Hole torn in a dollar bill with Medicaid text
(Credit: zimmytws / Getty Images)

Public policy needs to address flaws in Medicaid funding and encourage private planning for long-term care, according to experts speaking Tuesday during a panel discussion hosted by the Paragon Health Institute.

“Long-term care in America is broken. It’s marked by nursing home bias, too little home care, dubious access and quality, inadequate caregiver shortages, stressed out unpaid family caregivers and growing complaints of structural racism,” said Stephen Moses, president of the Center for Long-Term Care Reform and author of “Long-Term Care: The Problem” and “Long-Term Care: The Solution.”

The center promotes universal access to quality long-term care by encouraging private financing as an alternative to Medicaid for most Americans.

“Everyone bewails these problems, but few ask or explain their cause. Most jump to solutions that involve more government money and regulation, but arguably government money and regulation cause these problems,” Moses said. 

The lure of “social insurance,” he said, has prevented policymakers from thinking clearly about potential market-based options.

According to Moses, Medicaid created a “moral hazard” that discourages consumers from using their private savings to pay for their long-term healthcare needs, and it places the burden on taxpayers to pay for such expenses.

“Keeping Medicaid long-term care easy to get while preserving exempt wealth but with later estate recovery as an incentive to plan did not work,” Moses previously told the McKnight’s Business Daily.

The solution, he added is for Medicaid to be used only as a “safety net” for lower-income and indigent individuals. 

“To achieve that objective, we propose to end all Medicaid rules that enable people with substantial income and assets to qualify,” Moses said Tuesday. 

Richard W. Johnson, senior fellow and director of the Program on Retirement Policy at the Urban Institute, noted that “about half the population will never use paid long-term care.” But for those who do need professional care, he said, the risks are not spread evenly across the population.

“Women are more likely to need care than men. People of color are somewhat more likely to need care than non-Hispanic white adults and, importantly, less-educated and lower-income adults are more likely to need care than those with more education and more financial resources,” Johnson said. 

“One thing I would emphasize is the heterogeneity among the older population, and in particular, that there’s a lot of people who are going to be just fine, but there’s a small group who are going to develop serious long-term care needs, and many of them simply do not have the funds to prepare themselves for that eventuality,” he added.

Mark J. Warshawsky, senior fellow at the American Enterprise Institute and former deputy commissioner for retirement and disability policy at the Social Security Administration, said that he largely agreed with Moses’ assessment of the public funding challenge.

“I think he has accurately identified the Dr. Jekyll / Mr. Hyde aspect of Medicaid for long-term care benefits,” Warshawsky said. 

“Although on the one hand, it is marketed and it’s understood in the public mind and among policymakers as a program for the poor, when it comes to long-term care, the reality is that it’s a program for not just the poor, but for the middle class, the upper middle class, and even the wealthy,” he added. “You just look on the internet and type in Medicaid planning, and you’ll get literally hundreds of lawyers that will tell you how to do it. But even without hiring a lawyer, there are some very simple ways of becoming eligible for Medicaid with significant income and assets.”

Although flaws in the Medicaid program may need to be addressed, Johnson said that he doesn’t think that doing so will completely solve long-term care financing issues.