One of the reasons New York spends more on Medicaid is because the health care industry uses its political power to charge more, the subject of my prior post. A second reason is it charges for services it does not actually deliver – Medicaid fraud. A third reason is that New York provides more Medicaid services for recipients than do other states. And as I wrote here, the beneficiaries of most of those additional services are the elderly.
Today’s American elderly are the best off people, with the easiest lives, in history – unless one counts slave-owners. Tomorrow’s elderly, those born after 1955 or so, will not be as fortunate. Entering the labor force after social security taxes were raised, on the wrong end of multi-tier labor contracts, without defined benefit pensions and perhaps, when they reach their 50s, losing health insurance as well, and with limited savings, today’s young and middle-aged will reach old age as social security funds begin to run dry and the debts run up by their predecessors must be paid. We will have to work until no longer able, and will then face poverty. The poverty rate of the elderly, much lower than that of children in recent decades, is likely to explode – unless the seniors use their political clout to tax their own children into poverty, or to wipe out public education, or otherwise do unto their offspring what was done to them.
But today’s seniors and tomorrow’s, unless something else kills them first, will eventually reach the point where they not only are unable to support themselves but also are unable to care for themselves. Who will do so, and at what cost? Sky-high taxes? The loss of other services? Family members exiting the labor force? As the population ages, this is likely to cause a greater financial challenge than even social security and pensions. As I wrote earlier, the custodial care of the elderly is a subset of the “family of last resort” dilemma. The government steps in when family members cannot or will not meet their obligation to dependent children and seniors, because it does not want those children and seniors to suffer. But in so doing, it creates an incentive for families to shed those obligations, and an inequity for those who meet them on their own and are taxed to pay for those who don’t. And in New York State (especially downstate), where the policy has been that seniors are entitled to just about everything and family members have no obligations, and where the young are leaving for states with lower tax rates (in large part due to lower debts, pensions, and senior care spending), the soaring burden of senior care is likely to be greater for those who remain.
Anyone with aging relatives knows that as their health fails it is at first inconvenient, then difficult, then painful, then impossible for senior citizens to live on their own without assistance. To know when assistance is required, a bureaucrat reviewing an application would not only have to see what happens in an applicant’s home 24/7, but also know how they feel while trying to do the tasks of daily living. In practice, government officials either roll over and provide services to all who know enough to ask for them, or throw bureaucratic obstacles in the way to screen people out. Those screened out are often not those who have lesser needs, but those who have a lesser ability to work the system.
Eligibility for custodial care services is a specific case of the broader issue of determining eligibility in general. Relatively few public services and benefits are universal, like a public sidewalk or library, and such services have been shrinking in any event. Most are available only to those eligible by age (schools for the young, social security for the old), lack of means (food stamps, Medicaid, and other benefits available only to those with lower incomes with others expected to pay for themselves), and disability and other needs (such as SSI income support for the disabled). Age is at least easy to verify, though the generational equity issue of what older generations receive versus younger remains. Means can be gamed either way, for budget cutters looking to save money in a fiscal crisis, and for those looking to milk the system otherwise by hiding income or arranging one’s life to qualify. Real needs are, as described above, almost impossible to determine.
Bureaucrats, trying to those impossible determinations, end up being blasted from both sides by the very politicians who put them in that position. Often, politicians enact extensive benefits with porous eligibility requirements to seem generous, then provide much less than the funds theoretically required at budget time when tradeoffs have to be made. The pols hope or expect that only those with inside knowledge or a greater sense of entitlement will access the benefits, what I call the “hope no one (but us) shows up” strategy. In my view, eligibility-limited services rationed by means and need are fraught with the possibility of both fraud and injustice. And Medicaid custodial care services combine the most problematic aspects of rationing by means (with “Medicaid planning”) and need.
There is, however, another way to ration eligibility – self selection. If people are forced to give up something to get a benefit, they will do so only if they really need it. Workfare is an example. If someone really could get a job on their own, there is no reason for them to seek a welfare benefit that also requires work. Time is sacrificed to get money in either case. Metering water is another form of self-selection. Even if the price is low, as in New York City, water is less likely to be wasted if there is a charge, and accordingly New York City water use has plunged despite a substantial increase in population and employment. People have an incentive to take only the water they need.
Nursing home care is another example. Those entering double-occupancy nursing homes lose their privacy, and are limited to just a few possessions, in exchange for receiving custodial care. Most seniors will not demand such care unless it is really required, and try to avoid ending up in nursing homes until there is no alternative. That is why I believe proposals to substitute at-home care for nursing home care are unlikely to save money. Most people wouldn’t mind having a maid, a personal shopper, a chauffer, etc., so self-selection is absent. All that care is likely to be provided to those who do not require care at all, rather than those who would otherwise be in nursing homes. Until there was a bad year for the budget, when those without lawyers who really do need help would be denied both nursing home care and at-home care, and left to their fate (like NYC’s children when the time comes to cut the budget at the Administration for Children’s services). The experience of New York State, with high spending for both nursing home and at-home care, confirms this.
As in the prior post, as in most of my solutions, the goal will be to shift the incentives. Local governments – New York City and New York counties – determine eligibility for custodial and other senior care. They have done so too generously, and have been too tolerant of outright fraud and “Medicaid planning.” My proposal is to have the State of New York cover the entire non-federal cost of custodial care for the elderly in cases where self-selection is present, and pay for additional assistance – whether under Medicaid or through some other state program – to families that care for seniors at home. Local governments would pay the entire cost non-federal cost of senior care service that lack self-selection. They decide who is eligible, so they pay for it. The task of determining eligibility would still be difficult, but at least local governments would have an incentive to take it on.
For nursing home care, the state should cover the entire non-federal cost (subject to the price considerations discussed in my previous post) of non-single occupancy care, up to a certain number of months. Local governments would pick up the non-federal cost thereafter. The issue here is at what point nursing home care becomes necessary. By limiting state funding to a duration, say, two standard deviations out from the mean based on national data, the state would be covering 95% of those in nursing homes at national average durations. The possibility of having to pay for unusually long stays would provide an incentive for local governments to keep people out of nursing homes as long as possible.
This, however, is merely a fiscal solution to the duration of custodial care. Observation of my parent’s generation coping with the disability of my grandparent’s generation lead me to conclude that those with family support can limit the need for custodial care for physical disabilities to months, weeks, or even days prior to death. Mental disabilities, on the other hand, become unmanageable for seniors and families at a point much farther from the end of life. As a matter of public policy, funding to research into ways to prevent or slow Alzheimer’s and other forms of dementia should move right to the top of the priority list.
What about at-home care? Here, the self-selection requirement for state-funded care could be that seniors would have to give up their independence and move in with a friend or family member to be eligible. My observation is that this is not something most seniors and their families would want if it wasn’t absolutely necessary, and that provides a check on abuse. Not everyone understands that a senior who does so would have their eligibility for Medicaid funded services determined by their own income alone, not the income of the household they move in with.
That household would, of course, end up providing much of the care for the disabled senior itself. But to support families that care for their own, the community could chip in with Medicaid-funded home health care and social worker visits in the middle of the day, when other household members were working or at school, and respite care in a nursing facility to provide a break. The senior would be required, as part of the eligibility requirement, to wear a home detention-type ankle bracelet, and would only be permitted to venture out after a call in to a monitoring facility by the family member or friend charged with their care. If they ventured out on their own without it, the monitoring facility could quickly contract the police to retrieve them before they were harmed. A weekly social visit to an adult day care facility may also be provided, though suggesting this sticks in my throat given that New York State’s adult day care program was the victim of massive fraud to the exclusion of care for those actually in need. Perhaps the state might want to pay for family support services even for those not eligible for Medicaid, particularly if it will help families keep seniors out of nursing homes longer.
Since the state would be providing the money for self-selected beneficiaries, the state – not local governments – should be responsible for determining financial eligibility under Medicaid. In the long run, however, some form of universal custodial care benefit, with limits and self-selection, should be provided under Medicare or a replacement federal program as part of a universal health care program. As mentioned, the next generation of seniors will, in general, have few assets to extract prior to eligibility under Medicaid. Who knows? Perhaps the means-tested mentality is in some small way responsible for the spend-for-today rather than save-for-tomorrow attitude of today’s Americans.
And what about at home care for those who do not meet the self-selection criteria – who do not move in with friends or family members, who do not have after a long life anyone grateful enough to them to provide their care, who therefore insist on having service providers sent to their own home at public expense? Perhaps such care it shouldn’t be provided at public expense at all. But if it is, in New York State local governments determine eligibility, so local governments should cover the non-federal portion of the bill. If one part of the state, therefore, holds to a belief that the care of seniors with self-care limitations is solely a taxpayer, rather than a family, obligation, other parts of the state would not be made to pay for this. Local governments, instead, would have an incentive to promote family assistance where possible.
And when such people, without family or friendship ties, require full-time custodial care, it doesn’t make sense to pay for them to be cared for at nursing facilities in high-cost Downstate New York. With the state covering most of the bill, such seniors could be relocated upstate. Nursing home employees could follow, and benefit from a lower cost of living. New York’s nursing home operators? They too would have a lower cost of living in Buffalo rather than Greenwich, if they closed down here and opened up there. They, and their lobbyists and political contributors, have been the biggest barriers to such a policy.
Speaking of Upstate, Medicaid planning, and home care and personal care expenditures, are much less common and extensive in Upstate New York than Downstate, though as the young move elsewhere and leave the old behind this could change. It is worth noting that under this proposal, and the price proposal, Upstate could have nearly the entire non-federal cost of Medicaid covered by state taxes (a substantial share of which would be collected Downstate), provided it was willing to live with moderate prices and senior benefits. A much larger share of Downstate’s senior care Medicaid expenditures would also be covered by the state, particularly if over time the incentives affect the provision of such care. Local taxes associated with Medicaid would decline, though state taxes would have to rise at least in the short run. How to pay for this will, as mentioned in the prior post, be discussed later.
Any restriction on benefits for seniors is typically described as heartless. No doubt these proposals will be as well, if anyone pays attention. But what is really heartless if for today’s seniors to expect extensive benefits for themselves, while creating a financial situation under which those who follow might be provided with little more than medical marijuana followed by legal assisted suicide, in place of health and custodial care, in their old age. And that’s if the Democrats are in – the Republicans probably won’t even offer us that much. Any benefit that cannot be offered 20, 30, and 50 years from now should not be offered today. I propose that we try to create a fair system that has a chance of working in the long run.