My mother passed away in a nursing home in 1991. Prior to going into the home, her dementia symptoms had grown progressively worse, but my father was at home taking care of her. Then she fell, broke her hip, went into the hospital, and was discharged to the nursing home, where she stayed until she died. She probably had what today would be called Alzheimer’s disease. Fortunately, she was only in the nursing home for four months before she died. Fortunate for my mother, because who wants to live in a nursing home? Fortunate for my father, because who could afford it?
My father, who dropped out of college to help support his parents in 1929, worked for 50 years as a caretaker on the estate of a wealthy investment banker to whom my father had to tip his hat when “the boss” drove by in his chauffeured Cadillac limousine. A devout Catholic who went to Mass every morning, my father was fond of referring to New Testament parables. He especially liked the one about the rich man, the camel and the eye of the needle. I think he was pretty sure “the boss” wasn’t going to make it through that eye. We were not encouraged to follow in the footsteps of “the boss.” When I went away to Princeton on scholarship, my summer job was working for my father, pulling weeds, trimming trees and mowing the 60-acre lawn at the estate where he worked. I remember trying to convince him that not all rich people were bad (full disclosure: my girlfriend at Princeton was rich, at least by my standards). My father was skeptical.
My father never earned more than $15,000 in a year. Meanwhile, my mother stayed home, managed the finances, and raised six children. I was the youngest. Through some miracle of finance and incredible frugality, by the time my mother went to the nursing home my parents owned their home, had paid off their mortgage, and even had about $80,000 in savings. Those four months in the nursing home, at what was then the astronomical amount of $3,000 per month, cost my parents 15% of their life savings.
After my mother died, I decided to devote an increasing part of my law practice to what is now called “elder law.” Working with people like my parents, I tell them that my major goal is to help them sleep better at night. My clients fear death, of course, but less than their children do. After all, when you’re old, death is all around you. My married clients want to make sure that, when one of them dies, the other is safe and secure. All of my clients hope that, when they die, they can leave their savings to their children, or their grandchildren, or their relatives, or their church or school or some other deserving cause. And, what my clients fear most is frailty, Alzheimer’s disease, and the poverty that these troubles can bring.
When I was growing up, the specter of illness-induced poverty haunted every middle class, older American. In the 1960 census, despite the fact that Social Security had been around for over 20 years, 35% of households headed by older people were poor. One major reason was that sick older people, frugal and responsible people like my parents, often became impoverished by medical bills if they had the misfortune to get sick before they died.
Medicare was supposed to help solve that problem. For most people, it did. By the 2010 census, only 8.7% of households headed by older people were poor. Medicare pays doctors and nurses and hospitals to keep you alive as long as possible (as it should be). That is why it’s not surprising that 40% of all Medicare payments are spent on people during the last 30 days of their lives. If your husband has cancer, then Medicare would (mostly) cover the diagnosis, the operations, the “chemo” and the radiation. However, if your wife has Alzheimer’s disease and her need is not for operations and drug therapies, but rather for extra home care while she is at home, then Medicare does not pay for that extra care. The monthly cost of care at a good nursing home today is around $12,000. The cost of 24-hour care at home is higher. Medicare will only pay for room and board at a nursing home if your wife needs “skilled” nursing care, and even then, only for the first 100 days. After that, even if your wife can’t dress herself or use the bathroom, Medicare will not cover these costs. Only Medicaid (called MassHealth in Massachusetts) will pay for that type of care. And to qualify for MassHealth, you have to be “poor.”
I was speaking to a colleague of mine recently about the work that I do helping individuals and couples structure their assets and their estate plans so that if one of them needs extended nursing home care he or she can qualify for MassHealth. Of course, my colleague observed, MassHealth was meant to take care of poor people. Every time one of my clients qualifies for MassHealth as a result of my work, he observed, the rest of us pay more in taxes, because Medicaid is financed by all taxpayers, federal and state.
My colleague’s clients are mostly wealthier than mine. He does a great job helping them structure their assets so that, when they die, their children’s inheritance will not be reduced by estate taxes. My colleague’s clients, like mine, are covered by Medicare, even though many of his clients likely have the resources to pay for their healthcare privately. Of course, that means that everyone else has to pay more into the Medicare Trust Fund and more in taxes, since both of these sources fund Medicare. No matter though, since the law is that all people receive Medicare regardless how wealthy they are.
My colleague is good at what he does, and he is proud of it, as he should be. After all no one, rich or poor, should have to pay any more in taxes or medical costs than the law requires. But, to me it seems that minimizing taxes and maximizing benefits are really the same thing. Don’t middle class elders have the right to know that if one spouse needs nursing home care while the other is alive, that they will not be forced into poverty? Don’t they have the right to plan so that when the first of them dies, the survivor will be financially safe, even if he or she falls victim to a disease, like Alzheimer’s, that Medicare doesn’t cover? Don’t they have the same right to receive care as people who get cancer or diabetes? And, shouldn’t my clients have the peace of mind to know that their life savings will go to their children, or to charity, and not to a broken healthcare system?