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I am not just a tax wonk. For the past couple of years, when I wasn’t blogging on TaxVox, I was writing a book on long-term care. Caring for Our Parents critiques what is a completely irrational system for delivering and paying for these services. I had the great fortune of being able to tell this story through the eyes of both those who are receiving assistance and their families.
About 10 million Americans need this care, and as many as 40 million of us help family members and friends—either the frail elderly or those with disabilities. Long-term care is hugely expensive. On average, a year in a nursing home costs $75,000 and home health aides cost $19 per hour. In 2007, we spent $230 billion on paid assistance. But that pales in comparison with the economic value of informal care provided by family members, which AARP estimates at $375 billion.
The system is a mess. Most Americans pay for this care out of pocket until they run out of money, then they turn to Medicaid, the state/federal program that was supposed to provide medical care for poor mothers with children.
Today, Medicaid pays more than 40 percent of long-term care costs--more than $100 billion, or one-third of all Medicaid dollars. And as the Baby Boomers age, this program’s costs will double, with the federal share alone rising from about 1.5 percent of GDP to more than 3 percent by mid-century, according to the CBO.
Only about 7 million Americans have private long-term care insurance. But policies are too expensive and too complicated for most consumers. Besides, Jeff Brown and Amy Finkelstein conclude, many decide not to buy private insurance because Medicaid will cover their catastrophic long-term care costs for free.
Government has taken a number of steps to make private insurance more attractive. More than 30 states have adopted tax incentives to encourage people to buy policies. But, like most of these subsidies, there is little evidence they accomplish much. (I’ll blog in more detail on this subject another day).
Delivery is just as much of a mess. Nearly everyone wants to be cared for at home. But few family members have the time and skills to assist loved ones. And while Medicaid is beginning to provide benefits for people being cared for at home, most frail elderly still have to be in a nursing home to get assistance.
This is a painful story. But, while researching the book, I got the chance to meet some extraordinary people: Michelle Barrett, who gave up her career as an Air Force pilot to help care for her dad. And Peggy Ingles who, after being paralyzed in a horse-riding accident, fought with incredible tenacity to both restore some movement in her limbs and build a support system that allows her to live in an apartment rather than a nursing home.
It is possible, though not easy, to fix much of this without adding to the deficit. And some lawmakers want to include long-term care reform in the effort to remake our health care system. It remains to be seen if they succeed, but for the sake of all those I met over the past two years, I hope they do.
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