Arnold Kling  

Or is it Medicaid?

Textbook Omissions... Kinsley on Social Security...

I was not aware of some of these statistics.

Medicaid, the nation's largest health insurance program, is costing the states and the federal government more than $300 billion a year. The growth of the program, which covers the poor and disabled, has outpaced state revenues, and Medicaid is now a larger component of total state spending than elementary and secondary education combined, according to the National Governors Association.

...The governors say Medicaid, which insures a quarter of the nation's children and two-thirds of its nursing-home patients, has become so expensive that it now, on average, makes up 22 percent of states' budgets, compared with 10 percent in 1987.

Nursing home spending is, pardon the expression, the old maid of the health care sector. Nobody wants to pay for it. I know affluent elderly who ask how they can transfer assets to their children so that they can be eligible for Medicaid should they require a nursing home.

It may be quite rational for someone to decided that they do not want to build up savings to cover a stay in a nursing home. It's not what anyone looks forward to.

For Discussion. If nursing home stays should be paid by the private sector, then what incentives could make that happen?

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Bob Knaus writes:

Make elder care expenses tax-deductible for the heirs of those who receive it? Such a policy would shift significant spending to the private sector. Among the benefits:

- Creates cross-generational incentives for frugality
- Decisions on care strategy are shared between elderly and heirs
- Encourages home-based elder care

I see all these as having a net positive social/cultural impact. Doubtless my upbringing in a conservative religious society colors this - all of my grandparents were cared for at home until they died.

Of course, this uses tax incentives rather than appropriations to accomplish policy, anathema to libertarian economists!

Capt. Bob Knaus

Lawrance George Lux writes:

The Shotgun draconian formula would state all Labor who have a Parent of retirement age, will lose their personal tax exemption which will go to finance a Nursing Home Fund. This eliminates the incentive to transfer Assets to Children--who have to pay anyway. lgl

rvman writes:

Not letting the public sector pay for it would have the immediate effect of causing 100% of nursing home expenses be borne by the private sector. Indeed, the entire health apparatus could be borne by the private sector, by the simple expedient of NOT SPENDING ANY GOVERNMENT MONEY ON IT!

This causes equity problems, but nothing a negative income tax and mandatory long term care and catastrophic health coverage wouldn't solve.

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