‘Remedy for Health Care’
Although I could take issue with most of the assumptions in your editorial (Jan. 14), “Remedy for Health Care,” it raised a critical issue with respect to long-term care. Most current proposals to address catastrophic costs do not address nursing home care and chronic illness. Resolving the custodial care issue will be key to any future solution to the catastrophic care problem.
Today, there are approximately 1.2 million elderly persons in nursing homes. That number is expected to increase to 2.2 million by the end of the century. At the same time, demand for nursing home space is increasing. Nursing home costs under Medicaid are expected to climb from $13 billion in 1982 to $45 billion in 1990.
According to the Select Committee on Aging, as many as two-thirds of nursing home patients who enter as private paying patients subsequently deplete their resources and have to turn to Medicaid. The thought of being so financially devastated has forced many of today’s elderly to turn their assets over to family members in an effort to qualify for long-term coverage under Medicaid.
A group of Harvard researchers recently estimated the added cost of bringing long-term care into the Medicare system at $50 billion. Given this projection and current budgetary constraints, tax incentives appear to be the most viable option. In particular, the report by Health and Human Services Secretary Otis R. Bowen contained an option to create tax-favored savings accounts, called “Individual Medical Accounts,” to promote private financing of long-term care expenses.
Such a program would allow workers and their employers to contribute funds to a special account and, in return, receive a tax credit for such contributions. Upon retirement, the accumulated funds could be used to finance nursing home care, or to purchase catastrophic illness insurance that, according to the health insurance industry, would be made available because the multibillion-dollar pool of funds could be used to solve current actuarial problems of private insurance.
Tax-favored accounts would provide elderly Americans with the incentive to prepare for the possibility of incurring massive health care expenditures due to catastrophic illness. Unfortunately, the Bowen report failed to give this option the credit it deserves. It should have been the centerpiece of the whole report.
DAVID DREIER
Member of Congress
33rd District
LaVerne
