We are not prepared, either as families or as a society, to pay for the long-term care supports and services most of us will need before we die.
Personal care, either at home or in a nursing facility, is not something we want to think about. Yet 9 million Americans require some level of assistance today. And that number will triple as the boomers reach old age. Almost seven of every 10 of us will require some level of financial assistance after age 65. Others, due to accident or illness, will need that help at a younger age. The annual cost: more than $200 billion, and that doesn't count the time and energy of family caregivers.
For the first time since it created Medicaid almost half a century ago, Congress addressed this growing financial crisis in last year's health care reform law. One obscure provision, the Community Living Assistance Services and Supports (CLASS) Act, created a new national, voluntary long-term care insurance program that should be available to nearly all workers in late 2012.
In many ways, CLASS is a modest program. It would provide a benefit of at least $50 a day for life, and insurance experts would be stunned if even 10 percent of American workers enroll at first. But within the CLASS legislation is a very big idea: It would be a first step toward turning long-term care into a self-funded insurance system, in which Americans could plan for their own needs in old age. That would be a huge change from today, when millions of us drain all of our financial assets paying for care and end up on Medicaid.
But CLASS is poorly designed, particularly the financial thresholds for eligibility, contributions and coverage. These will need to be revised if the program is to succeed. Unfortunately, nearly all congressional Republicans and a few Democrats would rather kill it than work to implement it. At the moment, the Obama administration is in a race against time to fix CLASS before it is murdered in its crib.
CLASS is especially important because all the alternatives are under enormous financial pressures of their own. Medicaid spends more than $103 billion annually on assistance for frail older people and people with disabilities. And it pays for nearly half of all long-term care costs. But Medicaid, which is funded through the tax revenues of both the federal and state governments, itself faces deep cuts. Even governors in such blue states as New York and California are cutting benefits. At the same time, Congress may move to slash the federal contribution.
Non-Medicaid assistance for frail older people is in the same mess. Funds for subsidized housing, nutrition programs such as Meals on Wheels, and transportation are likely to be frozen or cut. And even as the government safety net for the frail is fraying, few of us are buying private long-term care insurance, which pays less than 10 percent of all long-term care costs.
That's why moving to a national, insurance-based system is so important. For all its serious shortcomings, CLASS is a modest step in that direction. It should be fixed, and not killed.
Howard Gleckman is author of Caring for Our Parents and a resident fellow at the Urban Institute.