Long-Term Care Financing – Between a Rock and a Hard Place

Editor’s note: This article was written by guest blogger Anthony Cirillo, FACHE, ABC, a healthcare marketing and experience management expert and expert guide in assisted living for about.com. For more information about the author, please see our About page.

The American Health Care Association recently released a report examining the shortfall between Medicaid costs and Medicaid funding, concluding that nursing homes receive on average $.91 on the dollar.

One of the most telling statements from the report is “The Medicaid reimbursement outlook for 2011 is bleak. It is worse than any other year in which this annual report has been compiled due to unprecedented state budget deficits and expiration of federal stimulus funds as of July 1, 2011.”

On the heels of that, the Texas legislature is grappling with a revenue shortfall of at least $15 billion — $27 billion by some estimates — and are proposing slashing reimbursement rates for nursing homes. Some dire predictions have half of the nursing homes closing.

With these scenarios playing out state by state, certain trends are emerging, such as:

  • Nursing homes are shifting to Medicare and private-pay reimbursed rehabilitation services. This is moving them away from residential care,  which is mostly Medicaid reimbursed.
  • Assisted living is becoming the new nursing home in terms of residential care. This can leave many people no option as payment for assisted living is mostly out of pocket.

That is why it might be worth paying attention to a New York Times article about South Korea’s self-proclaimed war on dementia. South Korea is training thousands of adults and children to become “dementia supporters” who are taught to recognize the symptoms of dementia and techniques for comforting those who are afflicted.

Hundreds of neighborhood dementia diagnostic centers have been created.  Nursing homes have nearly tripled since 2008. Other dementia programs, providing day care and homecare, have increased fivefold since 2008, to nearly 20,000.

So of course this has a cost. But South Korea did not mess around. They created a long-term care insurance system, paid for with 6.6% increases in people’s national health insurance premiums.

I believe, no I know, that there is so much bloat in the current hospital healthcare system that billions of dollars of costs can be trimmed. But here’s an idea. Why not instead of a corresponding dip in your healthcare insurance premiums, they stay at or about the same and that money be used to finance long-term care and aging services.

Most people will not flinch. They are used to paying at a certain rate and as long as that rate is stable they have come to expect this cost in their lives. By bundling long-term care into the insurance they would actually save when faced with separately buying long-term care insurance.

Marketing 101 – people are more inclined to buy a bundled service even at a higher price if it means not getting nickled and dimed afterwards with add-ons. That is why Southwest wins the airline wars. No nickel and dime. One price. All the other airlines just continue to annoy people by adding on nonsensical charges.

So there it is. Let’s actually realize the savings that healthcare reform is supposed to bring. Then instead of lowering insurance premiums, bundle long-term care into them. South Korea is winning their war on not just dementia but care for the aging. The U.S. is not.

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  1. Pingback: Tweets that mention Long-term care financing | MDSCentral -- Topsy.com

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