03/18/2010 05:12 am ET | Updated May 25, 2011

Get Medicaid Out of the Long-Term Care Business

For the poor and frail elderly -- among the most vulnerable in the nation -- the headlines are terrifying: "Seniors May Lose In-Home Care Aid," "Budget Cuts Threaten Elderly," "Cuts in Budget Shut Out Seniors." From California to Massachusetts, cash-strapped states are slashing Medicaid and other assistance for seniors who require high levels of personal care, either at home or in nursing homes.

At least a dozen states have lacerated long-term care services in their current year budgets, according to the Kaiser Family Foundation, and many more are planning cuts for next year. In California, the legislature and Governor Arnold Schwarzenegger cut nearly $200 million for programs such as adult day care and in-home services to help resolve the state's massive budget crisis. That decision, which would have cut services to 130,000 disabled and low-income seniors, is now being fought out in federal court.

But why is Medicaid -- a welfare-like program intended to provide medical assistance to low-income mothers and their children -- supplying long-term care services to the elderly and younger adults with disabilities at all? Why should seniors have to impoverish themselves to get access to desperately-needed personal care? The latest budget cuts are just more evidence that these critical services for disabled adults and seniors need to be addressed in a very different way.

Medicaid got this job thanks to a political deal made almost 45 years ago, the last time Congress enacted massive health reform. Medicare -- funded by the federal government and seniors' premiums -- was created to provide medical care for the elderly. But the cost of long-term care was dumped onto Medicaid, where the states are required to pay half the bill.

Medicaid is now the largest single provider of long-term care costs -- it spent more than $100 billion last year, over one-third of its budget. Medicaid, in fact, paid more than 40 percent of the nation's total long-term care bill.

The result has been a budgetary train wreck for states. And with tax revenues collapsing, these programs are in the fiscal bulls-eye. Cuts would have been even worse without $87 billion in additional Medicaid assistance included in this year's stimulus bill.

But the arbitrary dividing line between medical and long-term care is more than a fiscal problem. It is also puts the health of seniors and the disabled at great risk. The frail elderly badly need coordinated care. It is not uncommon for those 75 and older to have five or more medical conditions and take a dozen different drugs. But when their care is divided between two payers -- Medicare and Medicaid -- it is almost impossible to properly manage their health. Besides, outside of Washington, no one would think to separate medical treatment and personal assistance. How crazy is a health system where Medicare pays a nurse to insert a urinary catheter but Medicaid pays an aide to empty the bag?

The consequences can be deadly. Consider an 85-year-old widow with congestive heart failure, among the most common diseases of the elderly. Weight gain is a warning sign that the heart is not pumping efficiently. The problem can usually be fixed by simply adjusting medications. But somebody -- perhaps a home health aide -- must be there to recognize and report the problem. If not, the result may be an expensive trip to the emergency room, admission to the hospital, and, perhaps, even death. Yet, states are cutting Medicaid payments for those aides.

What can be done? I'd abolish Medicaid long-term care, except perhaps for the very poorest. Everyone else would buy into a self-sustaining long-term care insurance program. This could be Medicare Part E funded by a mix of premiums and payroll taxes. It could be standardized private coverage much like Medicare Supplement (Medigap) insurance. Or it could be something like the CLASS Act, now being debated by Congress as part of health reform, that would provide premium-funded government insurance. The exact shape of this coverage is an argument for another day. But any of these models would get Medicaid largely out of the long-term care business.

Medicaid does a decent job doing was it was supposed to do: provide health care to poor moms and kids. But when it comes to delivering long-term care services to the disabled and elderly, it is a disaster. It needs to go

Subscribe to the Politics email.
How will Trump’s administration impact you?