Transforming U.S. Long-Term Care: Medicaid to Medicare

Leading policy experts are advocating for a transformative reform of the U.S. long-term care system. Their proposal suggests transitioning home-based care responsibilities from Medicaid to Medicare, targeting individuals with considerable long-term service needs. By integrating this benefit with medical treatment, the reform aims to resolve existing fragmentation, making home care a compulsory Medicare offering. At present, Medicaid requires coverage only for nursing home care, leaving home-based services as an optional provision.

Developed by economists and health policy experts from the Brookings Institution, including noted figures like Richard Frank, Sherry Glied, Jonathan Gruber, and Wendell Primus, the proposal envisions overhauls not only to health and long-term care but also to housing finance policies. Despite recognizing the high potential costs, the plan is designed to be financially self-reliant, potentially offset by reduced Medicaid spending and health savings. The proposal includes a new income surtax for older adults to ensure steady funding.

Currently, Medicaid's long-term care services cater solely to low-income individuals with limited assets, and their availability varies significantly by state. Medicare, on the other hand, scarcely covers long-term care. The proposed system seeks to abolish waitlists and expand Medicare home-based care for beneficiaries needing assistance with daily activities or conditions like dementia. Medicare would directly pay licensed providers for services such as personal care, adult day services, transportation, and care coordination. However, compensation for family caregivers would remain a Medicaid function, not covered by Medicare.

The universal Medicare home care benefit would be subject to means testing, incorporating financial evaluations that include assets like home equity. Similar to France's social insurance system, benefits would differ based on income and need levels, ensuring basic benefits for all. The reform plan also proposes deferred payment agreements as an alternative to reverse mortgages. Modeled after a system in the UK, this would allow homeowners to use home equity to pay Medicare long-term care copayments, with debt repayment upon the property's sale following the homeowner's death.

Annually, the reform's projected cost could range from $110 billion to $150 billion, factoring in beneficiary contributions and potential state Medicaid savings. The net taxpayer cost after adjustments is likely to be between $40 billion and $70 billion, covered by a suggested tax surcharge on those aged 55 and above. While the plan endeavors to create a cohesive long-term care approach by integrating health services, unresolved issues like family caregiver compensation and an additional tax on older adults may provoke debate. Nevertheless, this proposal signifies a bold effort to systematically tackle inefficiencies in the current long-term care system.