CLASS Agonistes

This week the Obama Administration formally abandoned the CLASS Act, a component of the ACA designed to provide long-term care. Robert Reich explains why it was doomed from the start:

First, it required beneficiaries to receive at least $50 a day if they had a long-term illness or disability (to pay a caregiver or provide other forms of maintenance). That $50 was an absolute minimum. No flexibility on the downside.

Second, insurance premiums had to fully cover these costs. In budget-speak, the program was to be self-financing. Given the minimum benefit, that meant fairly hefty premiums. Third, unlike the rest of the healthcare law, enrollment was to be voluntary. But given the fairly hefty premiums, the only people likely to sign up would know they’d need the benefit because they had or were prone to certain long-term illnesses or disabilities. Healthier people probably wouldn’t enroll.

The failure of CLASS has led to a flurry of proposals for alternatives to long-term care insurance. Some want a purely private sector solution. Maybe a new Rube Goldberg financing scheme could be implemented as a part of 401(k) plans. Perhaps Wall Street could sell disability derivatives and ability default swaps, engineering away the “risk of non-use” that keeps people from enrolling in programs like this.

In thinking about these proposals, my mind turns back to Robert Bork’s Antitrust Paradox. For Bork, antitrust law was “at war with itself” because it professed to promote simultaneously 1) a cutthroat competitive process that would encourage firms to maximize efficiency and 2) the threat of penalties for any firm that succeeded in being so efficient that it outcompeted all or nearly all of its rivals, if its efforts to do so stepped over the line into monopolization. Of course, one could resolve the so-called paradox if one recognized that the Sherman and Clayton Acts were passed not merely to maximize “consumer welfare,” but also to prevent concentrations of economic power from exercising excessive influence. But as the judicial interpretation of antitrust law took on more of the assumptions of the Chicago school, the paradox loomed ever larger in efforts to characterize antitrust as futile in an era of consolidation.

So what’s the CLASS paradox? There are actually several. Those who are not so well off (such as the 50% of American workers who made less than $26,000 last year) are likely to be the most in need of the program, but have the least amount to spare for premiums. Those in the top 1% (that is, those who make over $506,000 annually) will probably want to use their own savings and investments, rather than an insurance program, to pay for LTC. That leaves a middle 49%, making between $26,000 and $506,000, who are the most likely participants. But among that group, the more healthy, well-connected, wealthy, and younger you are, the less likely you are to buy in because the benefits are speculative, distant, and/or unneeded. And by and large, the sicker, more isolated, poorer, and older you are, the less likely you are to have the resources to participate now.

The question finally becomes: are we serious about social insurance in this country, or are we content with treating the very frail elderly like possessions in the home, to be insured as need and whim allow? The solution to the LTC crisis is a right to basic care and residence, funded by general tax revenues. Sure, we can have extensive and difficult debates about the obligations of individuals and families to contribute to long-term care, particularly in order to make better-than-basic options available. But the general focus needs to be on redistribution from the currently well-to-do to the currently needy, rather than an ownership society mirage of individuals anticipating distant futures that may never materialize (and that many or even most can’t very well prepare for even if they do materialize).

We should also consider funding more of Medicare out of general tax revenues, rather than from dedicated payroll taxes and premiums. Richard Kaplan has argued that this shift could better serve both equity and cost-control goals:

The use of general tax revenues, moreover, would make clear that financing the health care needs of the Medicare population is a societal undertaking, much like the Medicaid program, which targets low-income individuals of any age. At a minimum, eliminating the separate taxes for Medicare would simplify the lives of employees and employers alike and would additionally reduce the cost to employers of adding new employees. Perhaps changing the financing of the Medicare program along the lines just suggested might also make its beneficiaries less inclined to protest every proposed programmatic restriction and to understand that their benefits are indeed coming from a communal funding source. The resulting change in budgetary debates can only be salutary for the republic as a whole.

Health care finance in general must adopt to a world of massive and growing income and wealth inequality. From 1947-1980, when Americans’ incomes more or less grew together at the same rate, there was some justification for modeling the purchase of long term care as an investment that individuals would manage one by one, to reflect their tastes and preferences. Since 1980, the divergence in fortunes has become so great that such choices far more reflect ability-to-pay rather than taste for risk or comfort. It is unfair to expect struggling middle and lower class individuals to continue with such burdens. And to the extent tough choices need to be made, they ought to better reflect the collective wealth of the nation, rather than the tragic choices that can befall an individual forced to choose between preparing for bleak penury in old age or investing in present purchases that could make that neediness less likely.

Our Own Devices

Health care finance is always going to be a contentious topic. Two recent stories about devices in health care show the unexpected ways in which technological innovation can generate new burdens, worries, and ethical dilemmas for patients and their families.

Katy Butler authored a heart-rending account of her father’s decline (and her mother’s near-exhaustion as a caregiver) in the NYT last week. Her father’s stroke changed both his and Butler’s mother’s lives:

The day before [the stroke], my mother was an upper-middle-class housewife who practiced calligraphy in her spare time. Afterward, she was one of tens of millions of people in America, most of them women, who help care for an older family member.

The story of what happens next is long and complex, but for health policy makers the nub comes down to a decision the family must make about whether to implant a permanent pacemaker when her father needs surgery to repair a hernia:

[T]he cardiologist, John Rogan, refused to clear my dad for surgery unless he received a pacemaker. . ..  The decision fell to my mother — anxious to relieve my father’s pain, exhausted with caregiving, deferential to doctors and no expert on high-tech medicine. She said yes. One of the most important medical decisions of my father’s life was over in minutes. . . .

[If my father's primary care physician had] had the chance to sit down with my parents, he could have explained that the pacemaker’s battery would last 10 years and asked whether my father wanted to live to be 89 in his nearly mute and dependent state. He could have discussed the option of using a temporary external pacemaker that, I later learned, could have seen my dad safely through surgery. But my mother never consulted Fales. And the system would have effectively penalized him if she had. Medicare would have paid him a standard office-visit rate of $54 for what would undoubtedly have been a long meeting — and nothing for phone calls to work out a plan with Rogan and the surgeon.

Medicare has made minor improvements since then, and in the House version of the health care reform bill debated last year, much better payments for such conversations were included. But after the provision was distorted as reimbursement for “death panels,” it was dropped. In my father’s case, there was only a brief informed-consent process, covering the boilerplate risks of minor surgery, handled by the general surgeon.

Butler’s family’s situation was clearly a troubling one. I do not agree with her harsher critics, who charge the New York Times has used her story to promote its political agenda:

The New York Times is continuing its promotion of the Obama administration’s cost-cutting health care legislation three months after it was signed into law. Central to the newspaper’s support for the bill is its drive to cut back on “unnecessary” treatments and procedures and to target for elimination “overly generous” insurance benefits. . . . The article is a cynical attempt to utilize the author’s family’s personal story—unarguably tragic and heartrending—to make the case that artificial pacemakers are being widely over-utilized.

But I was also troubled by Butler’s quoting the following studies:

In a 1997 study in The Journal of the American Geriatrics Society, 30 percent of seriously ill people surveyed in a hospital said they would “rather die” than live permanently in a nursing home. In a 2008 study in The Journal of the American College of Cardiology, 28 percent of patients with advanced heart failure said they would trade one day of excellent health for another two years in their current state.

I have not experienced “advanced heart failure,” but I know people who do, and it’s inconceivable to me that they would trade a day of “perfect health” for two months, much less two years, of stasis. Moreover, as Alasdair MacIntyre argues in his book Dependent Rational Animals, caring for others and being dependent are essential, important human experiences.

As I read Butler’s piece, I kept wishing that society had done more (perhaps along the lines of Britain’s Social Care programs) to help her family.

But even some forms of aid for the cared for (and their caregivers) are filled with philosophical complexities. Consider the Paro, a robotic seal I blogged about in last month and back in 2006. The Paro has been approved as “a Class 2 medical device (a category that includes powered wheelchairs)” to help soothe elderly patients. Here is one example of its powers:

One recent morning, staff at Marian Manor in Pittsburgh, one of Vincentian Collaborative’s homes, circulated three Paros among residents gathered for a sing-a-long. As 77-year-old Anita Biro sat down at a table, she berated two fellow residents and told them to leave, recalls Beth Kuenzi, activities manager for the home’s dementia unit. But when Ms. Kuenzi put Paro in front of Ms. Biro, her mood changed. As Ms. Biro stroked the robot’s synthetic fur, the machine batted its eyelashes and tracked movement with its head and eyes.

“I love this baby,” Ms. Biro cooed. Aides also take Paro to residents’ rooms to get them to socialize. At another Vincentian home, Lois Simmeth, 73, doesn’t always participate in group activities, but she ventures into the hall when she hears Paro’s sounds.

“I love animals,” explains Ms. Simmeth. She whispered to the robot in her lap: “I know you’re not real, but somehow, I don’t know, I love you.”

MIT Professor Sherry Turkle concedes that the Paro has some very good effects, but wonders “Why are we so willing to provide our parents, then ourselves, with faux relationships?” Another article explores advances in “building a machine that fills the basic human need for companionship.” Turkle, again, questions the larger social context:

[S]ome social critics see the use of robots with such patients as a sign of the low status of the elderly, especially those with dementia. As the technology improves . . . it will only grow more tempting to substitute Paro and its ilk for a family member, friend — or actual pet — in an ever-widening number of situations.

“Paro is the beginning,” she said. “It’s allowing us to say, ‘A robot makes sense in this situation.’ But does it really? And then what? What about a robot that reads to your kid? A robot you tell your troubles to? Who among us will eventually be deserving enough to deserve people?”

These are all fantastic questions, all-too-ready to be answered by techno-libertarian fantasists. I look forward to tracing the degree to which the decision to approve Paro as a covered device could reflect the larger ethical concerns explored by Dov Fox in his piece on the “gap between ethics and law” in other health decisionmaking.

Alliance for Health Issues Major Resource, “Covering Health Issues”

Amazing resource for health care and health care reform info over at Alliance for Health, “Covering Health Issues, 5th Edition, 2010 Update.” Made possible by the Robert Wood Johnson Foundation, it has 12 chapters and covers such issues as Health Reform, Cost of Health Care, Quality of Care, Mental Health & Substance Abuse, Long-Term Care, and Disparities. The collection is a veritable treasure trove of information presented in a readily accessible manner. Though the phrase is lacking because access is free, the Fast Facts alone are worth the price of admission. A few to think about (footnotes omitted):

• Two-thirds of people age 65 today will need some long-term care in their lifetimes.

• An estimated 22.3 million people were classified as substance dependent or substance abusers in 2007. Substances abused range from alcohol, pain relievers and tranquilizers to hallucinogens, cocaine and heroin.

• Each year, about one in four adults (26.2 percent) suffers from a diagnosable mental illness, according to National Institute of Mental Health.

• In a ranking of 19 industrialized countries, the U.S. had the highest number of unnecessary deaths.

• Among 37 nations, the U.S ranks 29th in terms of infant mortality with nearly twice as many infant deaths per capita than France.

• The United States spent $2.3 trillion on health care in 2008, or $7,681 per person. This amounted to 16.2 percent of the nation’s gross domestic product (GDP).

• Health care costs more than tripled from 1990 to 2008,² and are projected to rise to 19.3 percent of GDP in 2019.

• Nearly 82 percent of the uninsured in 2009 lived in families headed by workers.

• In 2008, 17.2 percent of full-time employees and 25.5 percent of part-time employees age 19-64 were uninsured all year.

State Long-Term Care Partnership Programs

By Brian Seguin

Long-term care refers to end of life care where a person can no longer take care of themselves. These people require either the assistance of a trained professional, such as a home health aide, to help them care for themselves in their home, or they need to be housed in a nursing home and cared for there. Since Medicare does not cover long-term care, people who require it need to either pay for it themselves, or if they have almost no savings and get a low enough monthly income that they qualify, they can apply for Medicaid which does cover it. If someone pays for it themselves and winds up spending all of their savings and still needs care, they can then apply for Medicaid to cover it if their monthly income is under the threshold set by their state in order to qualify for the program.

In the early 1980’s, states began to worry that as the baby boomer generation got closer to retirement age and might start requiring long-term care, it could cause increases in their Medicaid expenditures and thus budget deficits. One possible solution forwarded for this impending problem, and eventually implemented by four states in 1993, was the idea of state long-term care partnership programs. Under these programs states would incentivize their citizens to purchase private health insurance to cover at least part of the long-term care they may eventually require and thus spare Medicaid from covering some of the costs. Insurance companies who participated in the programs had to meet certain regulations of what type of care was provided and had to report certain data back to the states so they could effectively monitor the impact the programs were having.

Proponents hoped these plans would cause people to buy their own long-term care insurance coverage and hopefully never need to turn to Medicaid to pay for it. They also hoped this would stop the perceived threat of people transferring their assets (savings) to family members early in order to appear qualified for Medicaid. Of the four original states, California and Connecticut incentivized their citizens by allowing them to disregard assets they had above the threshold allowed to qualify for Medicaid in the amount that the partnership plan had paid towards their long-term care. In other words if a person purchased a partnership plan and it paid out $200,000 towards their long-term care, that person would still qualify for Medicaid even if they had up to $200,000 in assets over the amount usually allowed to qualify. This was called the “dollar for dollar approach.” New York required citizens to purchase more comprehensive plans that had higher lifetime benefits, and if they did they could disregard all of their assets in determining if they qualified for Medicaid, known as the “total assets approach.” Indiana allowed a “dollar for dollar” disregard if the person purchased a plan covering less than four years of care and a “total asset” disregard if they purchased a plan covering more than four years.

Opponents of this idea worried that these public partnerships would inappropriately promote private plans with limited values, and that they could lead to increases in Medicaid expenditures by allowing wealthier people who would purchase private long-term care plans anyway keep their assets and now have access to Medicaid that they wouldn’t have otherwise had. As a result of these fears part of the Omnibus Budget Reconciliation Act of 1993 (OBRA) required any state that started a partnership program after 1993 to recover any disregarded assets of a deceased Medicaid recipient from their estate. Although this Federal law did not apply to the four states already operating partnership programs and did not ban other states from starting their own programs, it effectively eliminated any other states from trying to start their own programs by removing the incentives for citizens to join. This is because although a person could keep some of their assets while still alive, and still qualify for Medicaid, the state would now have to take those assets from their estate. So there was no longer any incentive for a person to purchase a partnership plan which they may never need, and thus shift some of the potential costs of long-term care on private insurers rather than Medicaid.

The Federal government finally decided to give long-term care partnership programs another chance in 2005 with the passage of the Deficit Reduction Act (DRA). Parts of that bill removed the estate recovery requirement of OBRA and allowed states (other than the original four who have continued their programs and are again not subject to this bill) to start their own partnership programs provided they use the “dollar for dollar” approach. Insurance companies participating in these new programs will have to be certified by the state, using new federal guidelines, and will have specific data reporting requirements. The “dollar for dollar” approach is mandated to avoid the grant of Medicaid benefits to those who do not need or deserve them. This approach only allows beneficiaries to keep the amount of assets they would have presumably spent for long-term care themselves and then qualified for Medicaid anyway, had their partnership plans not paid that amount. The federal government has finalized its rule of what data needs to be submitted by partnership insurers after consulting with the National Association of Insurance Companies, insurance companies who issue long-term care plans, the four original states with programs, and consumers who purchase long-term care plans. The data collected is meant to cost insurers as little as possible while still allowing the federal government to accurately track the effectiveness of these programs. While no states or private insurers are required to participate in these partnership programs, as of August 2008, 13 states (in addition to the original four) are now offering partnership plans and 12 more are in the process of implementing them.

Rebalancing Long-Term Care

Will efforts to modernize home health programs survive insurance reform’s end game?  Providing insurance coverage to as many low-income uninsureds as possible has been an organizing principle in 2009’s health reform discussions, and reconciliation of the House and Senate versions will require satisfying some members that sufficient subsidies will be available to permit the promise of extended coverage to reach the neediest.  The ripple effects of those discussions may reach other reform issues, as leadership attempts to meet budgetary targets.  It would be a shame if this process led to a retreat from the current bills’ innovative long-term care provisions.

As I’ve described previously, the reform effort has contemplated an interesting mix of Medicare and Medicaid improvements to expand access to community based care for people with disabilities and chronic illness.  And the CLASS Act’s inclusion in the mix gives some hope  to those with needs for assistance with Activities of Daily Living (ADLs), as well as their family caregivers.  Those involved in caregiving for a chronically ill family member can testify that they’re not looking to dodge responsibility; to the contrary, they’re hoping to gain assistance to continue providing assistance in the community, to avoid the need for isolating and expensive institutional care for their loved ones.

Health Affairs’ January 2010, Volume 29, Number 1 — “Advancing Long-Term Services & Supports” - (subscription required for some content) is a welcome source of information and analysis in this area.   H. Stephen Kaye and coauthors provide timely data filling out our understanding of who is served, and where.  It is clear that people in need of nursing and personal care assistance prefer to live at home rather than in a nursing home.  About 8.4 million people of all ages with ADL difficulties receive services in their communities, while about 1.6 million receive services in nursing homes.  The median monthly cost in the home care setting, in 2009 dollars, is $928, compared to $5,243 in nursing homes.  About 75% of those in the community live with relatives.  90% have mobility impairments, 55% have cognitive impairments, and 31% have sensory impairments.  Other articles shed some light on programmatic and financial barriers to improving access to home services.

• Terrence Ng and coauthors describe the gaps, overlaps, and regional variation in long term care coverage provided by Medicaid and Medicare. In particular, they report wide variation in states’ adoption of Medicaid waivers and other mechanisms for extending community-based home care. For example, Iowa’s participation rate in Medicaid home and community-based care is 16.8 per 1,000, while Virginia’s rate is only 3.21 per 1,000. The authors also highlight the effects of the failure to coordinate Medicare and Medicaid for long-term care, and the cost-increasing effect of hospital readmissions, traceable in part to Medicare’s poor coverage of long-term care. The current Senate bill, at Sections 2401- 2406, would encourage expansion of Medicaid rebalancing efforts.
• The Public Policy Institute’s Susan Reinhardt discusses programs supporting the community preference of people with nursing and home care needs. She describes diversion and transition programs. Transition (”downstream”) programs are dedicated to moving to appropriate community settings those who would like to leave nursing homes. Diversion (”downstream”) programs fund home and community based services, to forestall or prevent institutionalization in the first place. She points to the reform bills’ support for the Community Living and Money Follows the Person Demonstrations.
• Two pieces do an excellent job of introducing us to those who provide home care. Carol Levine and others describe the plight of family caregivers, traditionally thought of as “informal” caregivers, but clearly the foundation of home health care.  Howard Gleckman provides case studies of non-family member home care workers, highlighting the physical and financial difficulties under which they labor. As needs for chronic care in general and home care in particular increase in coming years, the long-neglected needs of these family and non-family caregivers will have to be addressed. Congress is famously solicitous of the financial concerns of physicians, our most highly compensated caregivers. It is time to focus on the needs of those millions of direct caregivers who every day provide compassionate personal services to our most vulnerable friends and family members.

The January issue of Health Affairs helps to highlight the growing importance of the financing of long-term care.  As we age, and as our needs shift from acute to chronic care, we must wean ourselves from a financing perspective that emphasizes dazzling high-tech interventions and instead embrace the human-scale care offered by home health aides, visiting nurses, and physical therapists.  The pending bills don’t make this shift, but they nudge the battleship a bit.  They leave long-term care financing fragmented among various public and private programs, but they do support some promising programs.

The CLASS Act (Senate bill Section 8002) is a voluntary, opt out social insurance program that would provide some support for home care services.  For the reasons described last year by Howard Gleckman, the CLASS Act is incomplete; among other things, its voluntary nature could create selection problems.  It is a start, however, and would put a useful if imperfect patch on a torn system.  I’ll cite to one final article from the Health Affairs issue to point to a better way.  John Creighton Campbell and coauthors‘ discussion of public long-term care insurance in Germany and Japan contains the germ of a solution to the woes our system suffers.  Both the German and Japanese systems have universal coverage, support family caregivers, and accord beneficiaries a large degree of control over services received.  And they do so at a cost roughly comparable to that experienced by American public payers (Germany a bit less, Japan a bit more).  Organizing long-term care financing through one social insurance program yields efficiency dividends, eliminates stigma concerns, and encourages care at the level and location preferred by recipients.  Maybe it’s too early to be pushing for the next step in long-term care reform, but why can’t we do what the Germans and Japanese have done?  At the very least, let’s not cut back on the progress made in the current bills as we strain for the finish line.

Home and Community Based Services in Health Reform

As we head to floor votes and reconciliation, it’s important to keep our eyes on some of the less visible programmatic issues in the reform proposals. Many of these issues are old friends, have been kicking around Congress for years, and have been hammered out by members, advocates, and staff over many months. It would be a shame for them to be left on the cutting room floor in the interest of a “cleaner” bill. Home and community based care is one of those issues.

The reform bills adopt two complementary strategies to improve access to long term care (LTC): correct Medicaid’s institutional bias, and shift some LTC financing away from Medicaid. There is some history on which to build for the first strategy. Home and community based service (HCBS) reforms have chipped away at Medicaid’s institutional bias over recent years. HCBS waivers have increasingly moved care to the community settings, and reforms derived from DRA ’05 allowed further state flexibility in this area. Governors are strongly in favor of moving LTC funding to the community –- usually the most appropriate and economical setting –- but are seeking financial protection from increased demand. A recent paper from Harriet Komisar and others for the Scan Foundation proposed a four-prong proposal for HCBS Medicaid reform:

• Require –- or provide strong financial incentives for –- states to expand home and community-based services.
• Provide federal financial assistance to states through an enhanced matching rate to help finance expansions.
• Make home and community-based services eligibility available on an equal footing with nursing home care.
• Invest in workforce development.

Read more

Alzheimer’s, Dementia Triple Individual Health Care Costs

According to U.S. News & World Report, a recent Alzheimer’s Association report estimates that Alzheimer’s disease and dementia triple health care costs for afflicted seniors.

In its report, the Alzheimer’s Association found that:

The average annual health-care cost for someone older than 65 with Alzheimer’s or another form of dementia was $33,007 in 2004 — three times more than the $10,603 for people that age without the conditions.

Deaths from Alzheimer’s disease rose by 47 percent from 2000 to 2006 while the number of deaths from several other major diseases — including heart attack, stroke, breast cancer and prostate cancer — fell during that period.

States in the Rocky Mountains and Northwest will see the number of people with Alzheimer’s disease increase by at least 81 percent between 2000 and 2025.

By 2025, California and Florida will each be home to more than a half-million people with Alzheimer’s disease.

Experts agree that the U.S. needs to invest more into Alzheimer’s research to keep costs low in the future. Some even advocate that the U.S. Government double its annual budget for Alzheimer’s research to $1 billion.

The aging of the Baby Boom Generation is one of the major reasons for the growing concern over the costs of living with Alzheimer’s disease. Said Dr. P. Murali Doraiswamy, a psychiatry professor at Duke University Medical Center,

The bottom line is that we are an aging society, and if we don’t find a cure to delay or halt the disease, we are soon going to become an Alzheimer’s nation.