themselves of resources. What we have found in the Medicaid program is that it requires as much divesting oneself of dignity as it is of resources. Mr. WAXMAN. But your proposal is to cover the back end of nursing home care. What if someone can't pay for that front end of nursing home care? How would you want that handled for that individual? Mr. WILLGING. I would certainly, for those who, in fact, cannot afford the insurance, do not have the assets at all, I would not propose eliminating the Medicaid program. It should be designed so as to fit into that front end. I would, however, suggest that the most appropriate way to do that is for the Medicaid program not, in a sense, to continue as a vendor payment program, as it is today, but to buy the insurance on behalf of those who cannot afford it themselves. Mr. WAXMAN. However it is done, at what level would you decide the Government should step in either to buy the insurance or pay as a vendor for the service-$12,000? $60,000? Mr. WILLGING. I would probably have it on a sliding scale, Mr. Chairman. I would not, in effect, cut it all off at any certain level. I would say at a certain level of poverty, within whatever range of the poverty level, in asset and in income, the amount of money that the Federal Government would pay would be altered. Mr. WAXMAN. You might want to elaborate on that for the record, to tell us where you would come down. Mr. Goldberg. Mr. GOLDBERG. Mr. Chairman, I think the key issue is the spouse that remains at home. I think that is what we most importantly have to pay attention to and have adequate resources for. That person should be able to continue living in the home and meet his or her needs. That is really the central issue. Mr. WAXMAN. One of the concerns that has been raised about the Commission's proposal regarding home care services is that the eligibility criteria contained in the plan may not always be appropriate for the nonelderly, particularly children. Mr. Anderson, your organization provides home care services to Americans of all ages. Do you think the eligibility standards in the Pepper Commission report will work for the nonelderly? If not, what should we use? Mr. ANDERSON. I think the use of ADL's is the best approximate measure, Mr. Chairman, that we have available today. I believe that the appropriate population, the population we wish to address through long-term care, could be most adequately served through an eligibility standard of two ADL's, a deficiency in two ADL's as opposed to the three that the Pepper Commission report includes. Mr. WAXMAN. Mr. Willging, your testimony cites a study showing that over 90 percent of private pay individuals entering a nursing home will not need Government assistance during their first 2 years. Is it your position that Government assistance for people who stay in a nursing home for less than 2 years should not be provided at all? Mr. WILLGING. With the exception of those who, in fact, cannot afford the alternative mechanisms, as I indicated, no, I don't think the Governmental role is appropriate until, as I indicated, the ca tastrophe has begun. And the catastrophe begins, according to that study, at around 2 years for most Americans. Spend-down is not as serious a problem as we thought it was previously. Mr. WAXMAN. Does that mean you are opposed to the Pepper Commission's 3 month front-end benefit? Mr. WILLGING. Yes, sir. Mr. Waxman. If you are opposed to that 3 month front-end coverage, why was it that the American Health Care Association worked so actively to keep Congress from repealing the catastrophic act's skilled nursing facility benefit which provided similar coverage on a social insurance basis? Mr. WILLGING. Because that was the option we had at that time in terms of a Federal funding program for the extended care patient. That benefit, the SNF benefit, was enacted years ago with the Medicare program and was designed, in effect, to provide a more cost effective and more efficient approach to dealing with the activities, medical activities, that commenced in the hospital. We felt that that was, in fact, the one aspect of the catastrophic law which made some sense and fought, as you say, very hard to maintain that. Mr. Waxman. Would you then say that if we are talking about admission into a nursing home from a hospital you would support front-end coverage? I am trying to understand why, in one case, you think front-end coverage ought to be covered under Medicare and now you are arguing that you don't think it is needed. Mr. WILLGING. Well, because I think, as I suggested, we were looking at what we had available at the time as opposed to what we are talking about now. Today, we are talking about a major, almost revolutionary change in terms of long-term care funding. If we, as is suggested in the results of the Pepper Commission, are talking about revising our entire approach to long-term care financing, then we needn't worry about whether this aspect of an existing program should stay or go. I think in terms of what we had available to us at the time of the catastrophic law-and we were at the time talking about a major change in long-term care financing-that was, in fact, the best opportunity as far as the expenditure of Federal funds within the catastrophic bill. But here we are talking about a major revolutionary change where we can, in fact, make choices based on what is best across the board, not in terms of the existing Medicare program. Mr. WAXMAN. Mr. Scheuer. Mr. SCHEUER. Thank you, Mr. Chairman. I have no questions. I think you have been very helpful to us. I appreciate the testimony you have given, and I would like to have you available to respond in writing to questions that members of the committee may wish to submit to you for response. Thank you very much. That concludes our hearing for today, I thank all the participants. We stand adjourned. [Whereupon, at 12:06 p.m., the hearing was adjourned.] [The following statement was submitted:] PREPARED STATEMENT OF HON. DAVID DREIER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Thank you Mr. Chairman and members of the committee for the opportunity to submit my comments regarding the Pepper Commission recommendations on longterm care. I appreciate the effort the members of the Commission and this committee are giving to the difficult issue of providing long-term care services to our Nation's elderly. Census Bureau statistics show that those over age 65 will account for more than 21 percent of the U.S. population by the year 2030. At the same time, our nursing home costs are expected to reach $55 billion this year, from $4.7 billion in 1970. Obviously, most individuals cannot cover a nursing home bill averaging $23,000 a year. And most do not have insurance to cover such care. Yes, the Federal Government should take a leadership position on long-term care. But this leadership should not take the form of a new $42.8 billion government program. Obviously, providing long-term care benefits under the Medicare program would require a sharp increase in the Medicare payroll tax or increased taxes on the elderly. Public outrage over the Medicare Catastrophic Protection Act made it clear that no one wants these tax increases. And, every time we pass a health care program, the actual cost is much greater than projected. A massive federally sponsored long-term care program is not necessary. Instead, Congress should encourage a market solution to this serious and growing problem. Good long-term care insurance policies offering nursing home and home health services are now available in all 50 States. In recent years, employer-sponsored group products have entered the market. Over time, long-term care insurance products are sure to grow in number, and in the services offered. Rather than duplicating, and consequently wiping out this market, Congress should offer incentives for the industry to create efficient long-term care insurance products. I would like to bring to your attention legislation I have introduced to do this. H.R. 3440 is a comprehensive bill to facilitate private sector development of longterm health care insurance. The development of such a market is the key to ensuring the availability and affordability of insurance products to protect all Americans against catastrophic costs associated with extended hospital stays and custodial care. Specifically, H.R. 3440 allows for tax-exempt withdrawals from IRAs for the purpose of purchasing long-term care insurance. It would allow a company to offer a higher deductible health insurance package and contribute the premium savings to an employee IRA, whereby the funds could be withdrawn tax-free to purchase catastrophic or long-term health care insurance. In addition, it would eliminate the Certificate of Public Need [COPN] program, which many States use to limit competition in the nursing home industry and keep nursing home costs artificially high. It would also allow for the conversion of life insurance policies to long-term care insurance, and provide preferential tax treatment of long-term care insurance similar to the tax treatment as life insurance re serves. Mr. Chairman, a massive federally sponsored long-term care program is doomed to failure, and, as was the case with the catastrophic care law, Congress should not mislead the elderly by exaggerating the limits of a Federal response. Instead, Congress should encourage a market solution to this serious and growing problem. 36-343 (200) |