Tag: Medicare

How Can America Handle The Costs Of Elder Care?

The Daily Escape:

The start of US Highway 6, outside of Bishop, CA – September 2023 photo by Steve Wolfe

(There will be no Saturday Soother this week. Wrongo is on the road.)

Millions of older Americans from the Silent Generation and the Baby Boomers are facing a dilemma as they “age in place.” They must figure out how to pay for increasingly complex medical care. The NYT quotes Richard W. Johnson, director of the program on retirement policy at the Urban Institute:

“People are exposed to the possibility of depleting almost all their wealth….”

The prospect of dying broke is an imminent threat for the Boomers. About 10,000 of them turn 65 every day between now and 2030. They’re expecting to live into their 80s and 90s at the same time as the price tag for long-term care (LTC) is exploding. Currently LTC expense is outpacing inflation and approaching a half-trillion dollars a year, according to federal researchers.

By 2050, the population of Americans 65 and older is projected to increase by more than 50% to 86 million. The number of people 85 or older will nearly triple to 19 million. The Times has a chart of how many of those who need long-term care will die broke:

Some older Americans have prepared for this possible future by purchasing LTC insurance back when it was still affordable. Since then they’ve paid the monthly premiums, even as those premiums continued to rise. But this isn’t the norm. Many adults have no plan at all or assume that Medicare, which kicks in at age 65, will cover their health costs. But Medicare doesn’t cover the kind of long-term daily care, whether in the home or in a full-time nursing facility, that millions of elderly Americans require.

For that, you either pay out-of-pocket or you spend down your assets until you have less than $2,000 in assets in order to qualify for Medicaid. Remember that Medicaid provides health care, including home health care, to more than 80 million low-income Americans.

And even if you qualify, the waiting list for home care assistance for those on Medicaid tops 800,000 people and has an average wait time of more than three years.

Here is a snapshot of how long-term care is paid for in the US:

Governments provide 71.4% of the total. The largest non-government source is people who pay out-of-pocket, and private insurance is becoming increasingly expensive. More from the NYT:

“The boomer generation is jogging and cycling into retirement, equipped with hip and knee replacements that have slowed their aging. And they are loath to enter the institutional setting of a nursing home. But they face major expenses for the in-between years: falling along a spectrum between good health and needing round-the-clock care in a nursing home.”

That has led them to enter assisted-living centers run by for-profit companies and private equity funds. The NYT says that about 850,000 people aged 65 or older now live in these facilities and when in them,  they are largely ineligible for federal funds. Some facilities provide only basics like help getting dressed and taking medication while others offer luxury amenities like day trips, gourmet meals, and spas.

In either case, the bills can be staggering. More:

“Half of the nation’s assisted-living facilities cost at least $54,000 a year, according to Genworth, a long-term care insurer. That rises substantially in many metropolitan areas with lofty real estate prices. Specialized settings, like locked memory care units for those with dementia, can cost twice as much.”

Home care is costly, too. According to Genworth, agencies charge about $27 an hour for a home health aide. Hiring someone who spends six or seven hours a day cleaning and helping an older person get out of bed or take medications can add up to $60,000 a year.

It’s worse for people with dementia because they need more services. The number who are developing dementia has soared, as have their needs. Five million to seven million Americans over age 65 have dementia, and that’s expected to grow to nearly 12 million by 2040.

The financial threat posed by dementia also weighs heavily on adult children who in many cases become guardians of aged parents. The Times included this chart:

The reality is that families go broke either caring for, or finding care for their loved ones. The alternative: Women in the family give up their lives and jobs to care for their family members instead, which worsens the gender wage gap.

The NYT article makes it clear that older Americans receive far less government support than their peers in other countries. The “why” question is easily answered: It’s a combination of the concerted effort for any public support to be demonized as “welfare”. It’s also partly the result of our failed experiment with long term care insurance. The politicians’ idea was that “the market” would take care of it, so government help for retirees could be limited to Medicaid-paid nursing homes.

But, the LTC insurance industry has largely imploded. Insurers had little experience with the product and grossly overestimated the lapse rates. If a policyholder stops paying, the insurer gets to keep the money and use it to provide services to everyone remaining in the pool. The surprise was that very few people stopped paying. A second miscalculation was that people who held these policies were living longer than forecasted. Longer life equaled higher and larger payouts (insurers also benefit when customers die before they’ve used up all the policy benefits).

A final factor is the rising levels of dementia described above.

And since demand for support outside of family members exceeds the supply of beds, nursing homes and assisted living facilities that aren’t terrible want residents to join during the independent living phase (which requires very little care, so those fees subsidize intensive nursing home care). Many of these facilities require a $400,000-$500,000 buy-in, which may not be refundable at death, even if the resident is current on their monthly fees.

There’s got to be a better way. Medicaid can’t be the only option to pay for LTC. Congress needs to establish a better system for middle-class Americans to finance LTC.

How we handle the growing costs of long-term care is just another reminder that we get LITTLE for our tax dollars beyond a giant military. Americans are responsible for their own medical care, childcare, college tuition, retirement and nursing home care. Some or all of which are provided in other rich countries.

This is a loudly ticking time bomb, and the demographics of the problem won’t change for decades. And yet, the Republicans seem bent on making it worse. They’re actively trying to bring about their dream of privatizing Social Security and Medicare.

Wake up America! We have real problems to solve.

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What To Do About Social Security and Medicare

The Daily Escape:

Lupine and poppies, near Glendale, AZ – March 2023 photo by Marion Cart

From Joe Perticone:

“Social Security and Medicare are headed for insolvency—that’s just a mathematical, demographic fact. But when it comes to addressing the problem, there’s virtually nothing the two parties actually agree on. For years, Republicans have waffled between proposing cuts and kicking the can down the road.”

Republicans are correct that Social Security (SS) and Medicare (M) are marching toward insolvency. But they trip over their own feet with their proposals to save them. Republicans are wrong to think they can solve the solvency questions without raising taxes. Once the Republicans take taxes off the table, they’re left without any real solutions to propose.

The Biden administration has done a good job in pre-emptively going after Republican’s ideas about cuts in Social Security and Medicare benefits. The result is that the GOP is squabbling between themselves and scrambling to come up with a plan they could take to the public.

It’s not just the federal debt that should be discussed. Dr. Donald Berwick head of Medicare and Medicaid during the Obama administration wrote in JAMA: (emphasis by Wrongo):

“A total of 41% of US adults, 100 million people, bear medical debts. One of every 8 individuals owes more than $10,000. In Massachusetts, 46% of adults say they skip needed care because of costs. As of 2021, 58% of all debt collections in the US are for medical bills.”

The WaPo explains why people who live in the American South have bad credit scores. It turns out that neither race nor poverty were the deciding factors. It was medical debt:

“Of the 100 counties with the highest share of adults struggling to pay their medical debt, 92 are in the South, and the other eight are in neighboring Oklahoma and Missouri…”

But why the South? Yes, as a region, it’s unhealthy. But there are several Northeastern states where residents struggle with chronic health conditions but have good credit. One thing that stands out is the lack of Medicaid:

“…a recent analysis in the Journal of the American Medical Association…found that medical debt became more concentrated in lower-income communities in states that did not expand Medicaid after key provisions of the Affordable Care Act took effect in 2014.”

So bad health and bad credit are because of Republican governors’ refusal to expand Medicaid to cover more poor people. Leave it to the south to show a MAGA future for all of us: undereducated, unhealthy, and neck-deep in debt.

More from WaPo:

“In states that immediately expanded Medicaid, medical debt was slashed nearly in half between 2013 and 2020. In states that didn’t expand Medicaid, medical debt fell just 10%, the JAMA team found. And in low-income communities in those states, debt levels actually rose.”

It’s probably not a surprise that deep medical indebtedness isn’t a threat in any other developed nation on earth. It isn’t a surprise that health care in the US costs nearly twice as much as care in any other developed nation, while US health status and longevity lag far behind.

Legislating in the US is always a process. That means Congress labors to find incremental gains they dress up as reforms. The 1983 deal struck by Reagan and Democratic Speaker Tip O’Neill is considered to be one of the great bipartisan compromises. It combined benefit cuts with revenue increases to put Social Security back on a sound financial footing that has lasted for decades.

This time, getting rid of the income cap on the SS tax would help to keep it funded for an additional 35 years. At that point the Baby Boom demographic bulge will be over, and a different set of reforms can be proposed.

Medicare is the second largest program in the federal budget, equaling 10% of the total. Medicare spending is also a major driver of long-term federal spending and is projected to rise from 4% of GDP in FY 2021 to about 6% in FY 2052 due to the retirement of the Baby Boom generation and the continuing rapid growth of per capita healthcare costs:

Medicaid accounts for another 9%. But it’s also the largest source of federal revenues for state budgets. As a result of the federal dollar matching structure, Medicaid has a unique role in state budgets as both an expenditure item and a source of revenue.

Over the next few years, we’re going to need to come up with solutions to the problem of what to do about growing health care costs that are (along with lower tax revenues from recent Republican tax cuts) driving our ever larger US budget deficits.

Both sides are going to have to compromise. There’s no way we’re going to balance the budget in 10 years (or ever) unless we talk about increasing revenues while slowing the growth in the costs of health care that our entitlement programs cover.

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Monday Wake Up Call – January 31, 2022

The Daily Escape:

Mount Saint Nicholas, Glacier NP, MT – January 2022 photo by Jack Bell Photography

Anyone else thinking that our national party bus is about to stall out in the slow lane on America’s Boulevard of Broken Dreams?

Here’s an under-the-radar story: In 2020, the Trump administration hatched a plan to gradually transition traditional Medicare over to private firms. It’s called Direct Contracting (DC) and is operated by Direct Contracting Entities (DCEs). Currently, there are 53 of them in Phase One of an experimental program operated by the Centers for Medicare and Medicaid Services (CMS).

Under the program, the DCEs receive a fixed amount of money annually to cover care for each traditional Medicare enrollee whose primary care doctor (or group) has signed up with that DCE. The DCEs must pay for all of the care of those people assigned to them. To date, the CMS has auto-assigned hundreds of thousands of people to DCEs.

Since no one on Medicare has voluntarily signed up to work with a DCE, it’s unlikely they know of, nor understand what’s happening. And the CMS doesn’t require DCEs to tell people that they have the right to opt-out.

The idea behind DCEs is to shift a portion of the financial risk of the elderly’s medical care away from traditional Medicare by capping the payments to a third party that’s responsible to pay for it. This is the latest in many efforts by CMS and Congress to control the rising costs of healthcare.

Wrongo and Ms. Right have recently noticed a blizzard of direct mail offers to convert our traditional Medicare to an all-in insurance program. It’s probable that some of these are from DCEs.

The anticipated advantage of the DCE experiment is that Medicare’s out-of-pocket costs will be capped. The DCEs contract with CMS is for an agreed-upon annual payment. They have to pay for care and also make a profit based on that fixed revenue amount from the government. In addition to the normal profits from providing services, DCEs can keep as much as 40% of the money they don’t spend on care.

But there’s no such thing as a free lunch, and it seems to Wrongo that this creates yet another financial incentive to deny otherwise necessary treatments. It’s possible that the DCEs could pay doctors to steer patients away from specialty care. This means that someone enrolled in a DCE has reason to worry that their primary care doctor might limit their access to more costly care.

Direct contracting is supposed to be a pilot program, yet Medicare has no plans to limit the number of people it enrolls in these new plans. Instead, Medicare has announced plans to enroll 100% of traditional Medicare members into DCE-like programs by 2030.

Congress did not authorize the wholesale overhaul of traditional Medicare, so why is this happening? And so far, the Biden administration appears to be willing to continue playing Trump’s cards.

Many of the DCEs are owned by Private Equity (PE) firms. It doesn’t take a chess master to see that the PE firms will ultimately sell out to the insurance industry. And it wouldn’t be a big leap from that to fully privatize Medicare.

Time to wake up America! Did we elect Biden to privatize Medicare? The word “privatize” should scare the hell out of Americans. But unfortunately they’ve been fooled into believing that by some magic miracle of economics, it’s to their benefit.

To help you wake up, today we spend a few minutes with Neil Young. Wrongo appreciates Neil Young saying he wanted his music removed from Spotify if Joe Rogan is allowed to continue spewing his anti-Vaxx trash there.

This was an easy business decision for Spotify. They picked the popular podcaster Rogan with the $100 million-plus exclusive deal, over the cranky 76-year-old rocker whose last gold album was nearly two decades ago. Someone who hasn’t been on the Billboard charts since 1982.

Joni Mitchell and Dave Grohl have now said they will follow Young in leaving Spotify.

Let’s watch and listen to Neil Young playing “Hey Hey, My My” at Farm Aid in Champaign, Illinois on September, 1985. Young is a co-founder and board member of Farm Aid, along with Willie Nelson and John Mellencamp:

Neil won’t burn out or fade away.

Sample Lyric:
Out of the blue
and into the black
You pay for this,
but they give you that
And once you’re gone,
you can’t come back
When you’re out of the blue
and into the black.

“You pay for this, and they give you that”. Listen up Medicare!

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Saturday Soother – December 16, 2017

The Daily Escape:

Central Park NYC, December 12th – 2017 photo by Rommel Tan

Long-time readers know that Wrongo has a very low opinion of Speaker of the House Paul Ryan (R-WI), who he considers an intellectual joker. He is often given a pass by the main stream media, who suggest that he is a thoughtful and principled Republican. But once again, he looked like a partially-informed hack on Thursday when he said that Americans need to have more babies or risk a collapse of Medicare and Social Security.

His concern is about the declining US birth rate. The Boston Globe reports that:

Ten years ago, the typical American woman had about 2.1 children. Today, it is about 1.77, representing a collapse in fertility on par with the declines in other countries that yielded Japan’s rapidly graying population in the 1990s, or Canada’s massive present-day demand for immigrants.

From Ryan’s news conference: (parenthesis by Wrongo)

People — this is going to be the new economic challenge for America. People…I did my part, (Ryan has three kids) but we need to have higher birth rates in this country. Meaning, baby boomers are retiring, and we have fewer people following them in the work force…We have something like a 90% increase in the retirement population in America, but only a 19% increase in the working population in America…

It is true that birth rates in the US have declined, but that’s not necessarily bad news. For example, birth rates for teenagers hit a record low last year. Also, Wrongo recently described McKinsey’s report on jobs lost to automation that showed 75 million jobs are at risk in the US by 2030.

Perhaps we already have too many workers for the jobs revolution that is occurring all around us.

And there’s an obvious solution to the problem that Ryan ignores: Allowing more immigrants into the country, either to fill the jobs being vacated by retiring baby boomers, or as necessary to meet tomorrow’s job requirements. But Ryan shows that he’s all in with Trump’s hard line anti-immigration positions.

Should American women become brood mares? This isn’t a new concept. The fear of being outnumbered by racial and ethnic minorities is the driving force behind today’s alt-right, and the view was around in earlier white nationalist movements. HuffPo interviewed Kelly J. Baker, author of “Gospel According to the Klan”. Baker says that the need to ensure that white women were having more white babies was a key part of the Ku Klux Klan’s platform during its resurgence in the 1920s: (emphasis by Wrongo)

Baker said that the 1920s Klan was “nervous” about the possibility of widespread birth control for white women…To push back against the rising availability of effective birth control, the Klan told white women that having as many white children as possible is your job and it matters for your family and your race and for America.

And now, Ryan makes this a mainstream GOP idea. For all of the political empowerment of women in today’s headlines, the Ryan argument lands in the same place as today’s alt-right, and yesterday’s KKK.

Ryan and the GOP want to see more babies, but they won’t support young kids with health insurance through the Children’s Health Insurance Program (CHIP). Quartz reports that next month, 600,000 American children will lose their CHIP coverage. CHIP has been instrumental in ensuring health care coverage of children in US families that aren’t poor enough to qualify for Medicaid, but cannot afford any other form of insurance.

Republicans talk a lot about the cost of healthcare. The cost of not providing healthcare to children in an America with failing schools is impossible to calculate. It is very high, it lasts lifetimes and possibly, generations.

Yet, Ryan is saying that American women need to have more babies to Make America Great Again.

And we know that he’s asking for more white babies.

OK, it’s Saturday, and we need a break from toxic politics, and maybe from obsessing about shopping for gifts. Hanukkah began this week, so Wrongo looked for a soothing piece of music that was inspired by the celebration of the Festival of Lights. Here is “Hanukkah Overture for String Orchestra and Clarinet” by Adam Shugar.

If you look at the YouTube video, you will see that it has just 5,000 views. It should have many more. You should watch it because the music is good, and unlike most orchestral pieces, this string orchestra performs while standing. The video is shot from a high angle, and looking down allows you to see them all as they play together, almost like a choreographed dance. Here is “Hanukkah Overture for String Orchestra and Clarinet” played by the Orchestre Nouvelle Génération under the direction of Airat Ichmouratov, with Mark Simons on clarinet:

Those who read the Wrongologist in email can view the video here.

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