While originally intended to meet the health care needs of the poor, the joint federal-state Medicaid program has become America's long term care payment system by default because the nation lacks a comprehesive long term care program. Today, two out of three nursing facility residents rely on Medicaid to pay for their long term care. With increased use and cost of medically sophisticated services, Medicaid spending on long term care is expected to double by 2004.
Medicare and Medicaid
Many Americans are confused about the distinctions between Medicare and Medicaid and incorrectly believe that Medicare will cover their long term care. To their astonishment, most find that the costs of nursing facilities or home and community based services are not significantly covered.
Medicare was originally intended to care for America's elderly over 65 years of age and certain persons with disabilities. It is the federal hospital and dental insurance program with limited reimbursements depending on acuity, hospital stay and other factors. Medicare covers the first 20 days of care in a skilled nursing facility and only under certain conditions. For days 21 through 100, the beneficiary must share the cost of care by paying a nationally set rate of $96 per day in 1999. Medicare does not cover stays in an intermediate care facility or for home and community based servics. Following day 100, beneficiaries are no longer eligible for Medicare and must then privately pay or seek coverage under Medicaid. In order to receive benefits from Medicaid, residents are forced to "spend down" and liquidate their entire savings and other assets.
Medicaid was created to meet low income peoples' health care needs. It was developed as a federal-state replacement sytem for the "poor house" system that used to exist to assist people. The current system of liquidating one's assets to receive long term care benefits, better known as the "The Medicaid Dilemma" is far more than just a political dilemma. It touches upon some of the most sensitive values our society holds dear -- personal responsibility, care for our parents, independent living and self- sufficiency. Many of those who are most affected by this issue have been saving money and paying taxes for decades, and feel they are owed government assistance and that they should not have to lose everything to qualify for help with long term care.
Upon receiving long term care, many Americans who have been financially secure for years could find themselves below the poverty line in months. The average cost of stay within a nursing facility is $51,000/year, and the average length of stay is 2.3 years. Fifty-five percent of those who begin privately paying for long term care impoverish themselves within one year and must turn to Medicaid to pay for their care. Half of all couples with one spouse in a nursing facility are bankrupt due to the "spend down" provision which was necessary in order to receive Medicaid.
The current funding of Medicare and Medicaid will not be able to sustain the future burdens of long term care needs unless action is taken to strengthen the programs. Medicare will face serious funding issus beginning in 2015 and Medicaid costrs are aleready the single largest costs in mnay state budgets. The bottom line for Americans: those who have been planning for retirement must include plans for their long term care.
1. Senate Special Committee on Aging, Cash Crunch: The Financial Challenge of Long Term Care for Baby Boomers, March 9, 1998;2.
2. Senate Special Committee on Aging, Cash Crunch: The Financial Challenge of Long Term Care for Baby Boomers, March 9, 1998; 2.
3. American Health Care Association, What You Need to Know About Private Long Term Care Insurance; 4.
4. U.S Census Bureau
6. Business and Health Magazine, January 1997.