Don’t Count On Medicare, HMO For Long-Term Care

By Judith B. Clinco, R.N,

As government programs go, Medicare has been a terrific boon for seniors. But now the system itself is in trouble, and big changes are in the works to get it healthy again.

Built into the Balanced Budget Act of 1997 are sweeping provisions aimed at getting Medicare recipients to move to private plans that are cheaper than the traditional system. Combined with increased premiums and payment cuts for health care providers, the changes should delay the system’s projected bankruptcy from 2001 to 2010.

The overhaul is coming just in time: Medicare has been dipping into its cash reserves for the past three years. In fiscal 1995—the first of now-annual shortfalls—the system spent almost $36 million more than it took in. The following year, the gap ballooned to $4.2 billion. And in fiscal 1997, Medicare went in the red by more than $9.3 billion.

As a medical professional and owner of a home care agency, I find this trend alarming in the extreme. But I’m also concerned about what the overhaul will mean for Medicare beneficiaries, especially the seniors who need long-term care. Medicare has already been working to reduce costs. That’s why you’ve been seeing all those advertisements from HMOs that want you to join their family. When you do, Medicare, through the Health Care Financing Administration, pays the HMO a flat fee—right now, it’s $441 a month—to provide your medical care. In many cases this costs less than the traditional fee-for-service arrangement, which lets you choose your own doctors and see them as often as you want, with Medicare picking up most of the tab. But not enough people are switching to HMOs. Of the nation’s 33 million Medicare beneficiaries, only 4.4 million belong to private HMOs. So the old system is on its way out.

Over the next few years Medicare will be re-placed by something called “Medicare + Choice,”which brings with it a number of new choices, some experimental programs, and some restrictions on the options now available. It’s hoped that the greater variety of plans will tempt many more seniors to switch to managed care.

Medicare+Choice is a bold plan, but will it work? Nobody really knows what the health care landscape will look like 10 years from now. But I believe one thing is certain: Whether you stick with Medicare or switch to a private plan, you’ll get fewer services, higher premiums and more hoops to jump through. There’s a huge gap in the current system, too, and the new system won’t close it.

Neither Medicare nor HMOs provide long-term care to seniors if you’re disabled and need care in a nursing home, residential care facility, or your own home. And chances are good you’ll need such adult care at some point.
Government figures show that 40 percent of all Americans over age 65 will spend time in a nursing home. This kind of senior care can be quite costly; nursing homes charge an average of $35,000 a year, with some homes costing much more. And care in your home, while comparatively a bargain, might run $15 an hour, often on a part-time basis.

What happens if you need long-term care but don’t have insurance to pay for it? You’ll pay out of your own pocket until your estate is virtually exhausted. At that point you’ll become eligible for a safety-net program such as Medicaid or a state equivalent, but only if your monthly income is low enough. That’s why long-term care insurance is one of the best things you can do to prepare yourself for the future, especially if your estate is worth $100,000 or more and you’d like to preserve it for yourself or your heirs.

Why am I telling you all this? Adult home care agencies such as mine provide screened, trained caregivers to work in your home. The insurance you buy now might make it possible for you to use my services later on—regardless of what changes are made to Medicare.

Ambitious though it is, even Medicare + Choice will only buy a little time. President Clinton and congressional leaders are appointing a commission to find ways to keep the system in business beyond 2010. But you can’t afford to wait; for my money, investing now in a long-term care policy is the best thing you can do to protect your choices, your quality of life, your assets, and your independence.Becoming an informed shopper is an important part of buying any kind of insurance. Here are some places to start:

• Every state has a health insurance counseling program offering free information and help with Medicare, Medicaid, Medigap, long-term care, and other health insurance benefits. You can call the Arizona program at (800) 432-4040.

• If you have trouble reaching the Arizona office, try the Medicare hot line at (800) 638-6833.

Other places to get good information:

•Pima Council on Aging, 5050 E. Broadway, Suite C-104, Tucson, Arizona 85711, 790-7262.

• Insurance Department Consumer Assistance Unit, 400 W. Congress Street, Suite 152, Tucson, Arizona 85701, 628-6371.

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