Bush Proposes Tax Breaks for Long-Term Care Costs

Texas Gov. George W. Bush began his effort to seize the advantage on senior issues Wednesday, unveiling a new plan that would make long-term care cheaper.

The presumed Republican presidential nominee proposed a $7.4-billion, five-year package to address the huge number of baby boomers who will need nursing home care--including half of all women--and the growing number of those who care for aging relatives in their homes.

Bush proposed a $2,750 tax exemption to those who care for seniors and the sick at home. And he offered additional tax breaks to encourage more individuals to purchase long-term health insurance that they can use for nursing home care when they are older.

“It’s time for Americans to prepare,” Bush told an audience that included hundreds of seniors, many in wheelchairs. “Peace-of-mind insurance must become a central part of retirement planning in America.”

Bush also responded to recent criticism from Vice President Al Gore, who has charged that the Republican’s plan for Social Security would jeopardize the integrity of the retirement system.

Bush is expected to outline a Social Security proposal next week that will create personal savings accounts in which workers can invest part of their retirement money outside of the current system, which is headed for insolvency within a generation.

That speech, which will build on Wednesday’s health care proposal, will also include a plan to address Medicare and prescription drug costs.

“Under a George Bush administration, people who rely on Social Security will have the promise kept, no mistake about it,” Bush said. “People who rely on Social Security today will have a Social Security check. The government will keep its promise.”

Bush delivered his speech at the Ridgecrest Village retirement home in Davenport, Iowa, a solidly Democratic state that his team nevertheless believes he can win. He toured the facility, then shook hands with many of the residents, who seemed surprise at the overture. He even sat down at the piano, where one of the home’s residents, Wilma Nichol, played a lively version of “Deep in the Heart of Texas.”

Coming on top of $62 billion worth of additional new proposals on education, health and housing, the new plan is the latest in a series of moderate steps intended to move Bush to the political center. It also addresses seniors, the only age group in which Bush was trailing his Democratic rival in a Los Angeles Times Poll published Wednesday. Overall, Bush led Gore in the national survey by 51% to 43%.

Bush’s new health plan would create two programs:

* A $5.1-billion tax deduction for those who purchase private long-term health care insurance. Only about 5% of Americans own such insurance, which covers the costs of care in nursing homes or lengthy at-home health stays.

* A $2.3-billion tax exemption for older dependents. The exemption targets those who must provide care at home for frail or sick loved ones and amounts to an expansion of the current deduction for children and younger dependents.

Gore supporters immediately attacked the new plan, arranging a conference call for reporters with Health and Human Services Secretary Donna Shalala. In the call, Shalala criticized Bush for not offering a more complete health care reform package.

She said the $2.3-billion dependent exemption is a “copycat” effort similar to a proposal advanced by the Clinton administration to provide a $3,000-per-year tax credit for each dependent in a family’s care.

She seemed less familiar with the Bush proposal to encourage the purchase of long-term health care insurance. Nonetheless, she criticized the plan, saying that much of that type of insurance now available does not provide quality benefits.

The administration is currently attempting to negotiate a long-term health care benefit for about 300,000 federal workers but has no proposal parallel to Bush’s.

“Our major disagreement is that it’s not paid for,” Shalala said. “It’s not a real proposal--you have to pay for what you say.”

Advocates for seniors also said the plan does not go far enough.

Pat Luby, a legislative representative for the nonpartisan AARP, said the cost of long-term insurance is still prohibitive. “It’s better than nothing,” Luby said.

Long-term health insurance benefits vary widely, but industry surveys report that a typical policy might pay for two to five years of care in a nursing facility. The typical stay in a nursing home is 2 1/2 years.

Premiums for such policies increase with age. A 35-year-old worker would pay roughly $358 per year for a two-year policy, according to a recent health insurance industry survey, while a 70-year-old worker would pay $2,638 per year for the same policy.

After the two years of coverage has expired, an older person would be forced to pay additional costs out of pocket until becoming poor enough to qualify for Medicaid, which provides health care for the indigent. Medicare, which covers medical costs for seniors, covers long-term health care only in limited cases.

Aides described the push for long-term health care insurance as a way to bridge the gap between the coverage provided by Medicaid and Medicare.

“The idea is to ease the burden on the elderly,” one aide said.