Biden Should Look Beyond Medicaid to Expand Long-Term Care

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The Washington Post reports that business lobbyists are quietly trying to kill President Biden’s efforts to increase federal spending on Medicaid home and community-based (HCBS) long-term care services. The reason: The White House wants to fund the $400 billion increase—part of the president’s $2.2 trillion infrastructure spending program— by raising corporate taxes.

And make no mistake, business opposition could sink Biden’s ambitious plan or at least force him to sharply scale it back. Already, Senate Republicans have dropped the Medicaid long-term care expansion from their alternative to Biden’s broader spending proposal.  

That pushback is just one of many reasons why Biden might want to think beyond Medicaid as he moves to expand federal support for long-term care. There is no doubt that Medicaid long-term services and supports (LTSS) need updating and more funding. And the president deserves credit for highlighting that need.

But expanding Medicaid home-based services would fix only part of the nation’s long-term care problem. It would do nothing for those older adults and younger people with disabilities who need institutional care. And it would not help the millions of middle-income people who never will be poor enough to qualify for Medicaid yet cannot afford paid long-term care services, where average lifetime costs exceed $140,000.

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One solution is a public long-term care social insurance program, similar to those operating in nearly every major developed country in the world, except the US and England. Such an insurance model has many benefits over Medicaid LTSS. The Washington Post endorsed such a concept in an editorial on April 21.

It is universal. Like Social Security, it covers everyone who pays into it, not just those who are very poor. This universal feature would likely broaden public support for the benefit.

It is flexible. Medicaid comes with thousands of pages of restrictions and rules, many geared to preventing fraud rather than enhancing care. But those rules often severely limit how a family can spend the assistance.

For example, Medicaid HCBS generally reimburses care provided only by licensed home care aides. But in parts of rural and urban America, such aides are unavailable and care often is provided by unlicensed workers. With some exceptions, Medicaid generally will not pay for that assistance.   

By contrast, with insurance—especially if it comes with a cash benefit—a family could spend money in a way that is most appropriate to its needs with no red tape.

It is insurance. If it is properly designed, benefits would be fully funded through a dedicated tax or contribution. Thus, the program’s finances would be stable over many years and this important new benefit would not add to the federal deficit.

Long-term care appears to be an ideal insurable risk—nearly half of Americans never will need it, but half will, and about one-in-seven will need five years of care or more. And no one can predict what will happen to them. Thus, insurance. Yet, the private insurance market largely has failed, especially for those with true catastrophic needs. That makes a public social insurance program an important part of the financing solution.  

Biden also could consider adding services and supports as a Medicare benefit. This already is happening in a limited way. Special Needs Plans (SNPs) offer fully integrated medical care and home-based long-term care to, for example, Medicare beneficiaries who otherwise would need to live in a nursing home.

Programs such as PACE (Program for All-Inclusive Care for the Elderly) combines both Medicare and Medicaid funding for a fully-integrated care model. And a small but growing number of Medicare Advantage managed care plans are offering limited home-based supports and services to their members.

But Biden could jump start a Medicare long-term care benefit for those living at home. He could take a big step by making long-term care a Medicare benefit. Or he could take more modest steps to encourage plans to offer more social supports and services.         

And, to get back to the complaints of those corporations, everyone would pay a share of cost of social insurance, not just a handful of companies who will use their political clout to kill any model that only they finance.

I’m not suggesting that President Biden redesign his long-term care initiative just to satisfy a group of corporate lobbyists whose clients don’t want to pay higher taxes. But if he refocuses his efforts, he can both help more families and neutralize those corporate critics, which boosts the chances that a long-term care expansion will pass Congress.

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