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Back to index of statements MEDICAID REFORM: THE NATIONAL GOVERNORS ASSOCIATION'S BIPARTISAN ROADMAP Medicaid is the Critical Long-Term Care Safety Net for 850,000 People 65 and over who have Alzheimer’s Disease and Related Dementias (AD)
The Alzheimer’s Association Endorses the National Governors Association’s (NGA) Call for a New National Dialogue on Long-Term Care (LTC)
The Medicaid Long-Term Care Safety Net Can Be Improved. The Alzheimer’s Association supports the following concepts in the NGA’s preliminary Medicaid proposal:
Congress Should Not Force Families to Bear an Even Heavier Burden of LTC
Mr. Chairman and Members of the Committee: The Alzheimer’s Association appreciates this opportunity to present written testimony on behalf of the 4.5 million women and men in the United States who have Alzheimer’s disease and the more than 19 million family members who care for them. Specifically, we offer our comments on the long term care recommendations in the bipartisan preliminary report on Medicaid Reform which the National Governors Association submitted to the Subcommittee on June 15. We commend the Governors for the thoughtful effort that went into development of their long term care recommendations. The states have long been the leaders in developing innovative approaches to long term care that reflect the desire of frail elderly and people with disabilities to remain in their homes, if they can, and to direct their own care. Once again, they are taking leadership. While the Association does have some concerns about several of the specific recommendations, there is much in these long term care proposals that we support. We look forward to working with the Governors and the Congress as these proposals are further refined and legislation to implement them is considered. Medicaid Is Important to People with Alzheimer’s Disease and Related Dementias Medicaid is the critical long term care safety net for people with Alzheimer’s disease whose families can no longer care for them and who have spent down their income and assets on health and long term care services. While almost all people with Alzheimer’s disease are covered by Medicare for their basic health care needs, that program does not pay for long term care. Alzheimer’s is the most expensive uninsured illness older Americans are likely to face. It requires 24 hour a day care and lasts, on average 7 to 8 years from the time of diagnosis. At any one time, at least 70% of people with Alzheimer’s disease are living at home, where family and friends are providing most if not all of their care. Eventually though, the needs of the person with dementia are too much for families to manage on their own. And that is when costs begin to mount rapidly. The average annual cost of nursing home care in urban areas in 2004 was nearly $62,000, for a shared room. Paid care for a person with dementia is also expensive. Home care provided through an agency averages $18 an hour. Specialized dementia care at an adult day center costs from $45 to $65 a day. At those costs, retirement savings are quickly exhausted. That is why 850,000 Medicare beneficiaries with Alzheimer’s disease or similar levels of cognitive impairment, age 65 or older, rely on Medicaid for help paying for their long term care. Slightly over half, 446,000, are long term nursing home residents. The rest receive help at home or in other community settings. Long Term Care Is Much Bigger than Medicaid and Requires a Larger Policy Response The Alzheimer’s Association strongly endorses the Governors’ call for a new national dialogue on long term care. We agree that Medicaid cannot continue as the primary default mechanism for long term care when families can no longer pay for it on their own. We believe that many of the ideas that the Governors have put on the table merit immediate and serious attention as components of a fairer and more comprehensive system for spreading the risk and sharing the cost of long term care. These include:
It is particularly significant that the Governors have linked the issues of long term care and chronic care. Alzheimer’s disease presents perhaps the best example of how our failure to create such linkages may be adding substantially to both Medicare and Medicaid costs. Medicare expenditures for people with Alzheimer’s are nearly 3 times higher than the average for all beneficiaries, even though Medicare is not paying for their long term care. That is because 95% of Medicare beneficiaries with Alzheimer’s have one or more other costly chronic conditions that are common in the elderly. Because of their dementia, they cannot manage those other chronic diseases, follow physician instructions, or communicate effectively about symptoms or pain. The result is acute care crises, excess disability, and premature functional decline which not only lead to potentially avoidable hospitalization but exacerbate long term care needs – adding costs for both Medicare and Medicaid. The Governors are right that our current over reliance on Medicaid as the long term care safety net cannot be sustained over time. Fortunately, we have time to create a better system. The real pressure on Medicaid from long term care is still 15 to 20 years away, when the baby boomers begin to reach the age of risk of diseases like Alzheimer’s and need long term care. In the short term, growth in demand for Medicaid long term care for the elderly is likely to be slow to negative. Congress does not need to take drastic action that would undermine the Medicaid safety net for those who rely on it now. Congress must also recognize that the most effective way to slow the growth in Medicaid spending is to reduce the need for long-term care. That can only happen by reducing the number of baby boomers who will face costly long-term illnesses like Alzheimer’s disease. If medical research can find a way to slow the onset and progress of Alzheimer’s as much as we can now slow Parkinson’s and heart disease that could result in savings to Medicaid of $10 billion a year. Scientists are on the verge of such discoveries, but they can only get there with an increased investment in Alzheimer research at the National Institutes of Health. If the answers are to come in time to save the baby boomers - and Medicaid, Congress must invest an additional $200 million in Alzheimer research now. It is one of the most effective ways to reach the goal that Congress, the states, and the Alzheimer’s Association share – to preserve the Medicaid program without bankrupting the public purse. The Medicaid Long Term Care Safety Net Can Be Improved The Governors have put on the table a number of Medicaid reform proposals. While the Alzheimer’s Association is concerned about changes in Medicaid that affect all age groups, we are limiting our comments to the long term care proposals because those are the ones that most directly impact the people with dementia whom the Association represents. While some of these long term care proposals need additional detail before we can fully assess their impact on our constituents, we believe that the Association could support many of them. We look forward to working with the Governors and Congress to make sure that these ideas are developed and implemented in a manner that protects the interests of beneficiaries with dementia and other frail elderly. We do have concerns with several recommendations, which we identify in the final section of this testimony. Specifically, the Alzheimer’s Association supports the following concepts in the Governors’ preliminary proposals:
These long term care proposals offer the potential to improve existing Medicaid long term care services and supports for older people who rely on the program now or in the future. They also hold the potential for limiting somewhat the need for Medicaid assistance in the future. But they will not alleviate the urgency of the need for a more comprehensive consideration of long term care reform. Families Should Not Be Forced to Bear an Even Heavier Burden of Long Term Care While we are inclined to support most of the Governors’ long term care recommendations, we raise concerns about two proposals that would have the effect of placing an even heavier burden on families who are already exhausting themselves, physically, emotionally, and financially, caring for loved ones with Alzheimer’s disease and other serious disabilities. These proposals deal with rules regarding the transfer of assets and the “deeming” of family income for Medicaid eligibility. Families are already bearing the heaviest burden of long term care for people with dementia. Seventy percent of people with Alzheimer’s disease live at home, where family and friends provide 75% of their care. Over 70% of caregivers have been doing this for more than a year and nearly one-third have been caring for five or move years. This is not easy work. Alzheimer caring is constant – described as “the 36-hour day.” It includes the most intimate personal tasks – bathing, dressing, feeding, and toileting. But it also involves round-the-clock supervision, cueing and stand-by assistance to help the person with dementia retain their remaining functional abilities, and to protect them from harm from the challenging behaviors – including wandering and disinhibition -- that often accompany the disease. Caregiving takes a heavy financial toll on families. A recent national survey found that two-thirds of working Alzheimer caregivers had missed work because of their caregiving responsibilities; 14% gave up work altogether or took early retirement; 13% cut back on work hours or took a less demanding job; 85 turned down a promotion; 7% lost job benefits. The same survey showed that nearly half of non-spouse caregivers were providing financial assistance, usually to a parent, averaging $218 a month. Nursing home costs place a particular burden on families. Even though Medicaid pays a substantial part of the nursing home bill, for elderly long-term nursing home residents, 48% of their bills is paid out-of-pocket. Even when a person qualifies for Medicaid, he or she continues to pay all of their income (minus a token monthly needs allowance) to the nursing home; Medicaid only makes up the difference if they do not have enough income to pay the whole bill. There is no free ride with Alzheimer’s disease. In fact, for older Americans, Alzheimer’s disease and the associated cost of long term care is the only estate tax they will face. That is why the Association has such concern about these two proposals included in the Governors’ plan. Family contributions. The Governors suggest that some form of family contribution to the costs of long-term care be required, presumably as a condition of Medicaid eligibility. It is hard to understand how families could be compelled to do more than they already do. Under current law, community spouses are allowed to keep only a modest amount of income and assets to meet their own needs – the rest must be used to pay the nursing home bill. It is not clear which other family members might be required to contribute to the cost of long term care for an older person, or how any such requirement could be equitably enforced. Family circumstances vary enormously. Some adult children provide unpaid care for years. Some provide a home for an ailing parent. Some provide emotional support long distance. Would adult children be “assessed” based on current income, family size, other obligations? Would a single adult child be asked to pay more than a married sibling with children? How would the caregiving contributions they have already made be valued? What about step-children? This proposal seems a direct contradiction to the efforts that both the states and Congress have made in recent years to recognize, support, and reinforce the role of family caregivers – through respite and caregiver support services and tax credits. It should be rejected. Transfer of assets. This is a complicated issue. We realize that Governors have struggled with these issues and are still trying to find a solution that protects those who need help and acknowledges that older people should be able to pass on something to their children and other family members without undue penalty. That is reflected in the Governors’ proposal to allow a disregard of a certain amount of transferred assets – they have suggested $50,000 adjusted for inflation. In addition, they have suggested that individuals with dementia or others at risk of being exploited be protected, although it is not clear how that can be done. Older Americans, even those of relatively modest means, make decisions every day about the use of their resources – tithing to their churches, contributing to charity, assisting grandchildren with college education, helping adult children who face a financial crunch because of a job change or a health emergency. Those decisions are not made with an eye toward Medicaid but represent deeply held values about family and civic responsibility. Yet each of these gifts is considered an illegal transfer of assets if made within the so-called “look back” period for Medicaid eligibility. In addition, people with dementia and many other vulnerable elderly may be victims of fraudulent appeals or otherwise make ill-advised gifts that jeopardize their Medicaid eligibility. We agree that persons with substantial resources should not attempt to shelter those resources to avoid paying for long term care. We work with hundreds of thousands of families who are caring for loved ones with dementia, including many who ultimately find themselves needing help from Medicaid. We do not see gross abuse of the current system. We find just the opposite – families struggle to do it all themselves and turn to Medicaid only as a last resort. Many find it necessary to consult lawyers, not because they want to hide assets or bend the rules, but because Medicaid is so complicated they cannot figure out the basic rules on their own, including the rules Congress established to protect spouses from impoverishment. Current Medicaid financial eligibility rules, including those that govern transfer of assets, strike a reasonable balance between a state’s interest in limiting Medicaid eligibility to those truly in need and the interests of the person applying for long term care assistance. If it is true that some people abuse those rules to qualify for Medicaid – and there is no evidence to indicate this is an extensive problem – such people are just as likely to find the means to get around more stringent rules that Congress or the states might impose. The people likely to be harmed are those who truly do not have the resources to pay for long term care. The three year look back period already establishes a heavy burden on an older person applying for help with long term care. These are people who are already seriously disabled. Many have already moved to a nursing home, where at least half are suffering from dementia. Yet they are being asked to produce three years of financial records and to explain expenditures that they may not recall at all. In the case of people with dementia, their inability to handle their own financial affairs is often one of the first symptoms of their cognitive impairment. For them, reconstructing financial records may be impossible. Extending the look-back period to five years will place an even more unrealistic burden on these people, at a time when they are in need of immediate assistance. A five-year look back period would also pull into the net more gifts that were made for purposes totally unrelated to Medicaid. We understand why states are proposing to change the start date of the penalty period for the transfer of assets, to the date a person enters the nursing home or becomes eligible for Medicaid, whichever is later. In theory, it would allow the state to consider more asset transfers as disqualifying for Medicaid. In practice, it would disqualify persons who disposed of assets, regardless of the reason, and have nothing left to pay for their long term care. Congress should proceed very cautiously in this area and consult carefully with those who work most closely with older people who are trying to manage their finances to meet their needs and the needs of their families within the rules that Congress has already established. In the end, the best solution lies in developing a clear national policy that delineates public and private responsibility for long term care, not in making Medicaid eligibility rules even more restrictive when no other options are available for people who need help now. The Alzheimer’s Association joins the National Governors Association in its call for a national dialogue to confront the issues of an aging population and an increasing demand for affordable quality long term care. MetLife Mature Market Institute, MetLife Market Survey on Nursing Home and Home Care Costs 2004. Westport CT: MetLife Mature Market Institute (2004). Cited in AARP Public Policy Institute Myths about the Medicaid Program and the People It Helps. AARP Public Policy Institute (2005) Urban Source Institute tabulations from the 2000 Medicare Current Beneficiary Survey. Note that these figures do not include dual eligibles who are enrolled in Medicare managed care plans. Bynum JPW, Rabins PV, Weller W, Niefeld M, Anderson GF, and Wu AW. The relationship between a dementia diagnosis, chronic illness, Medicare expenditures, and hospital use. JAGS, 52:187-194, 2004. AARP Public Policy Institute Myths about the Medicaid Program and the People it Helps. AARP Public Policy Institute (2005). The Lewin Group Savings Lives, Saving Money: Dividends for Americans Investing in Alzheimer Research. Alzheimer’s Association, Washington DC (2004) Alzheimer’s Association and the National Alliance for Caregiving Families Care: Alzheimer’s Caregiving in the United States 2004. Washington, DC. Alzheimer’s Association (2004) Federal Interagency Forum on Aging Related Statistics Older Americans 2004: Key Indicators of Well-Being. 
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