Friday, January 22, 2010

Thoughts on long-term care

With the U.S. Congress now having moved away from a comprehensive health reform package, it is unlikely that the CLASS Act, which was a first step towards long-term care reform, will pass. The CLASS Act would have created an auto-enroll social insurance program (albeit people could opt out) that paid a small but actually quite meaningful cash benefit.

Human societies throughout history have used 5 methods to provide for long-term care financing and/or services:

1) Force women to do it
2) Leave it to welfare services
3) Be rich
4) Have individuals buy insurance against needing long-term care
5) Have the government insure the entire population or make them buy insurance

Number 1 used to work but it is unjust. I also have to wonder if women are being held back from advancement in the workforce, because they still provide about two-thirds of the unpaid long-term care services (to their spouses and parents). Number 2 is the default situation in the U.S. and it's a crappy one. Number 3 works great if you're rich. But you would want several hundred thousand dollars in cash to deal with LTC needs and inflation on top of regular retirement, so it's not for everybody - you have to be quite rich indeed.

Number 4 works, but only those able to afford insurance will purchase it. We need to move towards number 5.

No comments: