“The first lesson in economics is scarcity: there is never enough of anything to satisfy all who want it. The first lesson in politics is to ignore the first lesson in economics. —Thomas Sowell
“There are no solutions. There are only compromises. —Thomas Sowell
Elderly Life and Care encompasses a wide range of services, including independent living, assisted living, memory care, skilled nursing and home care (including nursing home care). home provided in the aforementioned settings). Private market forces prevail in independent living and, to a lesser extent but above all, in assisted living. Government funding and regulation prevail in home care, skilled nursing and, less but significantly, assisted living. By most measures, the more market-oriented independent living and assisted living sectors fare better economically over time than the more government-dependent sectors. Why?
Markets operate on different principles from government. Since the dominant trend in long-term care for decades has been to move away from private markets towards greater government involvement, it is incumbent on operators to compare and contrast the principles and results of funding systems. private and public. Let’s take a look at the general principles first, then look at their results for life and senior care. Perhaps we can draw some conclusions that will guide our public policy preferences.
The economy explains the markets. Markets are private, individualistic and maximized by capitalism. Politics explains government. The government is public, collectivist and leans towards socialism.
In the marketplace, free consumers vote with their money for (i.e., they choose) what they want in the quantity and quality they want. Government subjects can only vote yes or no (that is, they accept) for politicians or voting measures without gradations of preference, amount or quality.
In markets, entrepreneurs compete by creating or identifying and meeting consumer needs on the basis of quality and efficiency. In government, politicians compete in satisfying interest groups with perks paid for by others, and with notoriously lacking quality and efficiency.
In markets, millions of transactions between willing buyers and sellers create spontaneous economic order, set interest rates (the price of money) based on supply and demand, and generate data on prices that tell investors and businesses how much products and services to produce. Within government, the Federal Reserve sets interest rates based on the balance of power and political influence, resulting in asset bubbles, bad investment and economic inequality.
Government, markets and long-term care
How has the government affected long term care? Providing nursing home care – including room, board, medical care, laundry services, etc. – virtually free to anyone who cannot otherwise afford it, the government has created the institutional bias of the benefit system and has generated a huge, politically powerful nursing home industry.
By paying too little to provide quality nursing home care, the government alienated consumers, leading those who were financially able to seek alternative care settings. In response, the market has created a primarily private paid alternative, assisted living.
Access to care in retirement homes funded by the State after care is needed, facilitated by large exemptions from Medicaid income and assets, have desensitized the public to the risks and costs of long-term care, hampered the development of a private market for home care, and communities that consumers prefer, and have crowded out private sources of funding that the delivery system desperately needs, such as home equity conversion income and private long-term care insurance. The government’s involvement has left the United States with a system of delivering and financing long-term care services fraught with problems of access, quality, low reimbursement, discrimination, and institutional bias. Yet most analysts and politicians want to double public funding and regulation with new mandatory social insurance schemes.
How could a more market-oriented approach improve long-term care? People on their own would spend their money on independent living, home care, and assisted living – in that order. They would only seek care in a retirement home if it was medically necessary.
If the government did not fund the most expensive long-term care, even for the middle class and the wealthy, then consumers would worry about this risk and save, invest and / or insure for it. If Medicaid did not exempt between $ 603,000 and $ 906,000 of home equity from long-term care liability, then people would have a stronger reason to plan, prepare, save, or insure risk, in order to protect their heritage.
With home equity, private insurance, and a veritable reduction in asset spending unmitigated by Medicaid eligibility loopholes widely opened by Medicaid planning advocates, private funding at full market rates is on the rise. would affect all levels of long-term care. New income and new capital would energize the entire continuum, further encouraging innovation on the part of investors and providing better services to consumers. Some needy people would remain, but their needs could be met through private charities and, if necessary, a greatly reduced public safety net program.
Applying the general principles of markets and government identified above to the practical challenges of long-term care leads to only one conclusion: we must rely more on markets and less on government to improve both.
Stephen A. Moses is president of the Center for Long-Term Care Reform and author of “Medicaid and long-term care” and “How to fix long term care. “Reach him at [email protected].
The opinions expressed in each McKnight Seniors Residence guest column are those of the author and not necessarily those of McKnight Seniors Residence.