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If you spent any time last year helping a senior struggle through an application for the new Medicare Part D prescription drug benefits--or figuring out how to apply for the employer's subsidy for prescription drug benefits under your retiree medical program--you quickly realized that the new model of federally funded benefits distributed regionally by the private market still has a few serious kinks.

After two and a half hours with the Medicare Web site, I gave up trying to find the perfect choice for my father, who needs all the help he can get in paying for treatments for diabetes, hypertension and heart disease, as do millions of American seniors. The dozens of plan choices available in my state were confusing and repetitious, and I finally suggested one of the options provided by his present Medicare Supplement insurer--just because he recognized the name of the health plan.

Next in line, according to some recent research, may be long-term care, which, like prescription drugs, is infamous for draining the financial resources of seniors.

According to AARP and other social policy groups, more than 40 percent of long-term care is already paid for by Medicaid, eating up about one-third of the government program's total budget.

However, health-care policy leaders now believe that, like prescription drug benefits for seniors, long-term care benefits, now needed by about 10 million Americans, should be moved into the Medicare system and shared between public and private funding.

According to a survey of 246 health-care opinion leaders by the Commonwealth Fund, a New York-based health-care think tank, and Harris Interactive, more than 60 percent said the responsibility for long-term care should be shared by the government and individuals, and 80 percent favored adding a long-term care benefit to Medicare--financed by an additional premium.

In addition to a new Medicare benefit, 75 percent of respondents said they favored tax incentives for private purchase of long-term care insurance, and 63 percent favored allowing tax-favored medical savings accounts for the purchase of long-term care insurance. About one-third of respondents supported the idea of expecting employers to contribute to their employees' long-term care costs.

The National Academy of Social Insurance-sponsored poll of 804 Americans over age 40, conducted by Peter D. Hart Research Associates, revealed that 71 percent of respondents said they think the nation's methods for funding long-term care need either a complete overhaul or serious improvements. Only about 37 percent said they had a plan to pay for their own long-term care, if needed.

The organization said that present Medicaid and private funding left millions of Americans with unmet long-term care needs and often resulted in financial catastrophe for families who had to drain their financial resources.

What could be better? NASI suggested two "promising approaches": universal funding through a new Medicare benefit, or a national program of income and asset protection that would subsidize seniors who pay for private long-term care insurance. Two long-term care funding bills, S. 1602 and S. 1951, have already been introduced in the Senate, and you can expect more legislative attention later this year.

LEN STRAZEWSKI, a professor and benefits expert, is the benefits columnist for Risk & Insurance®.

February 1, 2006

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