Medicare should not cover at-home care

Vice President Kamala Harris announced a plan earlier this month to add home healthcare benefits to Medicare . The plan is a fiscal fantasy. Medicare is already in a fiscal crisis, and new benefits will only make things worse.

According to the Brookings Institution, covering seniors' home care for even one year would cost Medicare $40 billion . The program already accounts for more than one in every five dollars spent on healthcare in this country. Medicare spending exceeded $944 billion in 2022, the most recent year for which there are federal data. Its Part A hospital insurance trust fund is slated to run out of money as early as 2036 .

Harris promises to fund her home care proposal by subjecting more prescription drugs to price controls, tackling Medicare fraud, and cracking down on pharmacy benefit managers. But the math doesn't add up, as healthcare journalist Brian Reid recently noted in his Cost Curve newsletter.

The campaign cites a white paper from Stanford positing that prescription drug price controls could generate $450 billion in revenue over 10 years. But the Inflation Reduction Act has already spent $100 billion of that figure, according to the Congressional Budget Office's math. It can't go toward a new home care entitlement.

To wring out some additional savings, the white paper also floats slapping medicines with price controls after five or nine years on the market, depending on the type of drug — four years earlier than the Inflation Reduction Act.

But the $450 billion figure assumes that drugs will be hit with price controls immediately upon entering the market. So, the numbers don't match the details of the proposal. Talk about fuzzy math.

Taxpayers cannot afford to pay for the home healthcare of every senior who needs it. People need to save for these expenses. And those savings exist!

Stephen Moses, a visiting fellow at the Paragon Health Institute, estimates that "$35.4 trillion in retirement savings; $12.4 trillion in home equity; and $21.2 trillion in life insurance currently lie fallow" for use by seniors for possible long-term care expenses.

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Seniors often don't tap those assets because they can count on Medicaid, the health plan for the poor, to pay for their home care. It covers 61% of long-term care expenditures. Medicaid exempts a minimum of $713,000 in home equity, and up to $1.071 million in some states, from the asset test for Medicaid eligibility.

Nearly 8 in 10 seniors own their own homes. Taxpayers may wonder why those assets should be off limits for home care bills — and why they should have to pick up the tab, as Harris is advocating.

Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on X @sallypipes .