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Hastings Scholar Examines the Financial Burden of Long-Term Care

Nearly 11 million Americans use long-term care for help with daily tasks such as bathing and preparing meals, and yet few have private long-term care insurance. Thus, most of the cost of this care, which averages $140,000 a year, falls on family members and Medicaid. The scope of the problem and what should be done to cover the costs of these services are explored in an article co-authored by Hastings Center scholar Michael K. Gusmano in American Affairs.

As the number of older people and individuals with chronic illness rises in the United States, more Americans will require assistance with daily tasks. While private health insurance and Medicare cover much of the medical care for those with chronic illness, they provide little coverage for personal care.

The authors identified several reasons that few Americans have purchased long-term care insurance. First of all, many people can get unpaid care from family members or coverage for paid caregivers from Medicaid.  In addition, long-term care insurance is expensive and can be hard to find. Because the costs of long-term care services are uncertain, premiums can be high, and affordable plans may provide inadequate coverage. Older people and individuals in poor health may have difficulty finding plans because many insurance companies refuse to sell policies to them, Gusmano and co-author Irina Grafova write.

They point out negative consequences of relying heavily on family caregivers and Medicaid for long-term care. Family caregivers can develop stress-related health problems and, if they have to quit their jobs to provide care, they may suffer financial problems, too. And increased demand for Medicaid coverage of long-term care can strain state budgets.

Gusmano and Grafova suggest that one way to help cover the costs of long-term care is to create a comprehensive, mandatory social insurance program similar to social security. However, it unlikely that the U.S. will adopt such a program in the immediate future. “An ideological drive to reduce the government’s role in health care remains regnant in the Republican Party, as evidenced by the recent efforts to roll back the Affordable Care Act and limit the scope of the existing Medicaid program,” they write.  “On the other hand, the pressures generated by the aging of the baby boomers may soon create a unique opportunity for bipartisan policy action.”