A storm is coming: A plan to fend off our looming long-term care catastrophe

A storm is brewing. Every day, 10,000 Americans turn 65. Families are smaller, children are relocating to places far away from their parents, and seniors are living longer. Medicaid cannot pay for care for everyone who will need it. Nursing homes are not equipped to handle the coming storm, and neither long-term care insurance nor out-of-pocket outlays for home health aides are affordable. That is why I am introducing legislation, the Well-Being Insurance for Seniors to be at Home (WISH) Act, which will create a public-private partnership to allow Americans to plan for their long-term care needs.

Growing up, all four of my grandparents lived in our house. Three of them were very sick. We all cared for them, with my mom, a former operating room nurse, providing the bulk of the caregiving.

Both of my parents passed away a few years ago. My mom was 93 and my dad was 95. Fortunately, both were able to age comfortably at home with the assistance of home health aides. My mom and dad never wanted to be a burden for my brothers, my sister, and I, so they bought long-term care insurance.

Unfortunately, for most Americans, long-term care insurance is no longer affordable. Sales of long-term care coverage plans are just a fraction of what they were two decades ago because they are now limited in what they cover and prohibitively expensive.

The downfall of the long-term care insurance market is an indirect consequence of advances in modern medicine. In the past, when an elderly person became very sick and was no longer able to care for him or herself, he or she would usually die fairly quickly. Today, disabled elders can live for many years because of medical treatment and day-to-day help known as “long-term services and supports.”

While longer life expectancies have been a wonderful blessing for many families, including my own, they have also led to much greater elder care costs. Long-term services and supports at home costs tens of thousands of dollars each year, and nursing home care costs even more. Total long-term care costs for elderly people who face prolonged periods of disability can be several hundred thousand dollars or more.

The risk of being on the hook for many years of long-term care has made it difficult for insurance companies to offer plans with affordable premiums. When the actuaries at insurance companies designed long-term care insurance plans decades ago, they underestimated the costs they would need to cover, and lost a lot of money in the process. Insurance companies responded by limiting coverage and raising premiums by so much that long-term care insurance became unaffordable for most Americans.

The problems caused by the failure of the long-term care insurance market have been compounded by a lack of awareness among many Americans. Many people believe that long-term care is covered by Medicare. In reality, Medicare does not cover long-term care, and Medicaid only does for elders who are impoverished.

Under the WISH Act, workers and their employers each must make a social insurance contribution of 0.3 percent of wages. These contributions will fund a new Long-Term Care Insurance Trust Fund that will pay for the “catastrophic” period of long-term care for those who need many years of it.

Insurance companies, no longer liable for extended periods of catastrophic long-term care, will thus be able to create affordable coverage plans for Americans’ initial years of potential disability in old age. After decades of decline in the long-term care insurance market, Americans will now be able to purchase affordable coverage to financially protect themselves and their families, just like my parents did.

In addition to saving the Medicaid program and millions of elderly Americans from financial ruin, the WISH Act will give people peace of mind by allowing them to age at home with dignity. It will have the added benefit of bringing billions of public and private dollars to fund an essential need in our society while creating millions of good-paying, middle-class jobs in the home health care industry. Many of these new jobs will be for women of color.

President Biden’s American Jobs Plan includes a proposed $400 billion for home and community-based services (HCBS), a recognition of the importance of allowing Americans to age at home when possible. The WISH Act will build on President Biden’s bold, once-in-a-generation middle class caregiver job creation plan. The President’s American Jobs Plan combined with the WISH Act could truly be transformational

Suozzi represents New York’s 3rd District and is a member of the Ways and Means Committee.