H.R. 6300 (112^th): Medicaid Long-Term Care Reform Act of 2012

As Congress works to limit future debt and deficits, our Nation cannot afford to overlook Medicaid’s long-term care financing crisis.

The Congressional Research Service reports Medicaid long-term care spending has grown at an average annual rate of 6.5 percent since 1995.

The National Association of State Budget Officers reports that Medicaid spending has already exceeded most components of State budgets, including K–12 education programs.

According to the Congressional Budget Office, Federal Medicaid spending on long-term care will grow from $73 billion in 2012 to $1.148 trillion in 2021.

The Department of Health and Human Services has reported that—

In 2005, the Government Accountability Office projected that by 2040 the number of individuals who are 85 years of age or older, which it finds is the age group most likely to require long-term care services, is projected to increase more than 250 percent from 4,300,000 individuals in 2000 to 15,400,000 individuals in 2040.

The Alzheimer’s Association reports more than 13,500,000 seniors could develop this disease by 2050.

Annual industry surveys indicate the median annual rate for a private nursing home room in the United States reached $81,030 in 2012.

Encouraging middle-income individuals in the United States to anticipate and plan for their future long-term care needs will help them achieve greater health and financial security, as well as greater independence, choice, and control over the services they need in the setting of their choice.

Advance planning by family members will help to protect caregivers’ health, financial security, and quality of life.

In 2005, the Department of Health and Human Services warned that the retirement plans of many Americans are at risk simply because those Americans do not understand who pays for long-term care and therefore have not planned for the possibility of needing to finance such care.

Only about 1 in 10 Americans over the age of 55 has enrolled in private long-term care coverage.

The Government Accountability Office reports State Medicaid programs have, by default, become the major form of insurance for long-term care services.

A 2011 hearing before the Committee on Oversight and Government Reform of the House of Representatives revealed that someone with up to $750,000 in home equity may qualify as poor under Federal Medicaid rules. Witnesses at the hearing said Federal law also disregards the entire value of other financial resources when determining an individual’s eligibility for Medicaid.

In 2005, the National Governors Association concluded new efforts need to focus on how to encourage personal responsibility and discourage reliance on Medicaid for coverage of long-term care services.

Professional actuaries have stressed the Federal Government’s financial interest in reducing future Medicaid spending by improving affordable long-term care options for middle-income individuals in the United States. Such individuals represent approximately 83 percent of households suited for purchase of long-term care coverage, with an average preretirement household income of $75,000 and average assets of approximately $100,000.

Section 6021 of the Deficit Reduction Act of 2005 (Public Law 109–171) expanded the State Long-Term Care Partnership Program with the goal of—

To encourage Americans to purchase coverage described in paragraph (17)(B), the State Long-Term Care Partnership Program provides protection from Medicaid estate recovery if policyholders use their private coverage and still need Medicaid to provide coverage for long-term care services.

According to the four States operating a State Long-Term Care Partnership Program since the 1990s, only a small percentage of Partnership policyholders using benefits have exhausted their policies and relied on Medicaid, ranging from 2.4 percent of such policyholders in California to 7.4 percent in New York.

More than 40 States have established Long-Term Care Partnership policies since Congress expanded the State Long-Term Care Partnership Program in 2005.

Some States, including Connecticut, have worked to increase the likelihood of Medicaid savings under the State Long-Term Care Partnership Program by developing measures of cost effectiveness for long-term care insurance policies.

Section 6021(c) of the Deficit Reduction Act of 2005 require the Secretary of Health and Human Services to report annually to Congress on the impact of the State Long-Term Care Partnership Program on Federal and State Medicaid expenditures.

The Secretary of Health and Human Services has failed to comply with this mandatory reporting requirement since the enactment of the Deficit Reduction Act of 2005.

The Department of Health and Human Services no longer provides technical assistance or facilitates discussions of best practices for improving long-term care savings under the Medicaid program among States participating in the State Long-Term Care Partnership Program.

The Department of Health and Human Services has made no attempts to—

The Department of Health and Human Services does not consistently measure the results of its taxpayer-funded efforts to increase Americans’ long-term care awareness and has no current plans to coordinate with State Governors to raise such awareness.

Budget experts, including one former Director of the Congressional Budget Office, have warned that the insurance program established by the CLASS Act would increase the deficit over the long term, instead of significantly reducing spending on long-term care under the Medicaid program. Credible long-term care reform proposals must address Medicaid’s long-term care financing problems without increasing Federal deficits.

Congress should repeal the failed CLASS Act;

Federal and State governments should work to reduce the number of middle-income individuals in the United States who will rely on Medicaid to finance their long-term care needs by—

the Secretary of Health and Human Services should comply with the annual reporting requirements under section 6021(c) of the Deficit Reduction Act of 2005 (Public Law 109–171) (relating to long-term care insurance partnerships) and promote discussion about the consequences that families and States might encounter if nothing is done to change the trajectory of projected State and Federal spending on long-term care services under the Medicaid program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).