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A new federal benefit that would include taxpayer subsidies and cover the continuum of long-term care services, including residential care and home- and community-based services, would address some of the current issues with long-term care financing and payment, according to the authors of a new paper published in JAMDA, the official journal of AMDA – The Society for Post-Acute and Long-Term Care Medicine.

A reimagined long-term care financing system, the authors said, could take several forms, from a Medicare-based benefit to a federalized Medicaid benefit, or even a new program. The essential part of the equation is making it a federal benefit, they said.

“What we propose is a little different from other funding proposals in that we emphasize several key attributes of such a funding system — that it cover all older adults, not just those who spend down to Medicaid; that it cover the spectrum of care, from home-based to nursing homes; and that it will require taxpayer subsidies like other Medicare programs to be feasible,” Tamara Konetzka, Ph.D., a professor of health services research at the University of Chicago and one of the study’s authors, told McKnight’s Senior Living. “Other proposals that depend on key roles for private long-term care insurance or continue to depend mostly on Medicaid seem to us, destined to fail.”

The proposal, she said, is meant to spark conversation and would require number-crunching to figure out critical details, such as benefit periods and amounts.

The paper points out that care has been moving steadily into the home over the past few decades — in 1990, 87% of Medicaid spend on long-term services and supports went to institutional care such as nursing homes, compared with today, where more than half goes to HCBS (assisted living also can be considered “home.”). But because coverage of HCBS is a state decision, access varies significantly by state.

Middle-income older adults, they said, are most at risk because they are unlikely to have the resources to pay for private-pay options, including independent living and assisted living. This “gaping hole” means that many middle-income older adults will have unmet needs, the authors said. 

When it comes to assisted living, Konetzka said if all older adults had a long-term care benefit triggered through functional and / or cognitive impairment, then the use of assisted living versus home care versus nursing home care would be more of a decision based on what setting best meets the needs of an individual. Assisted living providers interested in accepting such a Medicare benefit likely would need to be certified, which would bring some associated changes.

“Unlike other sectors that are already heavily dependent on public funding, assisted living providers could face more substantial decisions — whether to stay private-pay or to undergo certification and whatever comes with it,” Konetzka said. 

The study authors promote extending Medicare to cover long-term care for older adults because it avoids the current approach, for which individuals are qualified for Medicaid after they spend down their assets. The new approach, they said, would spread the risk across all beneficiaries instead of being an “implicit tax of the entirety of one’s wealth” imposed only on those who need long-term care.

The authors lay the responsibility for initiating a new program on Congress, saying that “retaining the status quo remains the far greater risk.”

“These problems — that became only too obvious during the COVID-19 pandemic — will only be amplified as the U.S. population ages and LTC needs grow, straining state Medicaid budgets and exhausting personal resources,” they concluded.