Growing Older / Liz Taylor
Reality check: Government doesn't pay for care
DEAR READERS: On June 30, I began a six-part series on long-term care insurance that will appear every other Monday through the summer. The first column described the seismic demographic shifts that are reshaping our futures, forcing all of us to plan seriously for becoming old someday. Today's column addresses the vital question: If you need care, who pays?
Imagine you're about to go on a wonderful trip. You've been dreaming about this adventure for years. Your bags are packed. A taxi's outside waiting to whisk you to the airport. Suddenly you realize: You don't know where you're going. You have no plane ticket, no hotel reservation. Worse — you didn't save any money for this trip!
Sound crazy? The fact is, this is the way most of us age — accidentally, without planning or forethought. Paper bags over our heads, we march through life pretending we'll never get old. Or, if we get old, we won't get sick. If we get sick, we won't need care. Denial leads to inaction, and inaction leads to calamity when — surprise — most of us do get old, and many of us become incapacitated long before we die, some for years. Trouble is, we don't know who or for how long. Well, it's time to deal with it.
Long-term care services are expensive, primarily because they're highly labor-intensive and needed over a long time. An AARP study reveals that most Americans don't know what they cost or who pays for them — though they think they do. To protect your future, take off those rose-colored glasses. Having worked in the aging field almost 30 years, I have two firm beliefs:
One, you don't want to wait until you're 90 and sick to discover you're not covered. And two, how you pay for care is the No. 1 factor in determining its quality, the choices you have and the amount of control you'll have over what you get.
So who pays? Most people think the government does and assume it's theirs for the asking. Here's the reality:
Medicare covers two critical health needs of older people — doctor and hospital bills, not long-term care. While it does pay for a tiny portion of home and nursing-home care, it does so only while you're getting rehabilitated, and then, only for a short time. If you're not likely to get better quickly (and most older people won't), Medicare won't pay a dime.
Medicaid is the "safety net" that provides long-term care services free for the very poor. Medicaid is part of the welfare system, run by the Department of Social and Health Services. It wasn't meant — ever — to pay for the care of people who can pay for it themselves.
The Veterans Administration pays for care, but only if you have a severe service-related disability. The vast majority of vets don't qualify.
So, if the government doesn't pay, who does? The answer: You do, just as you've paid for your car, your home, the food you eat — and everything else you've used all your life. It's not a fun way to spend your money, but it's the price we pay for having better living standards and medical care and, thus, longer lives.
But wait a minute — there's a huge disconnect here. I said Medicaid was intended for the poor, yet it's being treated as an entitlement program full of goodies by the middle class. People who wouldn't dream of cheating on their taxes quickly turn over their house and assets to their kids to qualify for Medicaid's free care. An army of elder-law attorneys and other financial "advisers" stand ready to show them how. I attended a conference recently at which the main speaker, an attorney, casually bragged about putting a couple with $3 million on Medicaid.
Remember the last legislative session? As low-income children were considered fair fodder for losing health insurance as a way to staunch a huge budgetary shortfall, the loopholes that allow affluent older people to go onto Medicaid remained untouched.
If you're tempted to go down this path, first consider our state's dirty little secret: Medicaid provides rock-bottom, lousy care.
First, it doesn't pay adequately — typically 20 to 30 percent lower than the private-pay market. Medicaid has never paid adequately for care. It never will. This is tax money — welfare!
As a result, many care providers won't accept Medicaid, especially the good ones. Thus, we've created a two-tier system — with a wide array of high-quality choices for those who pay privately, and significantly fewer, sometimes dreadful options for those on Medicaid. Because of budget cuts, it's getting worse.
Which brings me to my third point. If you've noticed, voters are cutting taxes as fast as they can — not just in Tim Eymanland, but all over the country. Taxes pay for Medicaid.
Fourth, Medicaid is the fastest-growing segment in most state budgets, gobbling up ever more resources. We are an aging nation with rapidly escalating needs, but now we're going backward. The system is unsustainable.
Last month, Colorado and California announced they were suspending payments to nursing homes because they've run out of Medicaid money.
Soon the rubber's going to meet the road. Today's older generation — 35 million people — are in their 80s and 90s. The next older group — 30 million — are in their 60s and 70s. Then, hold onto your hat, here come the boomers — 76 million people now in their 40s and 50s. First they overwhelmed the schools, then the job and housing markets, and soon, retirement services and longterm care.
Without substantial changes, the U.S. Government Accounting Office reported — before the war in Iraq, homeland security, President Bush's recent tax cuts and the new drug benefit to Medicare — that spending for Medicare, Medicaid and Social Security (the boomers' retirement income) will outstrip the federal budget in just 10 years. By 2030, it said, there will be no money for other federal priorities.
I don't know about you, but I want to be in charge of my old age, able to buy the high-quality care I'll need. So, three years ago, at age 54, I bought long-term care insurance to protect my future. In my next two columns in this series (July 28 and Aug. 11), I'll explain the six critical elements I looked for in a policy.
Liz Taylor, a specialist on aging and longterm care, consults with families and teaches workshops on how to plan for one's aging — and aging parents. E-mail her at email@example.com or write to P. O. Box 11601, Bainbridge Island, WA 98110.
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