WISH Act Can Fix LTC Financing

In addition to all the other reforms needed in eldercare, we need to set up social arrangements that make it possible for nearly all American workers to have a way to pay for long periods of long-term care.

In addition to all the other reforms needed in eldercare, we need to set up social arrangements that make it possible for nearly all American workers to have a way to pay for long periods of long-term care (LTC), which is the aim of the WISH Act, now H.R. 4289.  The WISH Act builds on the obvious strategy of pooling savings so that those among us who end up needing long periods of support get the needed finances – this is the core idea behind insurance for all our other risks (auto accident, home fires, floods, etc.).  Since people move among the states, a federal insurance scheme is best, so benefits are not tied to the location where you worked.

The cost of around-the-clock care by a single caregiver for a person who has no family volunteer is around $250,000 per year.  The cost of a nursing home is around half of that.  The cost of a direct care aide for 9 hours per day, 5 days per week is around $50,000 per year.  And whatever you need might last for a very long time.  I have had nursing home residents whose stays started 30 years before I showed up to be their physician.  One in seven people who live past 65 will need more than 5 years of long-term supportive care. 

At this point, salaries and benefits are not set up to make it possible to save to cover these costs.  Long-term care insurance is capped at 2 or 3 years or about $250,000 total, and the premium cost is both very high and likely to rise as you age.   Even family support (without compensation) is becoming challenging as working age women need to work, families are geographically dispersed, elders may have inappropriate housing and no good options for moving, few employers are flexible about caregiving absences, and the work itself is often more technical or difficult than available family members can handle.

Most working people can reasonably put together ways to finance the first year or two of long-term care, using savings, family help, reverse mortgages, and other resources.  So, the insurance should stay affordable by having a substantial waiting period, one that reflects the person’s lifetime opportunity to save.

Conveniently, such a plan has been worked out and sits in the House of Representatives as HR 4289, the WISH Act.  Benefits of around $120/day would arrive after a waiting period between 1 year (for 40% of the population) and 5 years (for the wealthiest).  The average American would start getting benefits in less than 2 years.  The insurance plan costs about 0.6% of wages if it is financed by a wage contribution like Social Security (half to employer, half to employee, and not capped).  It could be financed in other ways, but having the sense that one “owns” it, like Social Security, helps ensure that the public understands their long-term care risks and the coverage they are buying. The WISH Act would save many Americans from poverty in old age, bring needed funds into eldercare, and cut around 25% from the projected costs of Medicaid.

More info?  Ready to advocate?  Be in touch – drjoannelynn@gmail.com

RESOURCES:

Suozzi introduces legislation to transform American eldercare, create federal long-term care insurance (Press release and links to the WISH Act bill, one-page description, and section-by-section)

Cohen M, Feder J, Favreault M. A New Public-Private Partnership:
Catastrophic Public and Front-End Private LTC Insurance

Giese C, Schmitz A, Brown K, Gunnlaugsson A (Milliman), Setting the Stage: A Journey on Public LTC Program Design 

Committee for a Responsible Federal Budget: Representative Suozzi Introduces the WISH Act

Author: Dr. Joanne Lynn

Dr. Lynn is a geriatrician and hospice physician doing advocacy and research to improve eldercare. She encourages better financing models for long-term care and demonstration projects to improve eldercare in communities. Dr. Lynn has published over 300 peer-reviewed medical research and policy articles.

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