Mr. WAXMAN. Thank you very much, Mr. Pollack. STATEMENT OF KAREN DAVIS Ms. DAVIS. Thank you, Mr. Chairman, members of the committee, for this opportunity to testify on the great need that exists for expanded financing of home- and community-based services on behalf of the Commonwealth Fund Commission on Elderly People Living Alone. Improving the financing available for long-term care, including a strong home- and community-based program, is an important first step in making sure that the dignity of disabled Americans is preserved and making sure that they get needed care. We must act now to alleviate the tremendous burden of financing long-term care and the burdens on families of trying to support the disabled. Last year, the Commonwealth Fund Commission released a report, "Help At Home", that documented the need that many disabled elderly people have for assistance to remain in the community. It set forth a targeted proposal to cover home care services under Medicare that bears many similarities to the Pepper Commission recommendations. I would like to share with you today the major findings of our study and to highlight some of the key features common to both our report and the Pepper Commission's proposal that would help to address the needs of the disabled, facilitate their ability to remain in the community, and enhance the quality of their lives. Five million elderly Americans suffer some level of physical or cognitive impairment. Of these, 1.6 million of these individuals have limitations that are so severe that they are at serious risk of institutionalization. About a million of those are limited in two or more activities of daily living; another half-million have serious cognitive limitations. We found that the severely disabled elderly population tend to be disproportionately old, poor, and in worse health. Forty percent of the severely impaired elderly have incomes below the poverty level, and another 40 percent have incomes below twice the poverty level. So we are talking about 80 percent of this population with quite modest incomes. They also have many chronic diseases, such as heart disease, arthritis, and cerebrovascular disease, which means that they have serious needs for physician care, and for hospital care, and for prescription drugs, that can add greatly to their outof-pocket expenses. Seven in 10 disabled people receive informal care from family members or friends without any paid help. These caregivers are also extremely burdened. About 35 percent of informal caregivers are over age 65; about a third are themselves in fair or poor health; nearly 1 in 10 had to quit their jobs to be a caregiver; and one-third have incomes below or near the poverty level. However, we are particularly concerned about the 300,000 elderly who are severely impaired and live alone, without any direct assistance, in their home. This group is particularly in need of formal home care services. Over half rely on such paid services. But they have very limited incomes, tend to be disproportionately poor, and need financial assistance. So coverage of home care is needed to help these individuals obtain the care and relief of financial burdens. Therefore, we do support the Pepper Commission's recommenda- i tions to have a home care benefit that would be targeted on the most severely disabled. It would help those who cannot manage without such assistance and eliminate the threat of impoverishment. We support the social insurance approach and think it would be helpful to ensure quality standards in this area and assure progressive financing. The Federal Government must take the lead in financing and specifying minimum benefits and eligibility for such a plan. The principle that we share in common with the Pepper Commission in our recommendation is that services should be targeted on the most vulnerable, the severely disabled. We also support the concept of phasing the plan in over time, starting with those who are most in need. Home care should be stimulated as an alternative to institutionalization. Most people prefer to remain in homes as long as possible, and we should attack that first. Financing should employ a social insurance approach. We believe that such care would supplement, not displace, families. It would greatly enable families to provide care to this population. Furthermore, we support helping low income populations with out-ofpocket burdens and particularly support the Pepper Commission recommendations to pick up coinsurance for all of those below the poverty level and provide partial assistance for those between 100 and 200 percent of the poverty level. We congratulate the Pepper Commission for putting forward a thoughtful and much needed long-term care package that would significantly help all disabled Americans if enacted. It provides benefits that are sorely needed and should be phased in as quickly as possible. I thank you for this opportunity to comment on the importance of long-term care reform for disabled Americans and look forward to working with the committee to make this proposal a reality. [The prepared statement of Ms. Davis follows:] PREPARED STAtement of KaREN DAVIS, DIRECTOR, THE COMMONWEALTH FUND, Thank you, Mr. Chairman for this opportunity to testify before your committee on the great need that exists for expanded financing of home and community-based services. This is an issue of great importance to the Commonwealth Fund Commission on Elderly People Living Alone. Improving the financing available for longterm care, including a strong home and community-based care program, for people of all ages is an important first step in making sure that the dignity of disabled Americans is preserved and that they do not forego needed care because services are unaffordable or unavailable. Too many of our citizens struggle today with the tremendous burden of financing nursing home care or providing intensive family care at home. They need help now. Last year, the Commonwealth Fund Commission on Elderly People Living Alone released a major report, entitled Help at Home, that documented the need that many disabled elderly people have for assistance to remain in the community and set forth a targeted proposal to expand the availability of help under the Medicare program. Today, I would like to share with you some of the major findings from our report that compelled us to call for improved financing of home and community services for disabled elderly people. Then I would like to highlight some of the key features common to both our report and the Pepper Commission's proposal that would help to address the needs of the disabled, facilitate their ability to remain in the community, and enhance the quality of their lives. Today 5 million of the 29 million elderly Americans who live in the community suffer some level of physical or cognitive disability. For 1.6 million elderly Americans these limitations are so severe that they are at serious risk of losing their ability to remain in the community. About 1 million of these severely disabled people require active daily assistance with 2 or more personal care activities, such as eating, dressing, using the toilet, bathing and transferring from a bed or chair. Within this group, one third also suffer severe cognitive impairment. An additional half million people are able to carry out most basic personal care activities, but I struggle with severe cognitive limitations which restrict their ability to live independently without assistance. The severely disabled elderly population experiences multiple difficulties, but has few resources to draw on for assistance. They are older, poorer, and in worse health than other elderly people: (1) A quarter of the severely impaired elderly are age 85 or older compared to 8 percent of the total elderly population. (2) Most of the disabled elderly live on extremely modest incomes-40 percent are poor with incomes less than 100 percent of the Federal poverty level, about $6,000 a year, and an additional 40 percent have incomes between 100 and 200 percent of poverty. (3) The functional difficulties experienced by the disabled are compounded by poor health. Seventy percent of the disabled elderly are in fair or poor health compared to 32 percent of the total elderly population. The disabled are twice as likely to have heart disease and six times as likely to have cerebrovascular disease than the general elderly population. (4) The combination of disability and disease within the elderly disabled population results in heavy reliance on medical care. They average twice as many physician contacts and are more likely to have multiple hospital admissions than the nonimpaired. Thus the disabled are likely to be experiencing high out-of-pocket costs for acute care as well as their long-term care needs. The severely disabled elderly rely heavily on daily assistance from family and friends. Seven in ten disabled people receive all their care without paid help. Providing care to the disabled can be physically, emotionally, and financially draining for the caregivers who are disproportionately women, primarily wives and daugh ters: (1) Thirty-five percent are age 65 or older; one-third are themselves in fair or poor health. (2) Nearly one in ten has had to quit their paying jobs because of caregiving responsibilities. Lack of participation in the formal workplace threatens the future economic security of the caregiver. (3) Most caregivers are not wealthy. One-third of caregivers have incomes below 150 percent of poverty and most live on modest incomes. Although the provision of informal care is of vital importance to the severely disabled population, for some, it is not available or not enough. In these cases, formal, paid services are a vital necessity and an important supplement to informal assistance. Thirty percent of severely disabled elderly people living in the community use paid home care services-one-third on a daily basis. Yet, the commitment and generosity of informal caregivers is clearly demonstrated by the fact that most disabled use formal care to supplement that provided by family and friends. Only 5 percent of the disabled elderly rely exclusively on paid services. Of primary concern to our Commission are the 300,000 severely disabled who live alone in the community. They do not have other household members to call on for assistance and arranging informal care from outside of the household can be extremely difficult, if not impossible. As a result, the severely disabled who live alone are extremely dependent on the receipt of formal services-over half rely on paid services, many on a daily basis. Because they do not have household help, those who live alone are overrepresented among paid care users: composing only 17 percent of the total disabled population, they account for 28 percent of the users of formal care. Given the low-incomes of many of the disabled who live alone, obtaining these services can constitute a severe financial burden. Currently, there is little formal financing to help the disabled elderly obtain longterm care services in the community. Coverage of home care services under Medicare is restricted to post-acute episodes and does not support the personal care needs of this highly disabled population. Although Medicaid does provide some assistance with long-term care needs, the extent of help is highly variable by state and coverage is limited by stringent income and asset tests. As a result, most community based long-term care services are paid for directly by the disabled elderly themselves and their families. Because of their low incomes, few can afford needed help. Out-of-pocket payments for home care services can be a major financial burden. The cost of an hour of in-home care can range from about $7 to $10 for nonskilled care to over $25 for skilled care. Among those using services, the most severely impaired will spend, on average, $7,800 for services in one year. Those with fewer limitations will still spend substantial amounts ranging from $1,500 to $2,000. The Commonwealth Fund Commission on Elderly People Living Alone believes that it is important to begin to alleviate some of the heavy financial burden that the severely disabled living in the community face. Providing limited assistance to severely disabled people can make an important difference in the quality of their lives and ability of caregivers to continue to provide for most of their needs. The community care provisions of the Pepper Commission's long-term care reform proposal speak to the gaps in our current delivery and financing system and address the concerns of our Commission. The Pepper Commission's proposal is targeted to those who are the most severely disabled, regardless of setting. It helps those who cannot manage on a day-to-day basis without assistance and eliminates the threat of impoverishment from the disabled and their families by providing a careful balance of home care assistance and financial support for nursing home care. It recognizes that for those in the community, family and friends are now providing care, but at great physical and emotional cost. In some cases, the burdens are too great and needs go unmet placing the disabled at high risk of institutionalization, functional decline, or other adverse outcomes. In our own deliberations, we felt that the severely disabled must be a priority group for coverage. The Pepper Commission's proposal calls for social insurance for home and community-based care with a strong role for the Federal government. Our own Commission shares this view. Given the dearth of community services today, it is extremely important to develop the financing to expand the availability of care. Moreover, ensuring the quality of services provided is essential. One of the best safeguards on quality is full participation by families and individuals of all incomes. Progressive financing and benefits on the basis of disability level, not income, are thus essential components of both the Commonwealth Fund and the Pepper Commission proposals. It is imperative that the Federal government take the lead in financing, specifying eligibility criteria and a minimum services package, and assessing the quality of services provided to assure that the system we develop is high quality and accessible to all in need. Given the low-incomes of most of the disabled elderly population, it is unlikely that private insurance companies will have the inclination or ability to successfully market a long-term care benefit to the people most in need. Medicaid coverage of the disabled population is hampered by complex income and asset eligibility stringent and Medicaid budgets are already strained by the cost of institutional care. The nursing home coverage provisions of the Pepper Commission plan provide universal access to short-stay care and much needed relief from the risk of financial devastation associated with long stays. There are several key principles that the Commonwealth Fund Commission considered crucial to ensuring that expanded financing of home and community-based services would successfully address the needs of the severely disabled. The Pepper Commission proposal shares many of these same elements. We believe that the following principles are essential in any long-term care reform proposal: (1) Aid should be targeted to the most vulnerable-the severely disabled. Those people in the community with high levels of physical disability who need active help on a daily basis or severe cognitive disability need help now and should be the first priority for coverage. A comprehensive assessment of functioning and assistance for families in managing care and referral to other services is vital. (2) Home care should be stimulated as an alternative to institutionalization. The limited availability of home care precludes the ability of disabled people to conduct their lives in the least restrictive environment and places an increasing strain on nursing homes. Disabled people overwhelmingly prefer to remain in the community as long as possible. Expanding the availability and affordability of home care services is crucial to facilitating the ability of disabled to avoid or delay nursing home placement. (3) Financing should employ a social insurance approach. Assuring that long-term care services are available to all disabled people, regardless of income, is critical to ensuring that all people who need services are served, that financing is sound, and that high levels of quality are maintained. (4) Care that is already being provided should be supplemented, not replaced. Personal care in the home or extended care in the community can provide an important adjunct to the informal care now provided by family and friends. To strengthen the informal care network, flexibility in service arrangements and scope of care is essential. By providing assistance with help at home, this plan would help to reduce the stress of family caregiving and ease financial burdens for elderly people and their families. (5) The low-income population should be assisted with out-of-pocket burdens. The low-income disabled living in the community are unlikely to have the ability or resources to purchase private coverage. As a result, they are in serious jeopardy of going without needed care because the cost of care is out-of-reach or incurring financial burdens that result in impoverishment. A public long-term care plan is necessary to help meet their needs. In addition, it is vital that special protection be provided for the low-income population against burdensome cost-sharing requirements. In summary, the Pepper Commission has put forward a thoughtful and much needed long-term care package that would significantly help all disabled Americans if enacted. It provides benefits that are sorely needed and should be phased in as quickly as possible. Preserving the dignity and independence of the disabled population is an important societal goal. Assuring that the disabled are not required to undergo severe economic hardship to obtain help with basic needs is well within our society's resources and an essential priority for policy action. Thank you for this opportunity to comment on the importance of long-term care reform for disabled Americans. I look forward to working with the Committee to make this proposal a reality for the disabled and their families. Mr. WAXMAN. Thank you very much, Dr. Davis. STATEMENT OF STEPHEN MCCONNELL Mr. McCONNELL. Thank you, Mr. Chairman and members of the committee. On behalf of the Alzheimer's Association, I am pleased to be here to address one of the most important subjects facing Americans today. Alzheimer's is the quintessential long-term care problem. If we can solve the problem for Alzheimer's victims, we can design a system that will help most other people with chronic illnesses. Alzheimer's is a horrible degenerative disease. It robs people of their memory, their judgment, and ultimately their dignity. Half of us in this room, if we live beyond the age of 85, will suffer from Alzheimer's disease. The care system today leaves a lot to be desired. On the home care front, 70 to 80 percent of Alzheimer's patients are cared for at home by family members and friends. The average age of those family members is 62.8, and yet 20 percent of Alzheimer's victims live alone. In an informal survey we did of 53 family members, we found that half of those family members had cared for someone at home for 7 or more years, a quarter for 10 or more years at home, most of them without help. We support the Pepper Commission recommendations to provide social insurance protection for people at home. It is the most important first step. When we posed the question to the question to volunteers in the organization if they had to choose between nursing home coverage or home care protection, by a margin of two to one, they said the first thing we should do is provide home care protection. Mr. Chairman, our association also enthusiastically supports the Medicaid Home and Community Care Amendments that you are |