Financing long-term supportive services must not be swept aside yet again. Advocates must create a drumbeat that demands attention and solutions, including federal catastrophic long-term care insurance.
I’m delighted you are among the folks willing to help raise long-term care financing to public and policymaker attention. We need to generate the will to confront the issues and shape arrangements in the US so that most people can handle their own long-term care costs, and everyone can count on having the basics of a decent life in old age. We’ll need a more sustained Social Security income system and more efficient and reliable local care arrangements, but we’ll also need more funds in savings and insurance, both public and private. Here are links to resources that will prove useful for your efforts to move long-term care financing onto the policy table. Let me know of other resources you find or that you find that you need, and please suggest enhancements to these (DrJoanneLynn@gmail.com).
First and foremost – to make the financing of long-term care into an inescapable policy issue – visible in election campaigns, often addressed in news media, and a topic that many organizations take up.
But also – to get multiple sponsors for the WISH Act (perhaps as modified and perhaps also other useful long-term care financing bills) in Congress
And to have employers, insurance companies, and organizations representing the interests of persons living with disabilities and older adults all actively supporting federal catastrophic long-term care insurance.
Federal catastrophic long-term care insurance as proposed by the WISH Act is fiscally sound and quite different from the withdrawn CLASS Act.
Many influential advocates and legislators remember the CLASS Act, which was part of the Affordable Care Act in 2010. Advocates and political leaders had to put a great deal of effort into having the ACA include the CLASS insurance scheme to support people living with disabilities. The final law required that CLASS be fiscally neutral, but the fact that it would be voluntary led to estimates that only a few percent of the population would buy in, and that the group paying in would include a disproportionate number of people with high risks, including many already having disabling conditions. This made the premiums prohibitively expensive and the program unsustainable. Thus, the CLASS Act was never implemented and was repealed in 2013. The disappointments of advocates and legislators might lead them to ask how the WISH Act would be different. The most striking difference is that WISH would not be voluntary and thus would maintain the largest possible pool of contributors and beneficiaries, with no opportunity for the adverse selection that afflicted CLASS. The table below is meant to illuminate the array of differences.
The WISH Act proposal
The CLASS Act, withdrawn
Federal vs. State program
Voluntary (mandatory with opt out)
Anyone 18+ choosing to participate. They also must receive wages or income that are subject to the Social Security tax and meet minimum work-quarter requirements, except for patients in a hospital or nursing facility, ICF/MR, IMD, or Medicaid beneficiary
Full benefits with 10 years contributing, partial down to 5 quarters
Contributed into the program for at least 5 years
Benefit eligibility triggers
Uses HIPAA triggers
Uses HIPAA triggers
Type and Amount of Benefit Payment
Cash benefit paid monthly, roughly $120/day, indexed to inflation and wage costs in long-term care
Cash benefit paid monthly, TBD but roughly $50/day. Might be based on degree of disability. Benefit rolls over month to month but not beyond a calendar year.
Not applicable because it is a cash benefit
Not applicable because it is a cash benefit
Coverage Duration (front vs. back vs. comprehensive)
Catastrophic/Back End, unlimited duration once disability trigger(s) are met and after an up-front waiting period
As long as the qualifying disability lasts
Waiting Period Before Benefits Begin
Varies from 1 year to 5 years, based on lifetime income
0.3% of wages from employee, matched by employer (or 0.6% for self-employed)
Premium estimates averaged $123/month for a $75/day benefit, but the CMS actuaries later estimated $240/month. Premiums could have increased, except for older retirees.
Mandatory premiums from payroll deductions
Financed through monthly premiums paid by voluntary payroll deductions
Opportunity for private market supplement
Front-end coverage with private LTCI and caregiver support programs easily fit and carriers would be relieved of most of the “tail” risk
LTC insurance could “top off” CLASS coverage or continue to sell to individuals who opt-out and pass underwriting.
Coordination with other programs
Income from WISH would not count against eligibility for other federal programs, but income from WISH could mitigate the level of benefits for low-income programs such as Medicaid nursing home care.
Eligibility for CLASS program benefits would have no effect on eligibility for Medicaid, Medicare, Social Security retirement, survivors, or disability benefits or Supplemental Security Income (SSI) benefits. Medicaid is the payer of last resort where there is duplication but enrollees can retain a small portion of their CLASS cash benefit when both payment sources apply.
Adjusted for inflation and direct service worker wages.
Adjusted for inflation but details not specified.
Comparison of the WISH Act proposed with the CLASS Act, which was withdrawn.
Since a decade has passed since the enactment and withdrawal of CLASS, advocates for federal catastrophic long-term care insurance should generally use this comparison only with people for whom the effort and disappointment of CLASS are still salient, and who ask about the merits of the WISH Act in comparison.
This short summary illustrates why the U.S. needs federal catastrophic long-term care insurance and how the WISH Act would meet the need.
Average Americans have no way to save, insure, or provide for the costs of supportive care while disabled in our last years.
Eldercare causes most spending down to poverty and relying on Medicaid in old age, and family caregivers often lose their own retirement security.
The average elder needs supportive services for 2 years, 1 in 7 of us will need more than 5 years.
Change is needed now, since current challenges will be dwarfed by nearly doubling the affected population within a decade.
Federal Catastrophic Long-term Care Insurance – the WISH Act, HR4289
Federal because elders move from state to state, and catastrophic costs require a large pool of funds
Catastrophic because then people can make their own plans for the first period of disability, confident of financial help if the period of disability becomes long
Catastrophe varies with different opportunities to save – well-off people can manage a longer period before needing the support of a public insurance plan
Long-term care (LTC) here focuses on a period when the person cannot take care of daily tasks without help – either paid or unpaid help is needed every day
Insurance because the need for long-term care in old age is both unpredictable and quite varied. Some need many years of around-the-clock care, while a few die suddenly with no long-term care need – but no one can predict. This is by far the most substantial threat to most family’s finances, making it very desirable to be part of a large insurance pool.
Some Specifics about the proposed WISH Act, HR 4289
Fully paid for by a payroll tax of 0.6%, split between employee and employer
Cash benefit of about $120/day, tied to inflation, enough for about 6 hours of paid help, including paying family
Triggered by cognitive disability requiring constant supervision or functional disability of two or more activities of daily living (which is the HIPAA standard used by LTC insurance)
Requires a waiting period of 1 to 5 years living with disability, depending upon lifetime earnings – 40% of the population with the lowest earnings wait one year, average Americans wait less than 2 years
Requires paying into the insurance for 10 years for full benefits
Creates a strong market for private long-term care insurance, since many workers will want to cover the waiting period
Greatly reduces reliance on Medicaid, avoiding substantial challenges for state budgets
Let’s make it possible for most Americans to pay for the supports needed in advanced age – Federal Catastrophic Long-term Care Insurance – the WISH Act
The NASEM report on nursing homes could be the centerpiece of a far-reaching public information effort aimed to get LTSS issues into political campaigns.
Soon, the National Academies of Sciences, Engineering, and Medicine (NASEM) will issue their report on the future of nursing homes. If advocates for long-term care reforms sit back and observe, this is likely to join a lot of other responsible, thoughtful, evidence-based writings on shelves in libraries. But it’s possible that we could make it one of the centerpieces of a broad-reaching public information effort aimed at making long-term supportive services (LTSS) a serious part of political campaigns upcoming.
Sure – this report will focus only on nursing homes, but that can be a very useful fulcrum for examining the overall arrangements for supporting how most of us will live with serious disability in old age. We could take the recent article by McGarry and Grabowski (“Nursing Homes and COVID-19: A Crisis on Top of a Crisis”) as indicative of the sort of recommendations likely to come with the Academies report. That paper listed ten reforms:
Realigning Medicare and Medicaid (to make all payments equal the costs of care)
Higher wages for direct care staff
Minimum staffing requirements
Increase financial and ownership transparency
Regulatory reform (to focus on major risks and provide collaborative help to improve)
Increase quality transparency (to include what residents and families care most about)
Increase presence of clinicians onsite
Alternative models of nursing home care (small homes)
Increase use of home- and community-based services (HCBS)
Long-term care financing (perhaps expanding Medicare or creating a new federal LTC benefit)
Let’s assume for the moment that the National Academy report makes basically these recommendations. I’d contend that they are basically good ideas. Two questions arise: (1) How will they get effectuated? And (2) What more needs to be on the policy agenda?
Taking the second question first – one very important element that is missing is the context of long-term care – the community’s housing possibilities, the availability of direct care workers for home care, the flexibility of local employers to enable family caregiving, and so on. Nursing home utilization and patterns of practice are profoundly entwined with the rest of the local care arrangements. The report should call for reforms to extend beyond merely advocating for HCBS and should have taken into account the rest of the arrangements that affect long-term care. I’d suggest advocating for a substantial CMS demo on excellence in moderate-sized geographic populations. Let’s learn what can really work well for all of eldercare.
Now, the first question – what would make the public and its leadership take notice? The proclivity of Americans to dodge questions of disability and old age is all too obvious. Perhaps some of this head-in-the-sand behavior arises from a sense that there’s nothing to do – long-term care is tragic and troubling but also overwhelming. To counter this sentiment, we need concrete actionable steps. We need to get behind some specific fixes that are both understandable and motivating. Try these slogans:
“Make it possible to pay for your own old age” (and tie that to financing changes);
“A home for every elder” (and tie that to making homelessness in old age unacceptable);
“Long Term Care = LTC, Lots of Tender Caring” (and hook that to staffing levels);
“Fair Wage for Hard Work” (tied to a living wage for direct care workers).
How about a bumper sticker? “LT$$ – financing for our old age.” The WISH Act (HR 4289) could help with financing.
I’m sure readers can suggest more clever tag lines, but we need to pull them together and slam the social media with messages that push policy agendas and call on political leaders to take stands.
Could you be ready to help make a Twitter and Facebook firestorm when the National Academy report comes out? And to follow up with emails to Congress and to heads of influential organizations?
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 – email@example.com
Let’s start familiarizing policymakers about more difficult, more fundamental reforms
Most eldercare advocates in the United States are fully occupied pushing for effective allocations in the current reconciliation bill. This activity offers the opportunity to plant the seeds of Long-Term Services and Supports (LTSS) reforms that are not yet likely – but are worthy and important. So, yes, we need to argue strongly for Medicaid funds to increase pay and require benefits for direct care workers, and maybe we’ll even get a little funding for information infrastructure and some public education about long-term supports and services. In addition, let’s start familiarizing policymakers about more difficult, more fundamental LTSS reforms – just to start getting these included in the policy discussions. It’s said that an adult has to hear a new idea a dozen times before they start to make it their own!
What seeds should we be planting? I’d recommend serious work on financing for the long term, like the WISH Act. I’d recommend serious work on housing – let’s get affordable, disability-adapted, and services-connected housing widely available. This will require tackling restrictive housing regulations, building back better after catastrophes, and integrating supported senior housing into communities. I’d go for reforming congregate facilities of all sorts to be more home-like, smaller, and more often integrated into communities.
The categories that the United States uses for LTSS issues have created thoroughly dysfunctional silos, from the perspective of eldercare — medical care, behavioral care, custodial care, rehabilitation, community-based services, nursing homes, assisted living facilities, family care, personal care, homemakers, and so on. What we need is to live in communities where eldercare has been anticipated and planned, since most older adults end up needing most of the services now in silos. So, we could be planting the seed of the idea of generating a local entity that has data, authority, and some finances to set priorities for improvement, implement improvements, and monitor the performance of eldercare locally. At least, CMMI could sponsor a multi-year LTSS improvement trial in a couple dozen communities. Let’s see just how much better eldercare could be – more reliable, more equitable, more supportive of older adults and their families!
All members of ASA know that the United States has a wholly inadequate set of “arrangements” for supporting people who need long-term supports and services (LTSS), about half of whom are past retirement age. And they know the situation is on course to become dire within a decade, when so many in the Baby Boomer generation encounter the disabilities associated with aging.
Potential reforms abound—better pay and benefits for care workers, single point of entry to services, skilled physicians, integrated teams, comprehensive care planning and so on. But all of these reforms will be stymied if there’s no money, and the funding has to be sustained into the future—not just as a short-term fix.
To address this situation, Rep. Tom Suozzi (D-NY) has introduced a remarkable bill, the Well-Being Insurance for Seniors to be at Home (WISH) Act, which would create a social insurance trust fund to cover long periods of LTSS needs, thus making it possible for workers to plan responsibly for the risks of disability in old age.
How the WISH Act Would Benefit Everyone
The WISH Act has a great many good effects: reviving the long-term care insurance industry, reducing the need to spend down to Medicaid, saving state and federal Medicaid programs from dire financial consequences, providing a targeted supplement to Social Security at just the time the beneficiary needs it most, educating Americans about the need to plan for LTSS risks in old age, improving pay and benefits for caregivers, and more.
And it does all of this with a truly modest mandatory insurance contribution from wages—0.3 percent from workers, 0.3 percent from employers. Someone making $50,000 per year, about the median income in the country, would be paying $150 per year, or less than 50 cents per day.
THE WISH ACT REQUIRES A MODEST MANDATORY INSURANCE CONTRIBUTION FROM WAGES—0.3 PERCENT FROM WORKERS, 0.3 PERCENT FROM EMPLOYERS.
The trust fund would be separate from other trust funds and would require 40 quarters (10 years) of having earned the current equivalent of $5,600 per year to qualify for full benefits. Pro-rated benefits start at six quarters. The benefit would be enough to pay for a national average of about six hours of paid caregiving, or about $3,600 per month, paid in cash like Social Security.
To qualify for benefits, the worker must be older than full retirement age and either dependent in two or more Activities of Daily Living or sufficiently cognitively impaired to require nearly full-time supervision and assistance. This is the standard that most long-term care insurance plans use and is ensconced in the HIPAA regulations.
In addition, the person must have had this level of disability for a waiting period that depends upon their earnings record, while contributing to the WISH Trust Fund. Low-wage earners in the lower 40 percent of earnings would only wait one year, and those with higher earnings would add one month for each 1.25 percentiles above the 40th percentile.
For example, the median wage earner would wait 20 months, the 70th percentile person would wait three years, and the highest earners would wait five years. Once begun, the benefit is life-long. This strategy rests on two observations: first, the definition of catastrophic financial burden differs for workers with different opportunities to save, own homes, invest in insurance, and raise families to help; and second, the cost of LTSS does not differ much for poor or wealthy people.
IT IS REALLY THE LONG-RANGE PLAN FOR ELDERCARE FOR US ALL.
The upshot when fully operational is that LTSS would have an infusion of payouts that total around $100 billion per year (in current dollars). The bill includes substantial education about LTSS risks and costs, in addition to the obvious education of having money taken from your paycheck each payday. Many people would learn to plan ahead to protect their ability to manage during disability in old age, without bankrupting their families. Long-term care insurance providers will fill in the waiting period and the additional costs of LTSS beyond the WISH benefit with much more affordable and flexible offerings.
Let’s Not Repeat History, and Instead Take Action on the WISH Act
Many ASA members will remember the push for the CLASS Act, which was part of the Affordable Care Act but could not be implemented because the finances could not work with a voluntary enrollment. The need for something to address LTSS costs has persisted, and WISH is a thoroughly responsible response!
It does not address the urgent needs or the short-term reforms we need in eldercare, and it does not help current retirees or younger people living with disabilities (until their own old age, provided they’ve worked a little over some years, which is true of most persons living with disabilities in working age). It is really the long-range plan for eldercare for us all. If it had been enacted in 1990, we would not be looking at having enormous numbers of elders unable to afford housing, food and medical care within a decade.
Admittedly, we are late to act, but it’s time to stop pretending that we mostly won’t live into old age, or that most of us won’t need LTSS. The opportunity to grow old was still uncommon in the middle of the last century, when Medicare and Medicaid came into being. Having that longevity opportunity now, for most Americans, is a remarkable achievement. But it requires some changes in how we manage to pay for our needs, and the WISH Act would be a major part of that reform.
To get the WISH Act passed will require substantial public interest and support. Call your Congressman and Senator. Explain the importance of this Act. Ask them to co-sponsor. Let’s stop kicking that cursed can down the road!
The Ways & Means Committee of the U.S. House of Representatives heard testimony on “Caring for Aging Americans” on November 14. Dr. Joanne Lynn participated as an expert witness. A video of the hearing can be viewed at https://www.youtube.com/watch?v=20GgbnOMIn4.
Read Dr. Lynn’s comprehensive written testimony by clicking below.