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Long-Term Care
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Records of the First Lady's Office (Clinton Administration)
Melanne Verveer's Subject Files
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LONG-TERM CARE
PHOTOCOPY
PRESERVATION
LONG-TERM CARE
PHOTOCOPY
PRESERVATION
file long Eare ten
Mr. Chairman and Members of the Committee:
Thank you for inviting me to appear before you today to talk
about long-term care. From the outset of the health care reform
debate, the President and the First Lady have made long-term care
an essential component of their commitment to comprehensive
health care. The inclusion of long-term care in the Health
Security Act is concrete recognition that the long-term care
needs of people with chronic illness and disability...a
ventilator dependent child, a young man born with mental
retardation, an elderly person with Alzheimer's disease, the
survivor of an automobile accident...are as important for this
nation to address as the health needs arising from acute illness
or injury.
The constituency for long-term care reform is a significant one.
It includes many of our Nation's senior citizens, for older
people have the highest probability of becoming disabled toward
the end of life. It includes 14 million family members and
friends of older persons who experience care-giving
responsibilities first hand as they respond to the long-term care
needs and problems of their loved ones. It includes 10 million
people of all ages who as a result of a disability require at
least some help from others to carry out routine activities of
daily life. Finally, it should include all of us... for any one
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of us on any particular day or any of our children could become
disabled as a result of accident or chronic illness.
In short, for the elderly, for younger individuals with
disabilities, their families and other people who care for them -
for each and every one of us - long-term care reform is not
expendable. It is a vital piece in solving the health care
puzzle. Without basic ongoing supports to live in the community,
a person with a severe disability might never get as far as
exercising his or her right to universal health care coverage.
THE LONG-TERM CARE PROBLEM
Today I will tell you about the growing long-term care problem,
explain our belief that health care reform is not complete
without a long-term care component, and tell you about our
proposed plan for tackling long-term care reform.
What would you do if you or a member of your family were suddenly
not able to take care of themselves
to feed themselves or
prepare meals, bathe, go to the bathroom, dress themselves, get
in and out of bed, shop for food, manage their money, take
medications unless someone were there to help them. If you
were married to such a person, and if you did not have to hold a
paying job, you might be able to manage. But suppose you did
have to work, or your parent lived 3,000 miles away or you
yourself were disabled or had an illness that prevented you from
providing assistance
then what?
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You would do what the vast majority of people in this country do
now in such a situation--make do the best you can with informal
care. purchase extra help to the extent you could afford, or do
without. Why? Because if you turned to the obvious places that
you would turn to if you experienced an acute health problem --
private health insurance, Medicare, the government you would
find precious little.
Most people are surprised to find that Medicare, which provides
substantial coverage for acute health services, offers only
limited, post acute support services to help beneficiaries get
back on their feet. Similarly, even the best private health
insurance policies provide virtually no long-term care. The only
government program with significant long-term care benefits--the
Medicaid program--requires you to literally become impoverished
before qualifying for help.
However, Medicaid funding has been, and continues to be,
significantly biased towards institutional care. In 1993, almost
85 percent of Medicaid long-term care expenditures were for
institutional care. Further, despite increases in Medicaid home
and community care spending, access to Medicaid home care
services varies tremendously across States. So even though the
overwhelming number of people with long-term care needs prefer
services in their own homes and communities, these services are
not universally available even to very poor people. In fact, in
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some sections of the country, you cannot obtain publicly funded
home care no matter how poor or how much in need you are.
Long-term care in America today is, at best, a patchwork of
financing and delivery systems, frequently piggybacking on
programs that were not designed to deliver chronic care; at worst
it is not there at all when people need it.
HEALTH CARE REFORM MUST INCLUDE LONG-TERM CARE
Long-term care is part of the health care continuum. No one
questions the right to treatment for an acute health problem --
setting a broken leg, putting a cast on the leg, and following
through with the necessary medical care to fix the leg. Yet
long-term care is often misperceived as an extra service, almost
a luxury.
Long-term care is not coverage for "maids and butlers" and other
household staff. On the contrary, long-term assistance for many
is the vital link that keeps people living at home. In fact,
without long-term support at home, many people turn to higher
cost institutional care.
THE ADMINISTRATION'S LONG-TERM CARE PACKAGE
The Health Security Act takes bold strides to weave the threads
of patchwork into a comprehensive tapestry that makes sense for
people when they face the dilemma of needing long-term care. The
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plan respects the dignity of people who need support -- it is not
means tested and does not discriminate by age. It honors the
choices of individuals and their families. It offers public
services and incentives for people who can afford to protect
themselves.
Importantly, the plan is prudent. It is carefully targeted at
people with the highest level of need, people who are least
likely to be able to make do only with family care. We recognize
that our available resources will not permit us to do everything.
It also directly responds to those who fear new entitlement
programs and out of control budgets. The Federal budget is
capped and the financial liability of Federal and State
government limited. It will bring help and hope to millions of
Americans without breaking the bank.
While a significant component of the Long-Term Care proposal is a
major new expansion in home and community-based care services,
the plan also liberalizes Medicaid nursing home requirements;
provides tax credits to help defray the costs of personal
assistance services for working people with disabilities; and
establishes Federal regulations, consumer education and tax
incentives for private long-term care insurance.
MAJOR EXPANSION OF HOME AND COMMUNITY CARE
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The new home and community-based services program offers highly
individualized services tailored to the unique needs of people
with severe disabilities. Eligibility is based on a person's
level of functional or cognitive impairment, with no limits by
income or age or type of disability. Because people of all ages
are equally eligible, this program goes a long way toward
eliminating much of the historical intergenerational division of
the long-term care pie.
Who will be eligible? The goal was to define -- across
disability categories and age lines -- people with the most
significant needs. The four mandatory eligibility categories
include:
people who need hands-on or stand-by assistance or cuing or
supervision to perform three of five activities of daily
living (eating, bathing, dressing, toileting, and
transferring) i
people with severe cognitive or mental impairments;
people with severe mental retardation; or
children under six who have chronic disabilities and would
otherwise require hospitalization or institutionalization --
after age six, children's eligibility is measured using the
other three criteria.
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Based on these criteria, it is estimated that approximately 3.1
million people will be eligible for this program; 71% or 2.2
million will be over age 65.
FEDERAL STATE PARTNERSHIP
The new long-term care program is a Federal/State partnership.
The Federal contribution is generous...28 percentage points
higher than current Federal Medicaid match rates, with the upper
limit set at 95%. The high match rate is intended to encourage
all States to participate. The President wants to create a
universally available floor of home and community-based services
for all people with significant disabilities no matter where they
live.
The new home and community program is a free standing program,
separate from Medicaid, so States have flexibility to build on
the most creative practices of their communities and design
service packages that meet consumers' needs.
BENEFITS AND SERVICES
Each State must guarantee that every person who receives services
has been carefully assessed and has an individualized plan of
care. In addition, each State must offer personal assistance
services, support in daily living activities -- although every
participant may not use this particular service. States must
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also offer consumers the opportunity to direct their own services
if they are able.
In addition, States are required to have something, somewhere in
their service menu to address the needs of each category of
eligible individuals. Beyond that, States are encouraged to
include whatever services can best accomplish this -- case
management, homemaker and chore services, home modifications,
respite services, assistive technology, adult day services,
habilitation, supported employment, home health whatever people
need to lead successful lives at home.
In addition, the program allows States to offer consumers cash or
vouchers instead of services, permitting those who want to to
take on the responsibility of controlling their own services to
do SO. In the words of many disability advocates: "we are not
cases and we don't want anyone to manage us."
FINANCING AND BUDGET
The legislation establishes a national budget for the new home
and community services program. Although there is no individual
entitlement to services, the budget was estimated as if there
were; it is based on the cost of providing an adequate level of
service to the eligible population and then it is capped. It is
not funded to replace family caregiving. In fact, it assumes
that family caregivers will continue their support. There is also
8
a sliding fee scale for consumers to pay a portion of the cost of
services under this program, ranging from 10% of costs for those
at 150% of the poverty level to 25% of costs for those above 250%
of poverty.
The funding for this program will be phased-in, incrementally,
over seven years, starting in 1996. Over the first five years,
the Federal government plans to spend 56 billion new dollars for
this program. In addition, during the phase-in, the law permits
the Secretary of the Department of Health and Human Services
(HHS) to increase these specified amounts if there are reductions
in Medicaid home and community care expenditures for persons with
severe disability. The exact funding levels are specified in the
legislation; the funding for the program is not discretionary, it
is an entitlement to States so that consumers (and States) can
count on it being there when they need it.
QUALITY
Experts in the quality field have noted that one of the best ways
to ensure that services are of high quality is to involve program
participants and their families in the quality assurance process.
Therefore, the President's plan, in addition to requiring States
to develop and obtain Federal approval of a thorough system for
assuring the health and safety of consumers, also requires that
consumers be involved in every step of the design of the program,
its implementation and its evaluation. To ensure consumer input,
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States must set up special consumer dominated boards who help
design the program and monitor its implementation. The board is
also responsible for assessing the consumer-responsiveness of the
plan as part of the Federal approval of the State program.
MEDICAID NURSING HOME IMPROVEMENTS
The plan also takes a series of steps to strengthen the resource
protections of the Medicaid program for nursing home residents.
All States will be required to establish medically needy
eligibility criteria -- to take medical expenditures into account
in determining financial eligibility for nursing home care.
Also, the amount of income that nursing home and other
institutionalized residents may keep for their personal needs
will be raised from a minimum of $30 to $50 per month, making a
real difference in the dignity and quality of life of many
residents. Finally, States will be allowed the option of
increasing the level of assets that residents may retain from
$2,000 up to $12,000.
NEW WORK INCENTIVE TAX CREDIT
Having a severe disability can be very expensive; it can cost so
much to buy the personal assistance services, home and vehicle
modifications, specialized equipment, and services, that many
people with disabilities throw up their hands and ask: "Why work?
It costs more to work than to stay home." What a terrible waste;
an explicit vision in this plan is to help all members of the
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community, including those with disabilities, to bring their
talents and skills to the fore, to be productive, contributing
members of their communities.
To accomplish this goal, the plan includes a 50% tax credit for
persons with disabilities for out of pocket expenditures on
personal assistance and related services, up to a maximum of
$15,000 per year (or a maximum credit of $7,500).
This tax credit phases out for persons with income between
$50,000 to $70,000. People with disabilities welcome this new
incentive to work. This provision also works well with the
employment provisions of the Americans with Disabilities Act.
IMPROVING LONG-TERM CARE INSURANCE; OFFERING INCENTIVES TO BUY
As we complete the solution to the long-term care puzzle, the
final piece is a series of improvements to the quality and
reliability of the long-term care insurance market and make it
more affordable. Unlike acute health care, private insurance
pays very little of the nation's long-term care bill. Many
people would be able to protect themselves against catastrophic
long-term care costs if affordable and high quality insurance
products were available. If an employer-based group market can
be created, the number of people who can purchase private
insurance to protect themselves will increase even more.
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The President's plan takes a variety of steps to improve the
quality of insurance and make it more affordable. New Federal
regulations will be developed, implemented, and enforced by the
States. A new Federal matching grant program will be initiated
to help States with enforcement of new standards. Grants will
also be made available to States and national organizations to
provide education for consumers about their risks of needing
long-term care, as well as the pros and cons of various kinds of
insurance products.
The new insurance standards will be developed by HHS, in
consultation with a long-term care insurance advisory board of
national experts, including representatives of the National
Association of State Insurance Commissioners. The Federal
standards will include: a required nonforfeiture benefit, an
offer of inflation protection; limits on pre-existing condition
exclusions; notifications of pending lapse and required
reinstatement in the event of incapacitation; clear definitions
of coverage and eligibility triggers; and rules regarding
continuation and conversion of group policies. Federal standards
governing the business practices of agents and insurers as well
as penalties for noncompliance will also be included.
The plan also includes a set of tax provisions to treat long-term
care insurance more like health insurance. Consumers will be
allowed to exclude from taxable income the amounts they pay for
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services or benefits (including cash payments) received under
long-term care policies. The cost of policies may be included as
an itemized medical expense deduction. To promote the group
market; there are also tax incentives for employers to begin
providing long-term care insurance.
PERFORMANCE REVIEW
Finally, the plan also includes a performance review -- an
interim and final report card so we can check up on how the new
public and private long-term care system is working, and identify
areas for improvement. On a related note, there are provisions
for a series of demonstrations studying various ways to integrate
acute and long-term care.
SUMMARY
In summary, we face a crossroads. Left untouched, the problem of
unmet long-term care needs will not go away and will only get
worse as the population ages. It's a problem that is unalterably
entwined with the problems in our health care delivery and
financing systems. We must address it in that context and
demonstrate our commitment to all Americans to meet a range of
health and related needs.
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