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March 4, 2013

Washington Health Policy Week in Review Archive 0d07ebb7-0fc9-461d-bea1-24336c81c6a7

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New Jersey Governor Supports Medicaid Expansion

By Rebecca Adams, CQ HealthBeat Associate Editor
February 26, 2013 -- New Jersey Gov. Chris Christie became the eighth Republican governor to throw his support behind an expansion of Medicaid last week.

"Refusing these federal dollars does not mean that they won't be spent," Christie said in his budget message. "It just means that they will be used to expand health care access in New York, Connecticut, Ohio or somewhere else. Accepting these federal resources will provide health insurance to tens of thousands of low-income New Jerseyans, help keep our hospitals financially healthy and actually save New Jersey taxpayers money."

The governor said that New Jersey, which already has a generous Medicaid program, will save about $227 million in fiscal 2014.

"Let me be clear, I am no fan of the Affordable Care Act," Christie added. "I think it is wrong for New Jersey and for America. I fought against it and believe, in the long run, it will not achieve what it promises. However, it is now the law of the land. I will make all my judgments as governor based on what is best for New Jerseyans ... In this instance, expanding Medicaid by 104,000 citizens in a program that already serves 1.4 million is the smart thing to do for our fiscal and public health. If that ever changes because of adverse actions by the Obama administration, I will end it as quickly as it started."

Beyond the 104,000 people who will become newly eligible for the program next year, state officials say that another 200,000 people who were already eligible under the current Medicaid program also will probably sign up.

In the past two months, several GOP governors have said that they would sign up for the expansion. The federal government will provide all of the financing for the newly eligible people next year and phase that down to 90 percent by 2020.

Other Republican governors who are pushing their state legislatures to expand Medicaid are in Arizona, Florida, Michigan, Nevada, New Mexico, North Dakota, and Ohio.

In Virginia, state lawmakers over the weekend created a commission that could potentially lead to an expansion of Medicaid in the future.
Christie, a pragmatic Republican who is viewed as a possible future GOP presidential nominee, had earlier decided not to partner with the federal government on an exchange but said he would cooperate and support federal officials' efforts in the state.

Consumer advocates were thrilled.

"This is the second 'hallelujah' moment of the past week," Ron Pollack, executive director of Families USA, a consumer advocacy group that supports the expansion, said in a statement. "With this decision, Governor Christie, like Governor Scott of Florida and six other Republican governors, has chosen to put the interests of his constituents above partisan politics."

Pollack said that Christie may have been convinced by arguments that expansion would reduce the number of people who can't afford health care, increase job growth, and strengthen the state's economy.

Another advocate—Ethan Rome, executive director of Health Care for America Now—called the announcement "momentous." Rome said the decision "sends a powerful message to every Republican governor and state lawmaker that it's time to stop playing games with people's lives and to fully participate in Medicaid."

In neighboring Pennsylvania, Democratic lawmakers used Christie's statement as a cudgel to lobby Republican Gov. Tom Corbett to back an expansion. Corbett said earlier this year that he was not prepared to recommend an expansion.

House member Allyson Y. Schwartz, D-Pa., joined state Democratic lawmakers and the seniors' group AARP in calling on Corbett to support broadening the program in Pennsylvania.

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Federal Exchange to Handle States with Most Uninsured, Data Shows

By John Reichard, CQ HealthBeat Editor

February 28, 2013 -- At a time when federal officials are struggling to find the money to implement the health care law, it's clear from new data that it will be up to them to run the new exchange marketplaces in the states with the most uninsured Americans.

New data from Enroll America, established to boost coverage levels under the health law, show that 13 states account for two-thirds of the uninsured population. And an analysis of that data reveals that 9 of those 13 states will rely on the federally facilitated exchange to direct the uninsured to the appropriate coverage, offer them a menu of plans, determine their eligibility for subsidies, and handle enrollment, which is scheduled to begin on Oct. 1.

Of the 13 states, only California and New York are fully committed enough to carrying out the health care law (PL 111-148, PL 111-152) by setting up their own exchanges. Of the remaining 11, two—Michigan and Illinois—say they'll partner with the federal government on a marketplace. The remaining nine will rely on the federal government. They are: Virginia, Arizona, New Jersey, Pennsylvania, Ohio, North Carolina, Georgia, Florida, and Texas.

The Centers for Medicare and Medicaid Services has never revealed its budget for setting up the federally facilitated exchange. That has led to skepticism on the part of some analysts that CMS has the resources to mount much more than a bare-bones effort. But Gary Cohen, the director of the Center for Consumer Information and Insurance Oversight, recently assured Senate Finance Committee Chairman Max Baucus, D-Mont., that the implementation effort is on track.

Earlier this week, however, the White House Office of Management and Budget requested a $949 million increase in the CMS administrative budget, an indication it may be seriously underfunded. It did so in a list of fiscal 2013 spending changes it wants Congress to make in the next stopgap spending bill to keep the federal government going after the current measure expires at the end of March.

Under current law, the CMS administrative budget is in line for a sharp decrease during the rest of fiscal 2013, not the increase the agency wants. The CMS is supposed to cut the equivalent of 5 percent of its budget for the entire fiscal year, but because it must do so over 7 months not 12, the cut is around 9 percent. The reduction is part of the automatic spending cuts under the sequester provision of the budget control law (PL 112-25).

Medicaid expansion and the uninsured

The Enroll America data also show that five of the 13 states with the most uninsured residents do not plan to expand their Medicaid programs as of Jan. 1. They are Georgia, North Carolina, Virginia, Pennsylvania, and Texas.

Of that group, Virginia has signaled the possibility it will expand in mid-2014 but that's far from certain. The eight of the 13 whose governors are moving to expand Medicaid are: California, New Mexico, Florida, New Jersey, New York, Michigan, Illinois, and Arizona.

Ten million of the uninsured live in the top ten metro areas. Of these, seven are in states—and the District of Columbia—that are working to expand Medicaid. Three are not. The seven are: Los Angeles, with 2.8 million uninsured; New York City, 1.97 million; Chicago, 1.05 million; Riverside, Calif.,721,000; Miami, 632,000; Phoenix, 565,000; and Washington, D.C., 542,000. The three not in an expansion state: Dallas-Fort Worth, 1.12 million; Houston, 1.12 million; and Atlanta, 861,000.

Some states moving toward expansion may not actually do so. For example, Florida's governor Rick Scott favors expansion but the legislature may block him. And some states are still wrestling with whether to expand, even as the governors have spoken out against expansion. Pennsylvania and Indiana fall into that category.

The federal exchange will have some heavy lifting to do in many of the metro areas with the most uninsured. For example, it will have to serve five of the top ten with the most uninsured: Dallas-Fort Worth, Houston, Atlanta, Miami, and Phoenix. Enroll America data also show that 21 million of the uninsured live in the top 50 metro areas. Of these 50, 30 will be served by the federal exchange.

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CMS Fine-Tunes a 'Single, Streamlined Application' Crucial to Health Law Success

By Jane Norman, CQ HealthBeat Associate Editor

March 1, 2013 -- In just seven months, millions of Americans are expected to start filling out what's supposed to be an easy-to-understand application for health insurance coverage under the health care law.

Public comments on a prototype exchange application that the Centers for Medicare and Medicaid Services proposed were due last week. And there are plenty of suggestions for improvement.

Consumers completing the form online, on paper or over the phone will be asked questions about everything from the health insurance their employers offer to their citizenship status to their sources of income. The answers will determine whether they are eligible for the Medicaid health program for the poor, for a federal subsidy to help pay for insurance, or neither.

This application is only a first step. It does not include a menu of plans, nor does it allow consumers to sign up for coverage. That would be a next step after exchange officials process the application and let consumers know what programs and/or plans they qualify for.

Many of the uninsured may not be too familiar with the ins and outs of health insurance. And the ease with they can fill out the application for enrollment in these new marketplaces will be crucial to the Obama administration's push for wide enrollment and the success of the overhaul law's (PL 111-148, PL 111-152) goal to extend coverage to most Americans.

Times Will Vary

At first blush, the 21-page paper version is one bulky packet. At a national meeting of health insurance brokers and agents earlier this week, members of the crowd jeered when speaker Chiquita Brooks-LaSure of CMS referred to the development of a "single, streamlined application."

However, a closer look shows some of the size of the paper version is due to pages allocated for the details on the income and insurance status of up to six household members. Online, applicants would be able to quickly click through those options if they're not needed, in a "smart" process designed to pose questions to applicants based on their previous answers.

The size of it "might be a little scary when you pick it up," said Karen Davenport, director of health policy at the National Women's law Center. "But if you're a household of three, you're not doing all 21 pages."

Nonetheless, for many, the introduction of a new federal form to be used by millions of Americans for health coverage brings back memories of the rocky introduction of the Part D Medicare prescription drug benefit in 2006, when the Department of Health and Human Services was deluged with complaints by panicked and confused seniors and their families.

Judith Solomon, vice president for health policy at the Center for Budget and Policy Priorities, applauded the prototype as a "good first start" though she acknowledged it also might seem "somewhat daunting."

The reality, she said, "is that a lot of people are going to need help"—which they presumably will get through navigators, assistants, call-in centers and more.

In its formal comments, the center also recommended that the application should help people determine first if they are eligible for Medicaid or the Children's Health Insurance Program, so they don't have to answer the many detailed income questions relating to eligibility for advance tax credits.

Karen Pollitz, a senior fellow at the Kaiser Family Foundation and a former top CMS official, said the prototype is "actually quite good" and that there's only so much CMS can do because it has to meet so many of the law's requirements. "It's not super simple and that's not the fault of the application; that's just the rules under the ACA," said Pollitz.

There's some concern in particular among consumer advocates about possibly confusing questions about a family's current access to health insurance. Applicants are asked for the name of the "lowest cost self-only health plan" offered at their jobs, the cost of premiums for that plan and whether it meets the "minimum value standard."

America's Health Insurance Plans, which represents the insurance industry, said in its comment that one major problem with the application is that it does not allow consumers to also pick their preferred plan and enroll in coverage.

"While the new Exchanges are viewed as an opportunity to ease the process for consumers, unfortunately, the paper applications do not achieve this goal," AHIP said. Not knowing that the next step will be to sign up for coverage makes the process appear incomplete, insurers said.

"The applications must be amended to avoid confusion and provide clear explanations of the steps in the process the applicant should expect," said AHIP. "To fail to do so will confuse, disappoint and possibly discourage applicants from applying for coverage."

CMS is in the final stages of devising the application's prototype, and last week's deadline for comments fell just a month after the prototype's official release. Some observers predict the final version may emerge as soon as a month to 45 days, as the administration steams toward the scheduled open enrollment kick-off on Oct. 1. Consumer are expected to be able to continue to sign up through March 31, 2014.

In addition, states may opt to develop their own applications, which is allowed under the law with CMS approval.

Most to Sign Up Online

Federal officials anticipate that most people will apply for insurance online. CMS estimates that 4.3 million people will submit applications to the exchanges in 2014, of which 3.9 million are expected to use a computer. CMS expects nearly 2 million more applications in 2015 via all methods and 2.8 million in 2016.

Opinions differ on that expectation for online sign up. At a meeting at Kaiser in January, Nico Gomez, deputy chief executive of the Oklahoma Health Authority, said that nearly 80 percent of his state's Medicaid managed care population were signed up for the program via the Web.

But Tricia Brooks, research assistant professor at the Georgetown University Health Policy Institute, said studies they've done show there's a wide variation among states when it comes to online Medicaid enrollment, dipping as low as 10 percent in some. The government can adopt strategies to nudge people toward the Web but "you're not going to get everyone there," said Brooks.

Brooks also said that the application doesn't ask about people's pre-tax contributions to dependent care accounts, for example, that could affect the amount of their reported income and thus whether they qualify for assistance.

A CMS spokesman said the laws and regulations were reviewed as part of the development of the prototype, which already has been tested four times among groups of people who lack insurance. Tests have been undertaken in multiple cities across the nation via one on one interviews. People were watched and questioned as they completed the form, the spokesman said. Final tests were conducted in February, the spokesman said. According to CMS documents, the cost of data collection and development for the application is estimated at $834,000 between 2014 and 2016, with an additional annual $89,000 cost for the salary of one full-time employee.

CMS also estimates it will take the average individual half an hour to complete the online form for those who are applying for Medicaid or federal subsidies, compared to 45 minutes for the paper version. It will take less time for those who don't qualify for either program but still want to buy insurance through the exchange.

Enroll America, a nonprofit group that's working with partners to promote enrollment, said in its comments submitted to CMS that it's important to realize that no matter how much simplification takes place, the application will remain challenging. The organization's own research finds that people describe feeling confused, overwhelmed, worried and helpless about finding insurance—which makes it doubly important they have prominent reminders in the course of filling out the application where they can call or visit for help, said Enroll America.

That means the existence of help should be stressed at every "troublesome spot" in the application, said the group.

Brooks said she knows that officials are working hard to perfect the application but bumps in the road should be expected. "It'll be a work in progress," she said.

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CMS Issues Rules to Tame Premium Hikes, Launch SHOP Exchanges, Set Premium Subsidies

By John Reichard, CQ HealthBeat Editor

March 1, 2013 -- With the deadline bearing down on insurers for filing rate applications to sell coverage next year under the health care law, federal officials recently announced a series of regulations plans will need to help them set their prices and meet other requirements for offering coverage.

The regulations are part of a final rule and interim final rule dryly titled "notice of benefit and payment parameters." The regulations govern: the so-called Three R program to cushion insurers against possible early financial losses in the unfamiliar insurance exchange market, creation of "SHOP" exchanges to serve small businesses, and premium tax credits to help the uninsured pay for insurance and lower their cost-sharing expenses and changes to medical loss ratios.

In addition to the 536 pages of final and interim final rules relating to benefit and payment parameters, the Centers for Medicare and Medicaid Services also announced a separate 26-page proposal. That proposed rule relates to one set of requirements for SHOP exchanges while the benefit and payment parameters rule addresses other final SHOP requirements.

The federal Office of Personnel Management also issued final regulations governing multi-state plans offered in insurance exchanges. And the Internal Revenue Service issued proposed rules governing the payment of fees by insurers under the overhaul law (PL 111-148, PL 111-152). IRS also announced a June 21 public meeting in Washington, D.C., on the proposal.

This wave of new rules and proposals comes just a few weeks before insurers are scheduled to begin filing bids. "Plans can start submitting their bids and policy forms to the exchanges, including the federally-facilitated exchange, on April 1, 2013," said Robert Zirkelbach, spokesman for America's Health Insurance Plans, which represents the insurance industry. "They have 30 days to submit their bids and policy forms and related data templates for approval."

The elements of the Three R program are risk adjustment, risk corridors and reinsurance.

Risk adjustment of premiums adds to the revenues an insurer gets if it has a disproportionate number of bad insurance risks and subtracts from their revenues if it has a disproportionate number of good risks. Risk adjustment aims to eliminate the incentives insurers have to "cherry pick"—to avoid enrolling people with costly chronic medical conditions.

A CMS fact sheet on the regulations announced last week says that the Department of Health and Human Services is making final the risk adjustment methodology officials will use when a state elects not to do its own risk adjustment program. "The final rule also provides a framework for the agency's approach to validating risk adjustment data," the CMS fact sheet says. "HHS will consult with stakeholders on this approach to data validation before finalizing further details."

The reinsurance program runs for three years. It's designed to reduce premiums and ensure market stability by helping insurers cover the costs of high-risk enrollees in the individual market, CMS says. "It will lower premiums in this market by an estimated 10 to 15 percent in 2014."

The risk corridor program also is temporary and will "protect against uncertainty in rate setting for qualified health plans by limiting the extent of issuer losses and gains," the fact sheet says. "The rule finalizes additional technical details on how issuers will account for profits and taxes in their risk corridors calculations," according to the agency.

The notice of benefit and payment parameters also addresses the subsidies low and middle income uninsured Americans will get to buy coverage in the exchanges. These are technically known as advance refundable premium tax credits. HHS made final its proposal for determining the amount of the subsidies. It also finalized its proposal for charging lower income Americans lower cost sharing under the insurance they get and for directly reimbursing insurers to compensate them for the lower cost-sharing they charge this group.

The new rule also changes the medical loss ratio regulation that requires insurers to pay rebates to consumers if they exceed certain levels of profit and administrative expense and do not spend enough of the premiums they receive on medical care and quality improvement. HHS is pushing back a deadline for insurers to report how much they spend in each category. Instead of June 1, the insurers have until July 31. Their annual deadline for issuing any required rebates is now Sept. 30 instead of Aug. 1. HHS also is allowing nonprofit tax-exempt insurers to deduct certain "community benefit" expenditures and state premium taxes from premiums in calculating medical loss ratios and rebates.

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Health Care Policies Focusing on Quality Instead of Volume, Official Says

By Melissa Attias, CQ Roll Call

February 28, 2013 -- Policies aimed at moving the health care delivery system toward a focus on value rather than volume of services are showing signs of progress, an Obama administration official told the Senate Finance Committee last week.

Jonathan Blum, the head of Medicare at the Centers for Medicare and Medicaid Services, pointed to four pieces of information that he said are reasons for optimism. But Finance Chairman Max Baucus indicated that he wants his panel be kept in the loop as the new efforts are implemented and to work out a system to share interim results.

"We want to keep informed and, frankly, just keep your feet to the fire," said Baucus, D-Mont.

As the first of his four points, Blum said there are more than 250 accountable care organizations in operation that serve more than 4 million people in Medicare. The model brings teams of doctors and other providers together to coordinate care and allows them to get a share of the savings if they provide high-quality care using less money.

Blum also noted that hospital readmission rates are starting to decrease. The 30-day readmission rate fell to 17.8 percent in the last quarter of 2012 after varying between 18.5 percent and 19.5 percent for the past five years, according to his written testimony.

In addition, Blum said 37 percent of the people enrolled in Medicare Advantage—or private health plans in Medicare—are in a four- or five-star rated plan, with five stars representing the highest quality. Four years ago, that number was 16 percent, he noted.

But Blum said he was most excited that the growth rate of Medicare spending per beneficiary has been historically low for the past three years.

"To be sure, we have more work to do, but the work to date and the data that we are seeing should give us great hope that we can bring Medicare to sustainable financial footing and to improve the quality of care," said Blum, who is the acting principal deputy administrator of CMS and director of the Center for Medicare.

In response to a question from Baucus, Blum later noted that while he thinks the new payment policies and care models are producing results, the challenge is how to assign cause and effect. He also said many projects were started in the last one to two years and that they expect it to take two to three years for the results to be fully seen.

Senators from both parties also used the hearing to quiz Blum about a number of issues related to Medicare and the 2010 health care law (PL 111-148, PL 111-152), including payment reductions to Medicare Advantage that CMS is considering. Orrin G. Hatch of Utah, the top Republican on the Finance Committee, said external estimates say the combined effect of the impending budget sequester, the health care law's cuts and higher taxes, and other policies will cause at least an 8 percent cut to the program in 2014.

Blum said part of the reason that reduced rates are being proposed is that overall Medicare spending is lower. He also maintained that Medicare Advantage enrollment has grown since passage of the overhaul and that premiums have decreased.

Hatch, along with House Energy and Commerce Chairman Fred Upton, R-Mich., and House Ways and Means Chairman Dave Camp, R-Mich., recently sent a letter to CMS Acting Administrator Marilyn Tavenner about the payment issue. The Republicans outlined a number of concerns and asked for a written response by March 15.

During the hearing, Republican Sen. John Thune of South Dakota also questioned why the so-called Independent Payment Advisory Board is necessary given the initiatives that CMS is implementing to improve outcomes and reduce costs. The board was established under the health care law to make cost-cutting recommendations if Medicare spending exceeds target growth rates.

Blum said he couldn't speak to the board directly because it's not part of CMS, but he maintained that it is helpful to have pressure from boards and Congress to keep spending low.

"The pressure needs to stay on," Blum said. "There are multiple ways to receive that pressure."

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The Aging Population: A Crisis in Plain Sight

By Jane Norman, CQ HealthBeat Associate Editor

February 25, 2013 -- The stories are ubiquitous and intensely personal. You hear them at work, at dinner parties, at kids' soccer games. Someone's mother, or widowed dad, or favorite aunt, or disabled brother needs long-term care—and that person has no idea where to turn for help.

Where will these loved ones live? Who will pay for their care? How can they live out the rest of their lives with as much choice, independence and dignity as possible?

Providing long-term-care services and support for the elderly and people with disabilities arguably is the biggest problem in health care policy today. Ten million to 12 million Americans are in need of some kind of long-term care, ranging from regular visits by home-health aides to around-the-clock attention in a nursing home. Most people don't plan for this expense. And yet most would do anything to avoid living out the end of their lives in a "home" or in a way that puts a physical and financial burden on their families.

No national strategy to finance and provide long-term care exists in the United States. Congress attempted a small step in 2010, creating a voluntary long-term-care insurance program as part of the health care law. But that program, known as the CLASS Act, was repealed last year after the Obama administration determined it was financially unsustainable. Private insurance exists to cover some long-term-care expenses, but it's expensive and is purchased by relatively few people. Most of the time, families provide the care at first and then turn to the overburdened, cash-strapped, complex Medicaid program when the money runs out. Some also argue that because Americans assume Medicaid will always be there as a last resort, they don't make plans for long-term care.

"It's hard to engage public officials in a discussion about this because it sounds expensive and insurmountable," says Bruce Chernof, president of the SCAN Foundation, which aims to raise public awareness about the need for a plan for long-term care. Chernof recently was appointed to a commission created last year by Congress to study the issue.

"The public is not engaged," he says, noting that most Americans assume they'll live into their 90s and die quickly of a heart attack. "We have a reality issue."

As the 80-million-member baby boom generation moves beyond the healthy years of early retirement and grows increasingly frail and ill, this national crisis will accelerate. It's true that Americans born after World War II are healthier than previous generations, but age will catch up with them—as will the medical problems attendant to growing older. Moreover, boomers are likely to live longer as medical treatments continue to improve and help them stave off death.

"We're about 10 years away," says Jesse Slome, who leads an association of long-term-care insurers. "There's going to be a big difference between being 65 and walking slowly, and being 75 and you can't get out of bed."

The few national policy ideas floating around include the small-scale proposal to provide tax incentives for private insurance, and the much larger-scale notion of creating a mandatory system of social insurance to underwrite the kinds of services that will be demanded. The new high-level commission, whose congressional mandate is to make recommendations to lawmakers for how to address this growing need, is supposed to begin its work soon.

Researchers estimate that 70 percent of baby boomers as they age will need assistance of some kind—in their own homes or in some sort of care facility—for three years on average. It's also noteworthy that many people who need extended care aren't elderly. People of all ages with physical and intellectual disabilities need assistance throughout their lives, although most federal and state long-term-care spending is strongly tilted toward seniors because so much is spent on nursing homes, according to research published in the journal Health Affairs.

By 2020, about 15 million people will need aid from some kind of caregiver, and by 2050 the number may reach 27 million, according to projections by the Department of Health and Human Services.

"Everyone thinks of it as a special interest group, and it's all of us," says Connie Garner, executive director for Advance CLASS, a coalition of groups that supported the CLASS Act.

But a resolution of this issue is very difficult politically at a time when the Medicare and Medicaid programs are being eyed for spending cutbacks or, at a minimum, will be left alone. More than two decades ago, an earlier commission created to study the issue that was the brainchild of Rep. Claude Pepper, a Florida Democrat, called for a long-term-care program that would have cost $42.8 billion even then.

On top of that, the National Bureau for Economic Research reports that spending on long-term care has been growing faster than other health care expenditures, and says that trend will continue over the next four decades.

The Insurance Option

Private long-term-care insurance is available and resembles other insurance plans—regular premium payments are made in exchange for future covered benefits. Depending on how much beneficiaries are willing to pay in premiums, policies cover anything from help with bathing or toileting in the home to lengthy nursing home stays. Some employers, including the federal government, offer policies—usually unsubsidized—but mostly this insurance is sold to individuals.

And it's pricey. The Congressional Research Service says the average annual premium in 2010 for people aged 55 to 64 was $2,255, up 71 percent since 1995. While some of that increase was due to better benefit packages and higher daily benefit amounts, some was due to premium increases for policyholders, CRS says. Insurance companies blamed price increases on low interest rates that constrained the return on their investments.

Moreover, not everyone can buy long-term-care insurance. People with pre-existing health problems, for instance, might be denied coverage entirely, just as with ordinary health insurance.

The Urban Institute says 7.6 million Americans who were 55 and older had such private policies in 2008, amounting to 10.7 percent of that age group. Several companies have left the long-term-care market since 2010, although the industry says those that continue to write policies have a vast pool of potential buyers. Figuring out which policy to buy is also often confusing, however, even with the help of an agent, because there are so many variables. Such insurance is regarded as a niche product.

For those who don't choose to try to insure against the cost of long-term care, the remaining options are few and not always satisfactory.

Seniors with equity in their houses or other savings can sometimes afford to move into assisted living communities, for which the national average monthly base rate was $3,550 in 2012, according to a survey by MetLife Insurance. In some cases, family members pick up the tab if money runs out, nursing home care is needed and a Medicaid-financed bed isn't available. But a private room in a nursing home now tops $90,000 a year, MetLife says.

For those who want to live at home for as long as possible, assistance can be obtained from home health aides. But that isn't inexpensive, either: National average pay is $21 an hour, MetLife says.

Beyond insurance and out-of-pocket pay for private help, there are two main sources of long-term care. The first is Medicaid, the open-ended state-federal program for the poor and people with disabilities that will foot the bill for nursing home care in specific circumstances. The second is unpaid family members or friends who are willing to perform nursing tasks once reserved for professionals while coping with the not-insignificant stress of juggling the other needs of their lives with caregiving.

According to the SCAN Foundation, 87 percent of Americans who need long-term care get it from unpaid caregivers. They most often require help with getting out of bed, getting dressed and bathing or showering, AARP research has found.

This group includes older people with serious conditions. More than 15 million Americans provide unpaid care for people with Alzheimer's or dementia, AARP says.

Medicaid: The Final Choice

Many seniors and their family members think that Medicare, the health care program for the elderly and disabled, will foot the bill when someone needs help for months or years on end. But, except in limited circumstances, such as medically necessary recovery from surgery and rehabilitation, that isn't the case. Medicare pays for doctor and hospital bills, and short-term institutional care while a patient is in recovery, but Medicaid is the long-term-care system's safety net.

Depending on the state, Medicaid will in some circumstances also pay for such services as home health aides or adult day care. The 2010 health care law also included some incentives. The Kaiser Commission on Medicaid and the Uninsured says states have made considerable progress in recent years in trying to provide long-term-care services in the home or community, but recent budget problems have slowed these efforts. Waiting lists for services are long and make it difficult to take advantage of them.

Yet much of the time, Medicaid still means nursing home care at a facility with Medicaid beds available, which may or may not be convenient for or acceptable to family members.

The difficulty is, Medicaid was never intended to be the backstop for an entire system of long-term care. Nonetheless, "Medicaid is the nation's primary payer of long-term services and supports," says the Kaiser Commission. Out of $342 billion spent on long-term care in 2010, Medicaid paid 41 percent, says the Kaiser group. Already under strain, Medicaid is facing cutbacks and changes to make it less costly. Plus, Medicaid is very complicated for families to understand.

Medicaid policy requires seniors to spend down almost all of their own money, and dispose of most assets, before they qualify. "I was personally familiar with it because I went through it with my mother," says Dave Heymsfeld, a policy adviser to the American Association of People With Disabilities.

"She was getting home care and then couldn't afford it anymore and went to a nursing home. She used up all her assets for that," Heymsfeld says. "Eventually she got to the point where she qualified for Medicaid, but she didn't live long enough to actually get the benefits."

Heymsfeld's mother is one of many. "There are an awful lot of people like that," he says.

At the same time, Medicaid is consuming more and more of government budgets. Although the growth of health care spending including Medicaid has slowed nationally, the Congressional Budget Office predicted in February that overall federal Medicaid spending will more than double from $251 billion in fiscal 2012 to $572 billion in fiscal 2023. A large portion of that increase will be the result of changes in the health care law that extend Medicaid insurance coverage to low-income adults under 65 in 2014, depending on state decisions. Leonard E. Burman, a professor specializing in public finance at Syracuse University, forecasts that federal and state spending on Medicaid will rocket past defense spending by 2040, when 80 million Americans will be 65 or older.

Qualifying for Medicaid means that seniors must prove they have few assets, excluding a car and a home. Individuals over 65 generally qualify for Medicaid's long-term-care coverage if they have assets of less than $2,000 to $3,000 and meet income limits that vary and are set by states. For example, in Ohio, a single senior can't have an income of more than about $589 a month.

Eligibility standards were tightened in a 2005 deficit reduction law, but Republicans in Congress and some governors recently have raised questions about whether too many people are sheltering their assets through purchase of annuities that are exempt from the asset limitations.

Moreover, the existence of Medicaid serves as an excuse not to plan, they contend. "Estate planning for Medicaid discourages individuals from engaging in meaningful financial planning that would enable them to take greater responsibility for their future long-term care needs," New Mexico Gov. Susana Martinez, a Republican, wrote in a recent letter to members of Congress.

Ignoring Reality

Long-term care has not exactly been a front-burner issue for politicians. During the 2012 presidential campaign, President Barack Obama and his Republican challenger, Mitt Romney, fought over the future of Medicare. But there was mostly silence about what to do about long-term care. What was said centered on whether or how Medicaid should be cut or its money redistributed to the states, rather than any plans for rethinking the system, including long-term care.

The issue was perhaps last put forward plainly in a presidential campaign by Hillary Rodham Clinton during her primary race against Obama in 2008. Clinton, who unsuccessfully tried to revamp the nation's health care system during her husband's presidency, notably tackled long-term care in a speech in Waukee, Iowa, in August 2007.

"The good news is, we are living longer, and we are living healthier lives. But we still have to figure out how we are going to get our system to catch up with what is the reality of life today," Clinton said, citing growing Medicaid costs for long-term care. "Medicare also faces significant financial challenges [that] are driven by the spiraling cost of health care. And unfortunately we are not addressing any of these issues and planning for the future."

In remarks to the Democratic National Convention last summer, her husband, Bill Clinton, talked about long-term care, too, although in the context of defending it from Republican proposals to reduce funding.

"A lot of folks don't know it, but nearly two-thirds of Medicaid is spent on nursing home care for Medicare seniors who are eligible for Medicaid," said the former president. "And a lot of that money is also spent to help people with disabilities, including a lot of middle-class families whose kids have Down syndrome or autism or other severe conditions.

"And honestly, just think about it," he continued. If cuts to Medicaid happen, "I don't know what those families are going to do."

HHS makes a stab at educating people about costs and choices, most prominently through an online National Clearinghouse for Long-Term Care Information.

But HHS acknowledges the limits of government intervention. "The proportion of adult children providing personal care and/or financial assistance to a parent has more than tripled over the past 15 years," the department's website notes.

Rise and Fall of CLASS Act

The most notable effort at changing the country's response to long-term care needs recently crashed and burned, leaving the issue perhaps even tougher to tackle.

Beginning about a decade ago, Sen. Edward M. Kennedy, a Massachusetts Democrat, and his staff began formulating the program that became the CLASS Act. A signature measure for Kennedy, supporters won its inclusion in the 2010 health care law after his death in August 2009. The voluntary program was supposed to provide a $50 daily cash benefit for people with disabilities, financed by premiums from workers. Anyone with any health condition could sign up to pay premiums. Even if it didn't finance nursing home care it still could provide enough help to keep people off the Medicaid rolls, advocates felt.

But the measure elicited withering criticism from Republicans and even such Democrats as Sen. Kent Conrad of North Dakota, who retired in 2012 and famously dubbed the CLASS Act a "Ponzi scheme of the first order" because it would begin collecting premiums right away but wouldn't pay benefits for years.

"It became a symbol of what people did not like about Obamacare," says Larry Minnix, president of LeadingAge, which represents nonprofit organizations that are involved in providing long-term-care services.

Unable to come up with a way to make the law work financially, HHS announced in October 2011 that the CLASS Act wouldn't be implemented, to the great disappointment of advocates who felt it still could be made to function. At a minimum, they wanted to see an advisory committee appointed that was supposed to go along with the program.

They got their wish, in a way. When the CLASS Act withered away, West Virginia Democratic Sen. Jay Rockefeller cooked up the idea of a national commission on long-term care that would report to Congress on solutions.

The CLASS Act was formally repealed in January as part of the fiscal-cliff law, and Rockefeller's Commission on Long-Term Care was created in the same law. The temporary 15-member panel was modeled on other independent health care panels and will have six months after its members are appointed to come up with proposals for Congress.

At the end of their work, commission members will make their recommendations through a majority vote and submit them to the president, House and Senate. The law requires that the commission's recommendations then be introduced in both chambers the first legislative day after the panel submits them, which means that some kind of comprehensive measure might come before Congress by next fall.

Lawmakers, though, are under no obligation to vote on the recommendations, which means they might wind up on the same dusty shelf as other ideas advanced over the years. The group also will be dominated, 9-6, by Democrats, leading to skepticism among Republicans about whether their input will even be considered.

Already two of the appointees are shaping up as strong advocates for partisan points of view. Democratic appointee Judy Feder, a professor of public policy at the Georgetown Public Policy Institute, is a former congressional candidate who was staff director of the Pepper Commission in the late 1980s. Grace-Marie Turner, a Republican appointee who's president of the right-leaning Galen Institute, is a leading GOP voice on health care and wrote a book titled "Why Obamacare Is Wrong for America."

Solutions Scarce

The public is also skeptical. One recent study showed that many surveyed lacked confidence they could pay for the costs of their parents' long-term care, or their own.

Still, advocates for better long-term care, a contingent that has remained hopeful despite political losses, say there are solutions. Some are complete overhauls and others are fixes to the current system.

For instance, private insurance might be made more affordable and attractive through tax incentives. Public-private partnerships might be formed for the sale of highly regulated private long-term-care insurance policies. Or the nation might move toward a nationalized system of mandatory social insurance for long-term care, such as Japan and Germany have done.

The new commission will have plenty to think about. "I'm optimistic," says Katherine Hayes, director of health policy at the Bipartisan Policy Center. "I would expect to see some kind of public- and private-sector options."

New approaches might be considered for increasing the demand for private long-term-care insurance. One way would be for Washington to provide tax incentives to lower the after-tax cost of policies, and at the same time increase protections for consumers. Surveys by the insurance industry have found that people would be more interested in buying policies if they could deduct premiums from their taxable income. However, some states already have tried increased incentives with little effect. "The modest ability of state tax incentives to lower premiums implies that they should be viewed as a small piece of the long-term-care financing puzzle," Harvard Medical School researchers reported.

In a notable policy shift, the United States might look overseas for a model of a system that could be incorporated as part of Medicare. Two decades ago, Germany and Japan adopted mandatory, universal long-term-care systems based on social insurance. Those might serve as models for a U.S. system. But lawmakers shied away from a mandatory system for the CLASS Act and enactment in a time of budget constraints would be politically very difficult.

Some advocates have suggested trying to revive and revise the CLASS Act. Howard Gleckman of the Urban Institute, an expert who has written extensively on long-term-care policy, has outlined a way to do that. But CLASS stirred so much controversy it's not clear how to achieve that politically unless the makeup of Congress changed.

"I don't see how the passage of time is going to make the technical issues go away," says Thomas Wildsmith of the American Academy of Actuaries, which is conducting its own research into long-term care.

Other advocates talk about a public-private partnership in which the federal government either sets up long-term-care insurance exchanges or uses the existing health insurance exchanges to organize the sale of private policies. Participation could be voluntary or mandatory, with incentives in the system built in to encourage sign-up sooner rather than later, researchers Gloria Eldridge and Joanne Lynn suggested in a piece in Health Affairs.

If the current system is to be kept in place, the Centers for Medicare and Medicaid Services is launching demonstration programs in states intended to show ways to better provide care for those known as dual eligibles, the 9 million people who qualify for both Medicare and Medicaid and tend to be the sickest and frailest in public programs. The idea is to provide care in their homes or communities, rather than institutions, at lower cost, and those projects could be expanded or implemented on a national scale.

Coordination across Medicaid and Medicare for these patients is widely regarded as poor, even by those who run them. "Although established at the same time, Medicare and Medicaid were designed with distinct purposes but with little forethought as to how the two would work together," Medicaid director Melanie Bella told the Senate Finance Committee recently. Some states, such as Florida, have sought federal permission to move these patients into managed care, although there's doubt about whether that will work.

Overshadowing everything is the huge cost of the current approach. House Republicans worried about government spending are interested in tightening the requirements for Medicaid admission and reducing the number of people who are eligible. After Rep. Charles Boustany Jr., a Louisiana Republican, solicited their opinions, state officials complained to him about too many people hiding their assets. Boustany also wants to look at ways to increase consumer education about the costs of long-term care so people will save more before they grow old—although that might be tough given stagnant incomes and investments hammered by the recession.

What is certain is that the ravages of age will escape few Americans. Family after family will continue to receive "the phone call" that changes their lives, as is related in Gleckman's moving book "Caring for Our Parents."

"With just a few words, my family was sent plummeting into a painful, mysterious and all-consuming world for which we were completely unprepared," the Urban Institute expert wrote, recalling the moment when he and his wife learned his mother-in-law had a debilitating stroke.

In 1990, the Pepper Commission issued its report calling for widespread changes in the nation's health care system, including a blueprint for long-term care. The commission, in words almost identical to those used by advocates today, described the plight of families "whose emotional and financial resources are exhausted from providing long-term care to frail parents or disabled children." Americans should have the security of knowing that they are not on their own, the commission said.

But Congress didn't act on those recommendations then, and many are skeptical that a report from the new commission will fare any better. For now, though, it's the best hope for those advocating for change.

"It's a critical dialogue that we need to be having. I'm optimistic that recommendations will move forward," says Jane Hyatt Thorpe, an associate professor in the department of health policy at George Washington University and a former CMS official. "But you never know. There are a lot of different priorities right now."

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