Today's home health care benefits do not meet the needs of most senior citizens ... and expose insurers to unnecessary risks. Why? They are based on common misconceptions and factors that have become outdated, because the delivery of health care services has changed dramatically over the past 30 years.
We are all familiar with the fact that one of every three men, and one of every two women, now age 65, will be sent to a nursing home during their remaining years. If they are older, their chances are worse. But, in most cases, it's not because of Alzheimer's disease, or because of their inability to perform normal activities of daily living (ADLs). According to the American Association of Retired Persons, almost half of all hospital patients must have skilled medical care to recover after they are discharged. Skilled medical care cannot be provided by friends or family members. (Walter 1992)
Medical advances mean that almost all skilled medical care provided in a nursing home can now be provided at home. But, it is usually more expensive. It's one-on-one care (whereas, in a nursing home, caregivers are shared by many patients). So, where patients receive recovery care now depends more on what they can afford, or on what their insurance will pay for.
Today, three out of four seniors sent to a nursing home go there to recover after hospitalization. Why? Two factors work against them. First, they can't afford to pay for care at home, or their insurance benefits are inadequate. Second, the Medicare/Medicare Supplement combination and Senior HMOs pay for the first 100 days of recovery in a nursing home following a three-day hospital stay. The result? According to various estimates, 33 percent to 70 percent of all nursing home patients would not have to be there if more affordable alternatives--e.g., care at home--were available.
Most people assume that Medicare and Senior HMO plans pay for all recovery care at home. That is simply not true! First, a Medicare-certified home health agency must be used; but only half of all home health agencies are certified. If a Medicare-certified agency isn't used, Medicare and Senior HMO plans won't pay a dime! (Jaber 1993)
Second, Medicare pays for less than half of all home care. If 24-hour-a-day nursing care is needed during the first few days of recovery, Medicare won't pay for it at home. Unless patients or their families can pay for it out-of-pocket, or they have the right kind of insurance, there is only one place to receive that care. . in a nursing home! (Since 24-hour-a-day nursing care costs $20 to $30 an hour or more, that comes to at least $480 to $720 a day.)
Regardless of their tax status, today's home health care benefits are seriously flawed in several ways: (Jaber 1993)
1. Elimination Periods. Any elimination period for home health care benefits can virtually guarantee a trip to a nursing home. Here's why. Most nursing home patients recover before a home health care elimination period would have been completed. In fact, interpolated data shows that 68 percent of Medicare's nursing home patients are discharged in less than 30 days; 93 percent are discharged in less than 90 days.
2. Long Benefit Periods. They are not needed by most home health care patients. And, they can be trouble for some for insurers, especially for recovering acute care patients. Anecdotal evidence suggests that they often turn into uncontrollable long-term maid service benefits long after recovery is complete.
3. Inadequate Benefits. Home health care is usually more expensive during earlier stages of recovery than it is later on. Inflexible benefits that don't adjust to the actual cost-trend of a patient's care also virtually guarantee an unwanted and unnecessary trip to a nursing home.
4. Premiums are not affordable. Premiums are so expensive that many consumer groups recommend that people don't buy LTC insurance, unless they have a family history of nursing home confinement, Alzheimer's, loss of ADLs, etc. When combined with far too prevalent high-pressure sales, a self-fulfilling prophecy sets in.
While they may be healthy today, prospects with family histories of long-term care have a greater tendency to buy LTC insurance than people who have no such family history. This results in adverse selection, and increases the premiums to counteract it. LTC insurance also has a low paid ratio (i.e., the percentage of issued policies that make it through the 30-day free look period; on average, the industry's paid ratio is only 60 percent to 70 percent).
Where's the proof? This has already been done. The paid ratio on the plan about which we speak is 98 percent (instead of the industry's average of 60 percent to 70 percent). Plus, 80 percent of the insureds had all of their eligible expenses paid in full! And, premiums are much more affordable, thereby attracting and keeping healthier insureds.
[TheSeniorView.com]
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