The Elderly: Where Should We Put Them, and Who Should Pay?
Sven Mawson
Poverty & Prejudice: Social Security at the Crossroads
Friday, June 04, 1999

America has a lot of old people. Old people run the country, old people have most of the money, and old people do most of the voting. Senior Citizens, they are called, and are. The elderly are an important part of the United States; they help keep the country running, and the economy going. Seniors have 77% of the nation's wealth, and 40% of its disposable income. As being old requires having lived a relatively long time, most old people also have a lot of information and wisdom to share with those who are younger, and their advice, although often unasked, is usually helpful. Unfortunately, there is a problem; Old people are, in a word, old. Things that become old tend to become frail, and people are no exception to this. Frailty is a certain byproduct of age, and with it comes needs, the need of care and nurturing and assistance with daily tasks. In fact, of seniors who are living in LTC (Long-term care) facilities, 83% need at least some assistance with daily tasks. Old people need either help cooking or to be cooked for, often need help walking, or bathing, or even changing their clothes. It is all part of what happens when people age, naturally, but they still need help.

How much of a problem is this? And how many elderly people actually need to enter these LTC facilities? Of Americans who pass 65 years of age, 60% will need LTC at some point in their lives. The average length of stay in a long-term care facility is only 2.5 years, but some stay much longer, having dehabilitating illnesses or problems, or just being too old and frail to take care of themselves anymore. As medical technology increases, this number will go up, not down, as more and more Americans are able to reach 65 or older, and the average age increases. In fact, currently 80% of Americans will pass 65 years of age. This means that around 50% of all Americans will at some point reside in a LTC facility. This number is growing! By 2000, America should have

around 100,000 people over the age of 100. The number of people who need to use LTC facilities, and who will at some point in their lives need LTC, is growing at an extraordinary rate. In 1996, there were 1.6 million elderly receiving care in 16,800 homes. As people get older, and frailer, and the average age increases, this will become more and more of a problem.

Why is this such a problem? Cost. The cost for a year of stay at a LTC facility in California, on average, is $47,450. For the rich elder members of our society this doesn't cause that much difficulty, but for the many who cannot afford LTC for extended periods, they have to rely on either insurance or the government. Recently, several large companies have been buying up LTC facilities around the country, and rather than this decreasing average costs, it is most likely to raise them, as companies gain monopolies. The government can only step in for the very poor, and insurance companies are trying to get out of the market, for lack of profit. What does this mean for the future? Already there are elderly people without insurance or the care they need, and unless something is done to assist them, this number will continually increase.

One of the traditional options is to use Health Insurance to help pay for long-term care costs, as elderly people with HMO coverage can often use the coverage to help pay their LTC bills. Unfortunately for many people needing LTC, HMO providers have been pulling out of the LTC market at a disturbing rate. According to them, there is no profit in providing for old people, so there is no need for them to provide coverage. As HMOs pull out of the senior citizen market, many seniors are left completely without coverage, forcing them to pay out of pocket or through government programs such as Medicare or Medicaid.

What possibilities are there for the old and frail members of society? One of the recent initiatives that has begun in California is called the California Partnership for Long-term Care, sponsored by the Department of health services and private insurance companies. The partnership was created to provide two things: Asset protection for spending on Medi-Cal (California's branch of Medicaid) and protection for Medical Recovery. Asset protection is necessary because of the requirements Medicaid imposes upon asset and income levels. In short, unless you are poor, you don't get covered. Medicare and Medicaid can both cover some of LTC costs, but the requirements are steep.

For Medicare coverage, the following requirements must be met:

· Each recipient must require skilled care.

· Medicare LTC only goes into effect after 3 or more days of hospital stay for the same problem.

· The facility must be Medicare approved.

· The recipient must be assigned to a Medicare certified bed.

· The recipient must receive care they could only get from a nursing home.

Even with these requirements met, Medicare coverage will only last 20 days on full-payment basis, and an additional 80 days on co-payment.

With Medicare only covering short stays, it is up to Medicaid to cover the rest, and Medicaid has its own requirements:

· Medicaid covers the poor only, or those who are going to become poor.

· The recipient must be 65+ years of age, blind, or disabled.

· The recipient must be a resident of the state providing the benefits.

· The type of care provided must only be receivable from a nursing home.

· The recipient must be in a Medicaid approved bed.

· Medicaid must approve the nursing home.

· The recipient must pass both the income limit test and the asset limit test.

Medicaid can provide coverage for old people, but only once they are past the income and asset limit level, which means they have to spend all of their money out of pocket initially, and then Medicaid will pick them up once they are drained. This is where asset protection comes in, because as old people spend money on the Partnership, Medi-Cal will take each dollar off of the asset protection limit, allowing a quicker approach to the asset limit line, and increased coverage by the government. Benefits are protected as well; money paid from the partnership does not count towards the income limit rules. With coverage from both the partnership and Medi-Cal, it becomes much more possible for elderly people to retain some of their money, even while receiving LTC.

Even with these stipulations and requirements, there is still a huge population of LTC facilities who are using Medicaid to pay part or most of their costs. For starters, although elderly people have a large percentage of the nation's wealth, the distribution within the elderly is by no means even, in fact 44% of elderly have an income of less than $7500 a year. Many elderly also make use of loopholes in Medicaid law to allow them to pass their assets off to relatives and liquidate most of their fortunes, and then applying for Medicaid coverage and receiving benefits. Although Medicaid covers many more people than just the elderly, they take up a disproportionate share of the payments.

In 1995 there were 35.2 million people covered by Medicaid. Of these, 11% were considered elderly. Medicaid made total payments of 152.3 billion dollars, 26.3% of which went to the elderly, and 35.4% to LTC facilities in general. Medicaid pays 50% of all nursing costs, and 14% of home costs. Home costs take up a much lower percentage of both costs and LTC in general, as institutional assistance takes up 3/4 of all LTC. For this year, Medicaid payments should be around 200 billion dollars, with up to 400/o of this going to LTC facilities, even though there are only 2 million Medicaid beds available.

What do all of these numbers mean? They mean that a huge portion of one of the largest Medical help institutions of our government is going to the elderly, and that costs to support our elderly continue to increase at a tremendous rate. There are other government payments for LTC as well, but Medicaid is paying the majority of it, around 62%. As the number of people who are elderly and frail continue to grow, the amount of payments Medicaid needs to make is going to increase as well, because a whopping 70% of all LTC recipients are receiving Medicaid.

Can our government continue to pay enough money to keep elderly people cared for? There is no crisis as of yet, hut as the amount of people needing care and help continue to rise, and the ability to extend their lives improve, we will eventually reach a point where it becomes imperative to make changes to the way our elderly are cared for. Considering the very high cost of care for the elderly, and the relatively uneven distribution of wealth to only some of them, they cannot afford to pay for themselves.

As our medical knowledge increases, perhaps we will finds ways to not only extend the lives of our elderly, but to also extend their health and well-being, perhaps eventually lowering the amount of people needing care. Unfortunately, unless some miracle happens, reality must he faced: the closer you get to death, the frailer you get. As death gets farther and farther off; the amount of time people spend in a frail state can only increase, and someone needs to take care of them. In the current state of affairs, with the current high cost of care, the burden will continue to fall on the shoulders of those much younger, perhaps where it belongs.

There are, of course, other alternatives, such as requiring each couple to have enough children to take care of them when they are older, or taking away all of their money immediately, and placing them on completely government controlled support. A solution to the current high cost of care could be to seek areas where care is cheaper, such as Mexico, and send our old people down there to retire and be cared for. Hopefully action will be taken to maintain the ability of our society to take care of our elderly, and we will continue to benefit from their experience and wisdom, long after they reach an age when their frailty turns them into a burden on our resources.

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