LeadingAge commends the Ways and Means Committee for holding this hearing on the impact of the Affordable Care Act on seniors. We believe the new law has had a number of positive and significant effects on the delivery of health care and long-term services and supports to seniors, and we continue to support its implementation.
LeadingAge is an association of 5,500 not-for-profit organizations dedicated to expanding the world of possibilities for aging. We advance policies, promote practices and conduct research that supports, enables and empowers people to live fully as they age.
One of the most important aspects of the Affordable Care Act for seniors was the reduction in the growth of Medicare spending, which will help to preserve the life of the Medicare trust fund. In 2009, before the enactment of healthcare reform, the Medicare trustees predicted that the trust fund would be exhausted by 2017. The trustees pointed to both the increase in the number of individuals eligible for Medicare and to accelerating health care costs as the factors endangering the financial stability of the Medicare trust fund.
In developing the Affordable Care Act, Congress made some hard choices, imposing spending restrictions on the program that the Congressional Budget Office projects will total $500 billion over ten years. As a result, the Medicare trustees subsequently estimated that the trust fund can continue to finance the Medicare program for many more years. In view of widespread concern over the size of the federal budget deficit and the growth of entitlement spending, we hope the committee will take into account the Medicare savings already achieved under the Affordable Care Act.
The healthcare reform law increases consumer long-term services and supports options while also improving transitions between levels of care. Medicare and other insurance programs currently finance services provided primarily in hospitals, skilled nursing facilities and physician offices; services at home and in the community get relatively little coverage. As a result, individuals released from a hospital frequently have to be re-hospitalized, at significant expense to Medicare and other insurance plans, because they have not received the services they needed to get well.
The expansion of home- and community-based options under the Affordable Care Act, including Money Follows the Person, Independence at Home and Community First Choice, will help consumers obtain long-term services and supports in the least restrictive and most cost-effective setting. Several demonstration programs for which the ACA provides – transitional care, prevention of hospital readmissions, patient-centered medical homes, and accountable care organizations are just a few examples – show great promise for better integrating health and long-term services and supports. Ultimately these demonstrations could point the way toward real reform of our health care delivery system, improving care and services as well as reducing health care costs.
Healthcare workforce needs also are addressed under the Affordable Care Act. We already face a severe shortage of nurses and direct care workers who provide the bulk of paid long-term services and supports. This problem will only worsen as increasing numbers of elders come to need long-term services and supports at the same time that nurses and direct care workers in the baby boomer generation reach retirement age. In addition, the vast majority of those providing long-term services and supports are family caregivers. They serve on an unpaid basis, frequently with little or no training or other help with care that can become quite complex.
The Affordable Care Act contains several provisions to meet these needs. The new law increases loan amounts in the existing federal nursing student loan program. It authorizes new training opportunities for direct care workers, a crucial provision that will help to improve the quality of long-term services and supports. The law would fund geriatric care centers to provide training in geriatrics, chronic care management and long-term care for faculty in health professions schools and for family caregivers. The law also would expand geriatric care awards to advanced practice nurses, clinical social workers, pharmacists and psychologists, increasing the number of health care professionals knowledgeable about the special needs of older people, the age group that makes the most use of the nation’s health care system.
The Affordable Care Act addresses a long-neglected issue by establishing the Community Living Assistance Services and Supports (CLASS) program. CLASS creates a consumer-financed, premium-based, voluntary insurance plan to help people needing long term services and supports remain in their homes and communities. The enactment of CLASS followed decades of discussion over how the nation might better address appropriate financing for these critical services and more than five years of legislative development, debate, and hearings. The program gained the support of over 250 consumer, provider, and faith-based organizations from AARP and the Alzheimer’s Association to Easter Seals and the Paralyzed Veterans of America.
Ten million Americans today need long term services and supports—including 4 million under age 65. As the baby boomers age into retirement, these numbers will more than double. Without CLASS, Medicaid would remain the nation’s default insurance plan for long-term services and supports. Medicaid is an open-ended, taxpayer-funded entitlement program that already is straining federal and state budgets. This system fails to provide realistic opportunities for personal planning, requires people to spend-down into poverty before receiving the help they need, fails to support family caregivers adequately, leads to higher acute care costs and is fiscally unsustainable, given the baby boomers’ coming explosive needs.
While private long-term care insurance policies and tax incentives for their purchase have been available for approximately thirty years, fewer than ten percent of seniors have this coverage. Even fewer people under age 65 have long-term care insurance policies. This kind of coverage will continue to be an important source of financing for long-term services and supports. However, even if the rate of long-term care insurance policy purchases accelerates beyond current projections, private insurance will not provide enough of an alternative to Medicaid funding of long-term services and supports in the coming decades.
The CLASS plan promotes personal responsibility, puts choice in the hands of consumers, saves Medicaid money, and doesn’t rely on taxpayer funds. CLASS is totally voluntary. Its cash benefit approach allows consumers to choose the type of help they want. It saves Medicaid money, according to the Congressional Budget Office. It is not a government entitlement program and stands on its own financial feet. The ACA prohibits the use of taxpayer funds to pay for benefits under CLASS. The program was strengthened by the Gregg amendment, which requires premiums to be set at levels that will keep the program solvent over a 75-year period based on actuarial analysis.
Because of the numerous ways in which the Affordable Care Act benefits seniors, LeadingAge continues to support the new law. We look forward to continuing to work with Congress on its effective implementation.
William L. Minnix, Jr.
President and CEO
LeadingAge (formerly American Association of Homes and Services for the Aging)