The actress and comedienne Betty Davis once said "Old age ain't no place for sissies." She wasn't kidding. One in five adults over 65 cannot manage such basic activities as eating, bathing, or cooking without assistance. That figure goes up to half for the 85-plus crowd (Heimbuch et al., 2023). Acquiring long-term services and supports (LTSS) is costly. According to the life insurance company Genworth, the median assisted living facility costs $5,350 a month, whereas the median semi-private room for a nursing facility costs $8,669 a month. Given that the median retirement savings is $462,410 for the 75-plus crowd, it is no joke.
Costly elderly care is the problem that Vice President Kamala Harris would like to address with her proposal to cover long-term home care. Her idea, which was proposed earlier this month, is to fund Medicaid to subsidize in-home long-term care to provide the LTSS that older citizens need to function and live without requiring assisted living. That is because Medicare currently does not cover home care, not to mention that only 4 percent of seniors have private long-term care insurance.
Harris' cost of estimate comes from a study from the Left-leaning Brookings Institution, and even they specify that the $40 billion estimate is for a "very-conservatively designed universal program." I very much doubt that such a program would be conservatively designed. I have two cost estimates that show how rosy her estimate is.
1) A study commissioned by the Centers for Medicare and Medicaid Services (CMS) found that Medicaid spent $115 billion on home-based care in 2021, or $15,407 per person (Wysocki et al., 2024). Assuming the per capita cost holds constant and that 14.7 million individuals would be eligible (per Kaiser Family Foundation estimates), that would be a back of the envelope estimate of $226 billion. That $226 billion might be low considering that the Kaiser Family Foundation found that a home health aid working 40 hours a week costs $68,640 a year, which is over $30,000 more than the median income of a Medicare beneficiary.
2) In 2020, the Left-leaning Urban Institute proposed a similar program in which there would be a $150 per diem cap on in-home expenses. Urban Institute estimated that it would cost anywhere between $250 billion and $394 billion annually. To think that the cost of home aides has increased by a third since that study.
On top of those cost estimates, research shows that including home care in health insurance will create the moral hazard to boost demand (Konetzka et al., 2019). Especially without a corresponding increase in home health aides, what this means is that home care will become more expensive as a result. In other words, what we will see is that Harris' policy could easily cost over half a trillion dollars annually.
What makes the proposal even more ridiculous is that she claims that she can fund the $40 billion by cutting $40 billion in Medicare drug spending without denying benefits to anyone. I am skeptical that she would succeed. For one, the Medicare drug-price controls used in the Inflation Reduction Act managed to increase premiums by 20 percent in 2024 while limiting consumer choice and raising out-of-pocket costs (Council for Affordable Health Care). No surprise there since I predicted in 2022 that the IRA would have such negative effects on drug pricing. Second, the Congressional Budget Office (CBO) projected in its report on reducing prescription prices that CMS would only be able to make a cut somewhere between $0 and $4 billion, which is nowhere near enough to cover the conservative estimate of $40 billion.
Even if Harris could magically cut $40 billion from Medicare without affecting benefits, think of what that implicitly means. As Cato Institute scholar Michael Cannon pointed out in his analysis on the proposal, Harris is tacitly admitting that there is at least $40 billion of waste in Medicare. And that is not too far off the mark considering that CMS admitted that there was over $31 billion of improper payments in 2023.
It is not only the waste that bothers me about Medicare, but the quality of healthcare that Medicare provides. The nonpartisan Medicare Payment Advisory Commission concluded that "the [Medicare] payment system is largely neutral or negative towards quality," a conclusion that is also in Cato Institute research on the topic. This begs the question of why we should trust the government to expand Medicare and not expect the same inefficiencies and low quality.
The Medicare Hospital Insurance Trust is already projected to be insolvent by 2036. Why should we add more promises that we cannot fund? Medicare is one of the three largest budgetary drivers of the federal budget and the out-of-control spending. The United States is going to reach a $1.9 trillion deficit this year, has already reached a 99 percent debt-to-GDP ratio, and have that ratio increase 122 percent in the next decade.
Plus, as the Right-leaning Heritage Foundation points out, the Biden administration increased the deficit well beyond what the Congressional Budget Office (CBO) projected. The debt increased from $27.8 trillion at the start of Biden's term to $35.8 trillion, or an increase of $8 trillion in debt. If Harris had brilliant ideas to keep costs down, don't you think she would have at least presented some of those ideas to the President in the past four years?
We have seen that Medicare or price controls will do nothing to help save costs here. What Harris' plan would do is increase healthcare costs considerably, do nothing to address Medicare waste, and all the while provide the elderly with subpar in-home care. This is not compassionate or fiscally responsible. It is nothing more than a feeble attempt to buy the votes of Medicare enrollees in the hopes that she can beat Trump come November. Money does not grow on trees; you cannot solve a problem simply by throwing money at it. I wish more people would see that Harris' plan is one proposal out of many that does not exist to help people, but rather buy votes in the hopes of winning come Election Day.
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