Prospects for quick health care reform fading.

The White House Task Force on Health Care Reform, chaired by First Lady Hillary Rodham Clinton, disbanded at the end of May. Its legacy includes months of carefully orchestrated public hearings and volumes of special studies on specific issues concerning health care financing. Administration sources, however, report that the fact-finding and debate have left the White House far away from introducing a comprehensive set of reform proposals that President Clinton hopes will be the center achievement of his term.

Early expectations indicated that the Administration would endorse a blue-print for a new health care system based on block purchases of services by consumers and businesses through HMOs. This approach, based on ideas developed by Dr. Judith Feder of Georgetown University, has proven to be a difficult idea to sell to a public already feeling bewildered by the complexities of the U.S. health care system. Support for the Feder concept began to evaporate in the late spring, as the Administration's experience with the BTU energy tax seemed to suggest that an equally complicated proposal for health care reform would lack enthusiastic support among congressional Democrats. Polling data suggests that many Americans may prefer the simplicity of Canada's "single-payer" approach, in which a single nationwide health insurance system reimburses clinicians and facilities in the private sector. A bill to establish an American version of the "single-payer" system already has been introduced in the House of Representatives. Although the Administration once rejected the idea of "single-payer" health care as too similar to British National Health Service-type systems, Hillary Rodham Clinton reportedly is viewing this approach more favorably. Continuing debate within the Clinton White House is one reason why no major legislation is expected to be offered to Congress until at least this October.

One exception to the slow speed of the health care reform process is the rapid pace of legislation designed to prevent older Americans from transferring assets to family members in order to qualify for Medicaid. According to some analysts, asset transfers cost federal and state governments nearly $2 billion per year in Medicaid expenditures that could have been financed through private long-term care insurance policies.

The process of closing the asset transfer loophole began on May 6, when the House Committee on Energy and Commerce voted by a 2-1 margin to include restrictions on asset transfer as part of the 1994 Medicaid budget. The House bill had the support of both the American Health Care Association (AHCA) and the American Association of Homes for the Aging (AAHA), the two largest organizations representing the nursing home community in Washington. In June, the Senate passed similar legislation, including as well language that prohibits nursing homes, when asking about the resident's method of payment, from asking about the resident's income and assets. Differences between the Senate and House versions are being negotiated by a joint conference committee.

A more sweeping change to Medicaid and Medicare was proposed by Senate Republicans as part of their alternative to the Clinton Administration's budget proposals. Under the Republican plan, the Federal government would cap its expenditures for both programs, forcing Medicare recipients and the State governments to make up for any reimbursement short-falls. Even moderate Republicans who were uncomfortable with the idea of increasing health care costs for retired constituents supported the plan, confident that the Democratic majority in the House would not allow it to pass.

The intensity of congressional interest in Medicaid financing suggests that Capitol Hill does not expect the fall health care reform package to eliminate the current system of government reimbursement for nursing home costs. Major changes in long-term care financing, if they occur, are likely to be backburnered until reform of primary care financing passes Congress.

Growth in Nursing Home Residency Slowed in 1980s

On June 28, the U.S. Department of Commerce released a study by demographer Cynthia Taueber that uses data from the 1990 census to demonstrate that nursing home residency, while increasing overall, lags behind the rate of increase in the elderly population. The total nursing home population of the United States grew from roughly 1.4 million in 1980 to just under 1.8 million in 1990, an increase of about 25%. In contrast, the number of Americans over 85 years old -- those most likely to live in nursing homes -- grew by 35 percent, from 2.3 to 3.1 million. The study, entitled Nursing Home Population 1990, also reported that the average age of nursing home residents increased during the 1980s. A press release that includes all the data from the study is available without charge from the Population Information Service, [phone].

Although researchers familiar with the study agree that it confirms that a smaller percentage of older Americans are using nursing homes now than 10 years ago, there is no consensus as to why. Taueber explains her findings as evidence that improved medical care and knowledge of prevention among Americans are resulting in a reduced rate of disabilities among the elderly. Robert N. Butler, MD, chairman of the geriatrics department at Mount Sinai Medical Center in New York, believes a better explanation lies in the increased availability of alternatives to nursing homes, including hospices, assisted living and more intensive home health care. A third explanation is that state restrictions on new construction have kept more older Americans on waiting lists for nursing home care. This is alleged to be particularly true for patients with conditions such as Alzheimer's disease.

The Taueber study comes on the heels of other disappointing news for the nursing home industry from the 1990 census. Contrary to popular belief, the census found that the number of older Americans is not going to expand rapidly during the 1990s, in part because of the effects of the "birth dearth" of the 1930s and early 1940s. The census found that there were fewer Americans aged 50-59 years in 1990 (21.8 million) than in 1980 (23.3 million). The first wave of the "baby boom" population will not reach age 65 until the year 2011.