It's hard to read Andrea Louise Campbell's new book — the story of her sister-in-law's struggle to pay for comprehensive nursing services after a horrific accident — and not think: there has got to be a better way.
Campbell details what happened to her sister-in-law Marcella Wagner after a devastating car wreck left her paralyzed from the waist down.
"The accident caused more than the physical and emotional devastation that upended Marcella's career plans," Campbell writes in an excerpt, which we published earlier this week. "It also brought about an economic tragedy that hurtled her young family into the world of means-tested social assistance programs, the 'safety net' of public programs for the poor."
As Campbell and Wagner's family learned, there are precious few ways to gain coverage for long-term care services in the United States — things like round-the-clock nurses for those who need the assistance. Traditional health insurance won't cover that type of expense. Medicaid will (it pays for nearly half of all long-term care in the United States), but that program is for low-income Americans. So in order to qualify, Wagner and her husband — parents to an infant Wagner was carrying during the accident — couldn't earn more than 133 percent of the federal poverty line ($2,100 monthly for the family of three). Anything above that would be handed over to the state.
Their assets had to go, too:
Their house and one vehicle are exempt. Beyond those two items, they can possess only $3,150 in assets, total. They had to liquidate everything else and put the resulting cash only into the house and the one vehicle. They couldn't use the money to pay household bills, credit card bills, or Marcella's student loans. They had to save every receipt to prove how the money was spent.
As the Baby Boom generation grays, projections estimate that demand for long-term care will rise from the 12 million Americans who use it today up to 27 million in 2050. And, reading Wagner's story, it's impossible to think there isn't a better way out there to prepare for that onslaught.
How other countries handle long-term care
Long-term care is a difficult problem for the United States to solve because it is expensive. We spent $207 billion on long-term care in 2010, about 8 percent of overall health care spending.
And not every country that has universal health insurance coverage also has a robust long-term care system. Canada, for example, does not include long-term care in the set of services that public health plans have to cover. One study (albeit a bit out of date, from 1989), found that Canadians pay 29 percent of their long-term care costs out-of-pocket. That's nearly identical to the portion of care that Americans finance.
But other countries have tackled the issue and, in 2010, Howard Gleckman at the Commonwealth Fund looked at how. While all models differ, all of them rely on some type of mandatory public financing for long-term care services.
Most of the countries that have universal long-term care coverage — the Netherlands, Japan, Germany — use a dedicated payroll tax to finance the system. Countries with more restricted long-term care coverage — like the United States and United Kingdom — rely on general government revenue. That could, unlike a dedicated tax, leave services more vulnerable to cutting.
Most of these programs are actually pretty new. The Dutch established the first long-term care insurance program in 1968, but other countries were slow to follow. Germany only created a program in 1995, and Japan, which faces especially intense pressures of an aging population, waited until 2000.
And these programs can be difficult, politically, to put into place: France had two failed attempts at long-term care programs, where very few elderly signed up for services, before setting up its current plan in 2002.
The programs that do succeed have, in their few decades of existence, typically proved more expensive than expected. The expected first-year cost of France's new program was $3.9 billion. Instead, the country spent $4.5 billion.
The German long-term care program has typically spent more on services than it has taken in in taxes. Actuaries there think the payroll tax to support it will have to rise from 1.9 percent to at least 3.2 percent by 2040.
The United States took a (failed) attempt at reform in Obamacare
Obamacare did contain a (now-repealed) attempt at creating a long-term care program: the Community Living Assistance Services and Supports, or CLASS, Act.
The idea of the CLASS Act was to create a government-run long-term insurance program that Americans workers would have the option to purchase. The government would then pool all those premium dollars to pay out benefits.
But the structure of CLASS was worrisome from the get-go. If only a small group of unhealthy people — those who anticipate using the services — signed up, the program could quickly destabilize. And in 2011, the White House decided the risks of that death spiral were so great, it would not implement the program.
And that leaves us where we are today: with lots of people needing long-term care, but with little way to pay for it. And with families like Marcella Wagner's having to spend down nearly all their assets in order to gain access.