 1000$. If the next year they made the same investment you would have net 10000$ worth of coverage, and so on… With such structure LTC plans could be combined/portable even as people switch jobs or lose/gain employment.
Anyways, I know this will probably come with many of the problems of health insurance today (how to cover those whose employers don’t offer insurance, or those who are not working…) but at least it could build a large pool of LTC insured individuals, and enroll them at a time when future LTC needs are hard to predict (30′s-50′s) thus creating good risk sharing.

Now first, let me say that more tax preferenced spending all else equal seems like a bad idea to me. However, given how hard it is to imagine movement ahead on LTC policy after the demise of CLASS, this seems like an innovative idea that could provide a route for persons who wish to save for LTC expenses to do so. Perhaps you could agree with your employer to forego a fixed amount of wages for this LTC benefit, and the tax treatment would expand the amount. And there are so few persons purchasing private LTC insurance that it wouldn’t be that hard to improve on the status quo.

Could this be done under the current tax code? Since private policies cover dollars per day, this is not that different from that. What would be different is when you would be eligible to use the money and for what. For private LTC insurance, typically you must show ADL limitations. How would you police the use of this money? Would it be taxable on the way out like a 401K since it was tax preferenced on the way in? Perhaps you make it tax free on both sides as a way to encourage LTC planning? That would seem to definitely require legislation. Lots of questions about this interesting idea. Thoughts?

Update: This is somewhat reminiscent of this idea I wrote about back in 2008, but idea above would have tax preference and what I wrote was not voluntary.