The Golden Years?

THE OPEN MIND
Host: Richard D. Heffner
Guest: Peter J. Strauss
Title: The Golden Years?
VTR: 10/13/1994

I’m Richard Heffner, your host on THE OPEN MIND. And it was a long, long time ago that my wife first observed that at any one moment, my choice of OPEN MIND topics and guests frequently mirrors our own life situation or concerns at that moment. Well that’s true of course, has always been. And is so today, as I turn to a most distinguished American lawyer, well known for his expertise in the matter of even fairly well-to-do older people fearful of being destitute, or at least financially too dependent in what was supposed to be their golden years. So, if you are wonderfully young and boundlessly wealthy, if you don’t anticipate growing old in America, and have no aging relatives or friends whose financial concerns concerns you, then today’s OPEN MIND probably isn’t really a program for you.

Otherwise, meet Peter J. Strauss, partner in Epstein, Becker & Green. I met him recently featured in a New York Times article entitled, “Welfare for Middle-Class Elderly.” Now these days, of course, child welfare advocates have complained that because the elderly can vote, and do vote their economic interests, they’re a great deal better off in contemporary America than our children’s lot is, so that I would first ask Mr. Strauss just what and where the middle class elderly’s beef really is. What is it that bothers you and bothers your clients?

STRAUSS: The beef, I guess, is that the system that was created for them in 1965, the Medicare system, which for the first time really gave quality health care to all seniors over 65 and younger disabled persons, has succeeded so well that we now have a dramatically larger older population. The scientists have performed their miracles and kept people alive and the doctors do their wonderful things, but for a large number of our elder citizens they’re alive but not functioning well. The problems of incapacity, the problems of functional disability, the inability to perform what the social scientists call the activities of daily living can be a real burden.

And the system that works so well to give them acute care coverage, to help them with their doctor and hospital bills, does not cover the costs of most of what they need today. You know, the stroke victim who goes home and who’s had the rehabilitation and doesn’t work very well in many cases, and can’t dress himself or herself, can’t feed himself or herself, can’t get to the bathroom, can’t walk and perhaps can’t communicate, needs an aid, a companion, someone to help perform those activities, daily living. And those costs are dramatic. We’re talking twenty, thirty, forty thousand dollars a year in some cases, you know, no matter where you are in the country. And Medicare doesn’t cover that, the supplemental care doesn’t cover that. So we’ve got this category of seniors, now close to 17, 16% of our population and by mid-century, the next century which is not so far away, 25% of our population who are being economically devastated because the cost of what they need is not covered. Somehow the system that worked so well is now failing them.

HEFFNER: Now, you describe this so accurately I know, but what’s the formula you’ve devised to deal with it?

STRAUSS: Well, the long term solution of course is a better social policy.

HEFFNER: What do you mean?

STRAUSS: A national healthcare system that covers long-term chronic care, not just acute care. We’ve got to fix that.

HEFFNER: You think we can afford that?

STRAUSS: The price tag is probably something only like one hundred billion dollars. There’s no way in the current climate that we’re going to add a hundred billion dollars to our deficit. Even President Clinton’s healthcare reform proposals which the Congress of 1994 has killed had very little in the way of significant coverage for the long-term care component. And what was there, some home and community-based services for people on a cost sharing basis, which was a very good idea I had predicted was going to get dropped out anyway but now everything has been dropped out and I won’t be proved right or wrong, but we need to do that. We need a part C of Medicare fundamentally as the solution to cover the long-term care. I mean it is kind of crazy to have a system where depending on the stroke of luck, depending on which disease that you get, whether you have a disease that has acute care need such as cancer or strokes in which your medical care is essentially covered, or if you get Alzheimer’s disease where it’s not covered because it’s considered custodial care, you become poor.

Now, I acknowledge the point you opened with which is we’re seeing a war between poor children and poor minorities and the elderly for limited dollars. And I think that government is acting disgracefully when it puts us in the position where these two needy groups need help. We have to look at what we do for our expenditures of healthcare money in a limited dollar environment. I don’t want to get ageist here and I am certainly an advocate for better healthcare for everybody. But we have almost no difficulty in spending almost unlimited amount of dollars on high tech medicine. We have no difficulty in providing for heart transplant and kidney dialysis and aggressive treatment for everybody who needs it, up to the point of medical futility. And we’ve never really asked whether the scientific community and the medical providers have really openly discussed whether that’s the best expenditure of money. Perhaps in a limited dollar environment we ought to be shifting some of those dollars that are spent from high tech care in later life, to spending it for low tech care for help in allowing the quality of life to be improved for people whose lives we’ve saved.

HEFFNER: But doesn’t what goes along with that eventually lead to making a decision about who shall live and who shall die?

STRAUSS: But we made that decision. We made that decision in 1965 when we adopted a system that said we only pay for this and we don’t pay for that. I’m just suggesting that we need to take another look at that.

HEFFNER: If we did take another look at it, where would you hone in? What kind of changes would you make?

STRAUSS: Well, I want to be very careful that I don’t think we should ration, because people are saying this is rationing.

HEFFNER: Indeed.

STRAUSS: But what they forget when they say that is that we have rationing now. I mean we have rationing when insurance companies make decisions as to what procedures are going to be covered. We have rationing when we say who can get Medicaid and who can’t get Medicaid. We have rationing.

HEFFNER: But in a sense you are positioning yourself against even that rationing, right?

STRAUSS: Well, I would not have the cost of chronic care means tested, so in that sense, yes. Medicaid is a means-tested program.

HEFFNER: Or disease tested.

STRAUSS: Well, or disease tested. I think that’s a choice that the community at large needs to make, as they’ve done in the state of Oregon. The state of Oregon, over the opposition of the Reagan/Bush administrations has instituted a very intellectually challenging process, which is that the kinds of care that people will get will be allocated within the budget available for all healthcare based on decisions and priorities established by the community through a representative group of physicians, politicians, clergymen, ordinary citizens and consumers. And I think they are doing a fairly good job of dealing with this issue of what we pay for. Now, I am violently and vigorously opposed to using age as the cut-off rule. I am violently opposed to using cost as a cut-off rule if it’s done in a micro-setting. I don’t think we should be saying, “Let’s see how expensive this heart transplant for Mr. Jones is going to be, and let’s not give it to Mr. Jones because he has a short life expectancy anyway and it’s too expensive.” But I think we’ve got to make those decisions on a global basis. I’m troubled by it if we do it on an individual basis. I think we have to do these decisions in advance. We have to establish these priorities and then suffer the consequences. You know, we’re all going to change the rules if we’re in that situation.

HEFFNER: Indeed.

STRAUSS: That’s human nature.

HEFFNER: Sure.

STRAUSS: I mean if you were going to ask me if you needed a heart transplant, and you were told that based on your potential for recovery the quality of your life that could be expected after it is not going to improve, and those are the goals that society has set, and therefore you can’t get the Medicare system to pay for your heart transplant, I’m going to be very upset. But I’m also upset about the fact that I don’t have my health insurance when I’m older, Medicare, paying for the companion that I might need if I were to become a stroke victim.

HEFFNER: Well, then where are we? Because when Dan Callahan, an ethicist, sits at this table he may not use the words, but he’ll mean, yes, we’ve got to ration healthcare. Where are you dealing particularly with the kind of clients you do deal with?

STRAUSS: Well, I don’t think allocating a total budget among people is rationing. It’s dividing it differently, perhaps. I’m not suggesting we cut back the total expenditures. I’m suggesting, in fact, we expand them. I mean, if we’re going to have a part C to Medicare we’re going to be spending more on healthcare, at least initially. It’s just a question of where we’re going to spend those dollars. This is a very complicated question. I don’t know where I would come out. All I know is that right now I think more seniors are hurt by the current system than are helped by it. And while age ought not to be the factor, there ought to be absolutely no arbitrary age limit on the provision of services, in a sense as we grow older the ability to benefit from certain medical procedures may change. We may be more likely to benefit from, let’s use the heart transplant, at age fifty than we would at age seventy-five.

HEFFNER: Of course, I gather that in England and in France, and I would suppose in other countries too, something like dialysis is age-limited.

STRAUSS: Absolutely.

HEFFNER: So it can’t take place after a certain age.

STRAUSS: And that is troubling. I think we need not – we should not adopt that particular approach. The approach may be more difficult. Can we afford not to adopt that approach? Yes, I think the concept that the citizens of Oregon have adopted is that they will take a broader perspective and evaluate if you’ve got 540 medical procedures that are going to be covered by the Medicaid program in a particular year, and you have only X dollars that will get you from number one down to perhaps procedure 475. They have prioritized the total 540, and Medicaid will only pay for the ones that they feel have the top ranking. Now, maybe hang-nail surgery is not going to be covered. Perhaps at some point heart transplants may not be covered under certain conditions, and those conditions have to be thought through in a very delicate and intellectually honest way.

HEFFNER: Of course, the piece in the New York Times the other day that I was referring to, “Welfare for Middle-Class Elderly,” I realize then what a major role you play now, given the facts as you’ve described them, in helping people – I was going to use the phrase “take advantage of” but that has imp…

STRAUSS: Well, a lot of people use that phrase and I think that’s unfortunate. But yes, I advocate to take a program which in 1965 was adopted, same time as Medicare, as a program for the poor. And I have helped people access it in appropriate cases, middle-income families. It was not designed for that. It was designed for the poor. But, of course, it was designed at a time when people thought that middle-income families could afford long-term care. They were not expected to live as long, or in as large numbers as they are today. So the expectations and the foundation of the system, which was Medicaid and long-term care coverage only for the poor, has changed dramatically. And Congress has not significantly taken another look at that. So it’s true we are advocating to make this program the payer of last resort of people for whom it was not originally intended.

Now, when I talk to clients who come in to see me, and a typical case would be a retired couple that’s played by the rules, that saved and they’ve got $200,000 in the bank and they have a house that maybe is now worth $220,000 and they paid 19,000 for it in 1952. And one of those spouses has been diagnosed as having an illness which is going to result in significant long-term care needs in three to four or five years. And they know that those costs, perhaps for taking care of an Alzheimer’s spouse or a Parkinson’s or whatever, is not going to be covered by Medicare. They’re too old to get long-term care insurance which is a new product that I strongly support people look at to self-insure so they won’t be in this situation. But many of them can’t afford it. Many of them are too old and they’re already sick so they can’t get it. These people, I think, have a real need.

Now, in fact, Congress has acknowledged by actions that Congress has taken that the Medicaid program is no longer just for the truly, legitimately poor within the confines of the poverty levels. Because in 1988 when Congress acknowledged there was a serious problem of spousal impoverishment, that in the case of the couple with the $200,000 and most cases all those assets would have to be spent before the person who was the victim of the disease was going to get Medicaid coverage, Congress recognized that that was unfair. So Congress created two benefits for the spouse of the nursing home patient. One’s called a Resource Allowance, and in most states today that is as much as $72,000. And an Income Allowance, which in most states that’s as much as $18,000 a month that the spouse at home is allowed to keep no questions asked. Now, Congress clearly was saying that this is no longer for the truly poor. And in fact, those allowances can be increased if the courts find there’s a need for more resources for the at-home spouse.

HEFFNER: Ok, but you’re not pretending for a moment that the Congress did, in your terms, enough. And therefore public policy, as yet, is a function of the original law. Wouldn’t you say that that was true?

STRAUSS: I agree. And so there’s this tension between the interim steps that Congress has done, the need of the community to access this program, and the budgetary demands on the states which are dramatic.

HEFFNER: But look, aren’t we talking mostly, once you deal with the spousal situation and as you say Congress has to a certain extent done that, aren’t you really coming back to the notion of whether one taxes away and taxes away or spends away what one has accumulated during one’s life as opposed to the notion of passing things on?

STRAUSS: Well, I think that is a factor. You know I’ve often said, and I repeat it because I feel very strongly about it, that the cost of healthcare today is the greatest tax of all. When nursing home costs average in this country close to $50,000, not the 35,000 that you read about in some of the surveys, and in metropolitan areas like New York and Boston and Los Angeles you’re talking 60-80 and in some cases $100,000 a year. And this is, in most cases, not covered. We really have a major tax, and I don’t think that’s fair.

HEFFNER: Wait a minute. Let me go back to the question of whether it is fair or not. We in this country seem to have fixed upon the notion. And no one given my stage of life could deplore it more, not as a matter of public policy but as a matter of the way it hits me. I’d like to leave whatever I could to my children and my grandchildren. But I’m not so sure that it is so wrong to assume that I’ve really got to eat up everything I have, and may not be able to pass on anything to them, if I and/or my wife were sick.

STRAUSS: If you and/or your wife are sick with the wrong disease. You see, I understand that but I think that’s the unfairness of the system.

HEFFNER: But suppose we make that true of all the diseases, not say, well, not make it true but make it true of all diseases.

STRAUSS: Well now you may be talking about cost-sharing, and I think that’s a myth we have to look at. I don’t run across a large number of people with substantial wealth who are transferring assets solely for the purposes of inheritance. I think people with means, who can afford to pay their fair share, want to do that. They don’t want to lose control. They don’t want to set up trusts, and that may not be possible anymore. But, there are many things that they do to get Medicaid which is a terrible burden on them emotionally, psychologically, there’s a loss of control. That’s a terrible thing to have to force people to do in later life. Now, some of the recent Congressional reforms and limitations on access to Medicaid are forcing more people to give their money away. It’s kind of sad and ironic that that is happening.

HEFFNER: But there’s an alternative.

STRAUSS: Well there aren’t many.

HEFFNER: Not giving it away.

STRAUSS: That’s right, and spending it down and having it gone. And I think it’s a shame that people who suffer from Alzheimer’s disease or Parkinson’s don’t have the same right to provide a better quality of life for their families than the people who are either lucky enough to die quickly or have a disease where the care is largely covered by the insurance system. So what do we do? What are our options, short of Congress adopting a Medicare part C? Which I don’t see for twenty years, I really don’t, unless we can turn the military budgets into better healthcare, and help on many programs, and care for poor children and, you know, we know the list. We don’t have to debate that.

But there are some things we could do. Again, they’re going to cost a little money. But why don’t we create things like long-term care IRAs? Why don’t we allow people tax credits for the premiums on long-term care insurance? Why don’t we do for spouses what we’ve now done for the disabled? Because Congress has now allowed persons with disabilities to shelter their assets during their life, have Medicaid, have their funds to provide for their homecare and their living expenses, and then repay Medicaid when they die. Why can’t we do things like that for spouses? I’ve proposed that. I’ve sent papers to the Congress and to the legislature and I really don’t get response to it. Everybody’s caught up in this battle.

And then a few years ago the Robert Wood Johnson Foundation sponsored a program for the states, called the Public-Private Partnership, allowing people to buy long-term care insurance, and when they used up their three-years benefit, could get Medicaid without spending down their assets. It was the carrot and the stick approach. And New York State adopted that, Indiana did, Connecticut, and California. And yet there are people in Congress who don’t like long-term care insurance, so in Oberon ‘93 they made it impossible for other states to adopt this program. We should be doing more of that. We should be encouraging people to protect themselves and self-insure and take steps that they don’t have to apply to Medicaid, that they don’t have to divest and lose control and lose independence.

HEFFNER: Short of that though, hell, I don’t want to spend down but I don’t understand, really, aside from not wanting to, why that isn’t, under the circumstances, the most acceptable public policy.

STRAUSS: Well I think it’s the only public policy that has been put on the table as an alternate to making yourself eligible. But why can’t we have something in between? Why can’t we say, “Yes, you’re going to have to have some obligation to contribute to your care, even of a long-term custodial nature; we recognize the system isn’t working well, but you will also have some protection.”? That there ought to be perhaps an allowance; like we give, you know, the first $600,000 is free of estate taxes. Maybe we could have some kind of an allowance where you would be permitted to transfer to your children. We now have, by the way, unlimited pretty much protection for spouses in many cases. Why don’t we have some kind of an allowance for inheritance purposes? I don’t find that violative of ethical values for our society. You work very hard to maintain what you have today. I mean, you’ve been public service and maybe you don’t have 40 million dollars where the problem wouldn’t exist, but why shouldn’t you have some right, some ethical right to pass on something to your children?

HEFFNER: Don’t misunderstand me, Mr. Strauss, I think I do. And I think the people who are written about in this extraordinary piece in the Times the other day do, and the people whom you advise. I don’t mean that, but I don’t see us doing what it is you think we should do. And I have to raise these questions as a consequence. What do you think is going to happen? I mean, we’re a people who, I would presume, could do all these things and you and I know that we’re not going to.

STRAUSS: Indirectly, Congress, and many people may disagree with what I’m about to say, but indirectly I think Congress acknowledges that Medicaid is the payer of last resort and has to be; that there is a real wrong if they went all the way, because they could. Instead of creating a three-year period of ineligibility when you give away your assets, they could make it a ten-year period of ineligibility. Or they could say you simply can’t get Medicaid until you’ve spent on your care, dollar for dollar what you’ve given away. They haven’t done that. Why haven’t they done that? Because somewhere, below the political rhetoric, they acknowledge this terrible wrong that we have here and they are allowing it to continue. They tighten up the rules. It was twenty-four months, and then it was thirty months, and now it’s thirty-six months. But they don’t go all the way because they know it’s not politically acceptable…

HEFFNER: Aha.

STRAUSS: …and they know it’s not morally correct.

HEFFNER: Which of those two?

STRAUSS: Both. I think both. You know they all have mothers, and they all have fathers. You know, when I give a lecture at a tax planning conference – because you know what, interestingly you know this interest in the aging population has grown so much that I get invited to conferences that are traditionally on income tax planning and estate tax and gift tax planning. Now, all of my colleagues who speak there have important things to say, and they are great speakers, and the audience is very interested. But I have to tell you, when my hour is up I get 40 or 50 people who get up from the audience and come out, not because I’m a good speaker, but because they all have a question about their mother, or their father, or their spouse, or their child with a disability. And there’s a crowd that has a personal question. And this is reflective of what is going on in society, and it’s reflective of what the Times article was about. And it raised all the issues on both sides and I think it was fairly balanced, but the issue is there and it’s not going to go away.

HEFFNER: Mr. Strauss, thirty seconds left. What do you see as happening in the next few years?

STRAUSS: I think we’ve got to get the Congress to look at some interim solutions. We have a White House conference on aging coming up. I hope this is an issue that the conference will address. I think that the advocacy groups like AARP, and the Older Women’s’ League, and our attorneys associations, and the National Academy of Elder Law Attorneys, which I helped found and which is now doing very good work in this area; we’ve got to present specific ideas to the Congress. And we’ve got to mobilize politically, understanding we have difficult budget times, understanding that children and minorities and people who are poor within the guidelines also need help. We should not take it away from them, but we’ve got to solve this dilemma. When 25% of the population is going to be over 65 and 5% over 85, what are we going to do then if we can’t help it now?

HEFFNER: Good way to end the program, even though a sad way, in a way. Thank you very much for joining me today, Peter Strauss.

STRAUSS: Thanks for having me.

HEFFNER: And thanks, too, to you in the audience. I hope you join us again next time. And if you’d like to share your thoughts about our program today, about our guest, please write The Open Mind, P.O. Box 7977, F.D.R. Station, New York, NY 10150. For transcripts, send $2.00 in check or money order.

Meanwhile, as an old friend used to say, “Good night, and good luck.”