Great struggles sometimes result in unexpected opportunities. In the waning moments of 2012, Congress remained in session to bridge partisan divides and solve the fiscal cliff impasse with the passage of the American Taxpayer Relief Act (ATRA), which is now signed into law. However, ATRA achieved policy change on items far beyond the tax code by repealing the Community Living Assistance Services and Support (CLASS) provision of health reform and instituting a new commission to propose solutions for mitigating long-term care challenges that a growing number of Americans face. This Commission, which will be named in the next month and must report back to Congress by the summer, is charged with making recommendations on how to create an organized and efficient approach to meeting the needs of individuals with serious chronic illness and functional limitations.
When an individual has chronic health conditions combined with daily functional limitations, their health costs are significantly higher than for those without. People with functional limitations often require long-term services and supports (LTSS) to assist with daily activities, such as bathing, eating, and meal preparation. The United States has spent the last decade "chasing the disease" through a range of programs that have not delivered on the promise of both clinical improvements and cost savings. Meeting the needs of the entire person, not just attacking the disease, is the key to achieving both of these outcomes. Without a strong network of long-term services to provide ongoing help, people often end up in emergency rooms and hospitals, the most expensive and least person-centered types of care.
Beyond the usual talk about a more coordinated and accountable health care system, we must provide new tools to help individuals responsibly plan for their needs as they grow older. Public policy in this area has moved little in the past 50 years. However, average life expectancy has increased nearly a decade and 70 percent of those living beyond age 65 will require some LTSS, for approximately three years.
Today, Americans who want to plan for their needs as they age have few viable options. The current private long-term care insurance market is effectively broken, as it has never held more than 10 percent of the potential market and many insurers have stopped offering these policies altogether. Reasons for lack of uptake are many: lack of public understanding and interest, high monthly premiums, and underwriting standards that make it difficult to qualify for coverage.
Failure to tackle these convergent forces has huge consequences. Individuals in need of care often use the Medicare program to cover services that could have been provided more efficiently outside the acute care setting, putting tremendous burden on the health care system that might otherwise be avoided. With essentially no other options, these vulnerable older Americans with substantial chronic illness and functional limitations will spend out their personal resources, often in inefficient and disorganized ways, that leave them and their caregivers bewildered and isolated. Once these resources are exhausted, these vulnerable individuals ultimately rely on Medicaid for the rest of their lives to meet daily support needs. These needs will only increase as baby boomers age, creating a snowball effect that threatens the viability of the entire health system. Addressing people's functional needs in tandem with chronic health conditions is the right step to putting Medicare and Medicaid on more stable footing and, most importantly, giving these vulnerable adults the dignity and choice they deserve.
It is time to rationalize both the financing and delivery of services to meet the needs of today's aging American population that will live longer and with more functional limitations, but who want to spend these years living to their fullest without being treated like patients. Thinking through realistic long-term care financing solutions as part of the entitlement reform debate and leveraging the strengths of both the public and private sector is a first-order issue for The SCAN Foundation in 2013. This new national commission, despite its long list of charges and short work window, has the potential to provide key solutions as part of entitlement reform efforts while also laying a new, sustainable path for all Americans to age with dignity and independence.