Stateline Story

Long-Term Health Care Costs Loom Large for Governors

  • July 16, 2004
  • By Erin Madigan

Soaring health care costs, coupled with the looming retirement of a record 77 million Americans starting in 2011, are casting a shadow of concern over states that worry their public health care systems can't shoulder the burden of the aging baby boom generation.

The problem is of such proportions that Idaho Gov. Dirk Kempthorne (R), outgoing chairman of the National Governors Association, spent the past year studying how states can get "boomer-ready."

One in every three Americans could go broke paying for long-term care in their golden years, Kempthorne said. The NGA research initiative into long-term care, called "A lifetime of health and dignity," culminates this weekend in Seattle when about 35 of the nation's governors convene for their annual summer meeting July 17 19.

NGA plans to release a CD-Rom on long-term care outlining 20 actions governors can take. Governors also will be filmed in a town hall meeting with about 200 Seattle-area senior citizens and caregivers that will be broadcast across the country this fall as part of a public television series on care giving called, "And Thou Shalt Honor."

Later this summer, teams of legislators, advocates for the elderly, and health officials from Georgia, Idaho, Iowa, Louisiana, Massachusetts, New Mexico, Vermont and Virginia will meet in Denver to start developing long-term-care action plans. To jump start their programs, those eight states will be able to apply for $48,000 each in federal seed money from the U.S. Administration on Aging, U.S. Substance Abuse and Mental Health Services and the Centers for Disease Control and Prevention.

"The greatest contribution of the governor's initiative was using the political capital of his office and his position at NGA to put this on the national agenda because so many (states) have been thinking about long-term care," said Joseph Coughlin, director of the Massachusetts Institute of Technology Age Lab, who has met with Kempthorne to explain the role of high technology in aging policy.

At the NGA meeting, governors also are to meet with U.S. Secretary of Health and Human Services Tommy Thompson to address issues such as the high cost of prescription drugs and the rising number of uninsured Americans. They're also expected to discuss bioterrorism with U.S. Homeland Security Director Tom Ridge.

The oldest members of the baby boom generation born after World War II won't turn 65 for another eight years, but lawmakers are bracing now for the tsunami of elderly Americans who then will begin demanding health care services in record numbers. With state costs of the shared Medicaid program already eating deeply into state treasuries, the current health system could bring an unprecedented financial load to states forced to help cover medical bills and nursing home costs for poor or uninsured baby boomers.

Although Kempthorne may have helped catapult long-term care into the national spotlight, cash-strapped states already have been debating solutions. Twenty-six states currently offer either tax credits or deductions for long-term care insurance. Maine is the only state that offers both. In 2004, a few states such as Idaho, Kansas and North Carolina enacted or expanded tax incentives for people who purchase long-term care insurance, according to the Virginia-based Health Policy Tracking Service.

In addition, several states including Idaho, Illinois and Oklahoma are urging Congress to allow states to partner with private insurers to help poor patients buy long-term care insurance.

Other states are considering safety issues related to long-term care. In March, New Mexico became the second state, behind Texas in 2001, to enact a "granny cam" law that allows families and guardians to place video cameras, audio devices or Internet systems in nursing-home rooms to monitor and detect abuse or neglect.

"Most abuse and neglect cases in long-term care facilities go undetected because the victims are too ill to report them or do anything about them. This act is one more way to protect nursing home residents from becoming victims of abuse, theft and other harm," Gov. Bill Richardson (D) said in statement.

At least 19 states put the brakes on long-term care spending between fiscal 2002 and fiscal 2004, according to a May report by the Kaiser Commission on Medicaid and the Uninsured, a research arm of the Henry J. Kaiser Family Foundation.

State cost savers ranged from scaling back provider payments to nursing homes that serve Medicaid patients to more aggressively pursuing estate recovery, a practice in which states seize assets from the estates of dead patients who lived in nursing homes on the state's tab, the Kaiser report said.

Despite these actions, the cost of long-term care is threatening to bust state budgets and Medicaid, which helps pay medical expenses for 50 million poor and disabled Americans. States currently spend more than 30 percent of their Medicaid money on long-term care and more than half of that on nursing homes, which cost about $50,000 a patient per year.

Spending on long-term care through Medicaid differs from state to state. For example, North Dakota spends 62 percent of its Medicaid dollars on long-term care, whereas Georgia allocates only 23 percent, but most states are feeling the crunch.

In fact, states spend more on long-term care than on prescription drugs, which often capture greater attention from lawmakers and the media, said Jo Donlin, who follows long-term-care issues for the Denver-based National Conference of State Legislatures.

"It's a huge chunk of the budget," Donlin said. "States are looking at long-term care and saying, We have got to revamp our systems in order to accommodate the need that's headed our way.'"

Citing figures from the federal government, a recent study by Harvard University's John F. Kennedy School of Government said state Medicaid programs spent more than $20 billion in 2002 on nursing-home care and predicted that number will double by 2013.

In large part to save money, states and the federal government have for several years slowly been trying to shift elderly and developmentally disabled patients out of costly institutions and into community-based care, which aims to keep people in their homes longer and maintain greater independence. The federal agency that oversees Medicaid has allowed many states to use federal money to pay for community-based and in-home care, which typically costs much less.

"We are talking about re-tipping the system away from institutional care and toward community care, but we're also talking about increasing people's quality of life in the community," said Diane Braustein, director of aging policy at the National Governors Association Center for Best Practices, the research arm of NGA.