Clinton Proposes Partial Funding of Long-Term Care for Elderly

The proposals represent the most ambitious effort to deal with the long-term care needs of the elderly since the collapse of Clinton's plan to guarantee health insurance for all Americans in 1994.

The core of the initiative is a proposal to give a tax credit of $1,000 a year to people who need long-term care, whether at home or in an institution. The tax credit would also be available, in some cases, to people who care for relatives with conditions like Alzheimer's disease, Parkinson's disease, stroke and traumatic brain injuries.

The White House said that the tax credit, if approved by Congress, would help 2 million people, at a cost of $5.5 billion, from 2000 to 2004.

White House officials said the president would probably not specify now how he intended to pay for the initiative, but would probably ask Congress to cover the cost by eliminating several corporate tax breaks. In any event, they said, Clinton will not dip into the anticipated budget surplus, which he has said should be reserved for Social Security.

Ari Fleischer, a spokesman for Republicans on the House Ways and Means Committee, said the proposed tax credit for long-term care was "a good idea that has a potential to be enacted into law." It was, he said, part of the House Republican manifesto, the so-called Contract With America, in 1994 and 1995.

But Fleischer said that Republicans and Democrats alike had in the past resisted some of Clinton's proposals for business tax increases. The long-term care changes would have a better chance of approval if they were not linked to tax increases, Fleischer said.

The health initiative is to be included in the budget that Clinton sends to Congress later this month. It responds to a significant need, administration officials say, pointing out that 5 million Americans need long-term care because of illness or disability, and that the need will grow with the aging of the population.

The president's proposals would encourage and reward people who provide informal, unpaid care to spouses and parents. Many of these caregivers are themselves over the age of 60.

Administration officials cited the plan, which has been in the works since the summer, as evidence that the president was still able to focus on the needs of the American people, despite his impeachment by the House of Representatives on Dec. 19.

"If this helps on that front, I'm happy," said an administration official asked about any connection between Monday's planned announcement and the impeachment proceedings, "but that's not the rationale for it."

Budget documents show that Clinton's initiative also includes these proposals:

-- The federal government would provide $125 million a year to the states -- $625 million over the five years covered by the initiative -- to assist families caring for relatives with serious illnesses or disabilities. The money would pay for information, training and counseling, as well as the occasional services of a home health aide or personal attendant, so that the regular caregiver could get out of the home for a few hours a week. About 250,000 families could be assisted under this program.

-- Medicare officials would disseminate information to all 39 million beneficiaries emphasizing that most long-term care is not covered by Medicare, the federal health insurance program for the elderly and disabled. Surveys of the elderly have found that nearly 60 percent of them do not realize Medicare's limitations. The education campaign would cost $10 million.

-- The federal Office of Personnel Management would make private long-term care insurance available to federal employees and retirees, their parents and certain in-laws at negotiated group rates. The government would not pay the premiums, but would negotiate the rates with a single insurer or "a very small number of carriers."

The White House estimates that 300,000 people would buy insurance under this arrangement. Because of the group rates, it says, premiums would be 15 percent to 20 percent lower than the cost of individual long-term care policies. The government would insist on certain minimum benefits and a cost-of-living allowance, to protect benefits against inflation. The administrative costs to the federal government would be $15 million over five years.

Joshua M. Wiener, an expert on long-term care at the Urban Institute, a research and policy center, welcomed the president's proposals. "It's good to see some recognition of this issue," he said. "In the debate about Social Security and Medicare, we've almost totally forgotten the third concern about retirement security -- the need for long-term care."

But Wiener said the tax credit would be of little help to people with incomes so low that they did not pay federal income taxes. "You have to pay some taxes to qualify," he said, "and 40 percent of the elderly pay no income taxes at all, primarily because substantial amounts of Social Security are not counted as income for tax purposes."

And although a $1,000 credit would be valuable, many people with chronic illnesses and disabilities require home-care services costing tens of thousands of dollars a year, experts said.

The administration says that three-fourths of the people who would get the proposed credit would be spouses or other relatives of people needing long-term care.

Under the administration proposal, a person could qualify for the tax credit if he or she was unable to perform three or more basic tasks of everyday life. These "activities of daily living" include bathing, dressing, eating, using a toilet and getting in and out of a bed or a chair. The person's impairments would have to be certified by a doctor.

Alternatively, the family of a person needing long-term care could qualify for the tax credit if the family provided such care to a close relative who lived with the family and who had annual gross income of less than $8,100.

The tax credit would be available, in some cases, to parents caring for children with severe disabilities. The rate of children living with handicaps has increased in recent years, in part because of doctors' success in saving premature, sick and disabled newborns.

The administration says the tax credit would benefit 1.2 million elderly people, 250,000 children and 550,000 nonelderly adults.

The full tax credit would be available to couples with incomes up to $110,000 a year, but would be gradually reduced for more affluent couples and would be eliminated for those with incomes over $130,000 a year. The credit would be phased out for individuals with incomes from $75,000 to $95,000.

In a description of the proposal, the White House says: "The flat $1,000 credit would be given on the basis of a certified need for long-term care, rather than expenses for long-term care. This means that families and people with chronic illness or disability do not have to collect and submit receipts for paid home health care" or other expenses.

Administration officials said the proposals recognized the value and costs of informal, unpaid long-term care provided by relatives. If, for example, a man has a stroke and his wife takes time off from work to care for him, she would not necessarily have a receipt to show her reduced hours of work or the time spent bathing and feeding her husband. But the family might qualify for the tax credit.