Long-term care is a problem affecting all economic strata. Financing long-term care is uniquely a middle class problem. It is not just a problem for the elderly; it is an inter-generational issue. One-third of all Americans receiving long-term care are under 65. The elderly receiving long-term care are the parents of children of middle age or the grandparents of Generation Xers.

The system or delivery of long-term care in the United States is fragmented. We need to develop an integrated system of medical and personal services required by individuals who have lost some capacity for caring for themselves due to functional limitations or chronic health conditions. These services include: skilled nursing care, sub-acute care, rehabilitation, respite care, and personal assistance with the activities of daily living such as bathing, toileting, dressing, meal preparation and housekeeping. It should include congregate living arrangements, adult day care, assisted living facilities, home care, nursing homes, and hospice. Care should be coordinated by geriatric care managers trained to make an assessment of the individual's condition to develop a written plan of care, to implement and coordinate the care plan, to monitor services, to make appropriate reassessments, and to discharge the individual when services are no longer required. This continuum of care should be seamless.

Government regulation of long-term care providers needs to be extended and enforcement must be vigorous. Health care providers, such as hospital, doctors, and nurses, and nursing homes are regulated, although enforcement of the Nursing Home Reform Act by federal and state agencies is lax. Geriatric care managers are not even licensed as geriatric care managers. They are usually licensed as social workers and/or nurses. Regulation of the assisted living industries and adult day care industries is minimal. Regulation of home care and hospice is spotty. The cost of long-term care and prescription drugs are the two leading sources of catastrophic out-of-pocket health care costs for the elderly. Although people prefer to remain at home with community-based services, long-term care financing is directed toward institutional care, specifically nursing home care. Under our present system of delivery of long-term care, many individuals are placed in nursing homes who do not require that level of care. The advent of assisted living facilities in the past few years has helped to "push down" services to that level which is more appropriate for many people. It is also cheaper than nursing home care, and the surroundings are usually more pleasant. However, most people would prefer to be cared for at home, and the Medicaid cutbacks in the Balanced Budget Act of 1987 have made long-term home care more difficult to obtain.

Long-term care is now financed through a combination of private pay, private insurance, Medicare, Veterans Administration, and Medicaid. Most Medicare dollars are spent for acute care, home care, and hospice. Adult day care is financed largely by private pay, but with some Medicaid available. Assisted living is almost all private pay with limited private insurance, and nursing homes are primarily Medicaid with some private pay. This patchwork system of financing leads to absurd and tragic results. A person entering an assisted living facility which accepts only private pay will exhaust themselves of their funds and then can be discharged from the assisted living facility. The person is then placed in a nursing home on a Medicaid basis. This means that people having the ability to pay privately are sucked out of the nursing homes into assisted living facilities, and the nursing homes are left with only Medicaid patients. Since the Medicaid reimbursement rate for nursing homes is often below the actual cost of providing the care, those patients in nursing homes on a private pay basis are saddled with exorbitant rates.

Long-term care insurance can help pay for the cost of care. However, it is expensive and it is estimated that only between 4 and 6 percent of Americans have long-term care insurance. One reason is that 77 percent of people surveyed expect to be healthy in retirement, although statistics show that 43 percent of people age 65 and over will spend some time in a nursing home. Most experts believe that only 20-25 percent of Americans can afford long-term care insurance and that approximately 25 percent of all persons who apply are rejected for medical reasons. While long-term care insurance is an important part of the solution, it will always be limited.

Absent private pay and private insurance, most Americans with chronic illnesses impoverish themselves and Medicaid pays for their care. This is disease discriminatory. A person needing a bypass has that surgery paid for by Medicare without the need for impoverishment. However, a person with Alzheimer's disease does not have his or her care paid for by Medicare, but must become destitute and go on Medicaid.

The solution to this problem lies in a form of social insurance. Under this concept the Medicare program would be expanded to pay not only for acute care, but also for chronic care. One way would be for each individual to receive a pool of money (i.e., $200,000) to be used as needed at any level along the continuum of care. There would be a $10,000 deductible, then Medicare would pay 80 percent of the cost of care. After the pool of money has been exhausted, the individual would have to pay privately or through private insurance. This expanded Medicare benefit, which I call "Medicare Part D," would be paid for by a combination of increased payroll taxes and by retaining the federal estate tax and dedicating receipts from that tax to the Medicare Part D trust fund. Such a program would ensure adequate financing of all types of care, acute and chronic, at every level on the continuum of care. The system must ensure that provider payments be adequate to cover not only the actual cost of care, but a reasonable profit to the provider. The system would spread the risk of care across the population as a whole. We must begin to view long-term care as a normal life risk.