An increasing number of Americans are retiring in Mexico to places like Puerto Vallarta, and for a variety of reasons, are losing health insurance between the ages of 55 and 65 before they qualify for Medicare. In fact, people between the ages of 55 and 64 are losing coverage faster than any other age group. An estimated 3 million uninsured Americans in the 55 to 64 age group are early retirees whose former employers have reneged on promises to guarantee coverage until age 65–an unanticipated consequence of massive corporate downsizing in recent years. Others are spouses of Medicare beneficiaries under the age of 65 or simply hold jobs that do not include health insurance. Most older uninsured Americans have enough assets to make them ineligible for Medicaid, the state-federal health program for the indigent, yet at the same time few can afford to buy individual policies without feeling a financial pinch. One of the most feasible and reasonable alternatives to financially stressing Medicare, Medicaid, and retired individuals assets is to create a long-term care industry with in Mexico that would be comparable to care within the United States but at a much lower cost.
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As bulk of America’s population ages, society as a whole ought to become more concerned with long-term health care and the rising cost of medical treatment. Because of the increased likely hood that individuals will require long-term health care as they age, insurance companies charge steeper premiums to elderly individuals and make maintaining health coverage impossible for much of the retired population. In extreme cases, premiums can range as high as $1,000 a month. So it is not surprising that many people who become uninsured simply stay that way. Experts think that as these Americans join the growing ranks of the uninsured, they begin to behave much like the other 40 million people who lack insurance: they tend to neglect preventive care and may postpone or forgo necessary treatments. As a result, by the time most Americans enroll in Medicare, their conditions may have deteriorated so much that their bills will end up being higher than they otherwise might have been.
The major public insurance program for the elderly, Medicare, does not provide long-term care benefits for chronic disabling conditions. Only about 18 percent of the elderly are enrolled in the Medicaid program, either through nursing homes or in the community, and only about 5 percent participate in any kind of private financing plan for long-term care (Sherwood). Thus, more than four out of five elderly persons lack adequate public or private insurance for long-term care and are vulnerable to the financial risks associated with long-term care use.
Medicare was enacted in 1965 under Title XVIII of the Social Security Act to help older Americans obtain and pay for medical care. In the early 1960s before Medicare, only about half of older Americans had any health insurance, compared to 75 percent of those under 65 after its installation. Medicare is divided into two parts: Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) which represent two of the four Social Security Trust Funds. In 1994, Medicare outlays were $163 billion. Approximately 9 percent of Medicare spending was for disabled beneficiaries, 5 percent for those with end-stage renal disease (ESRD), and the rest for the aged. By the year 2001 it is projected that Medicare spending will be over $200 billion and still not sufficiently cover the American public (www.medicare.gov).
The second major program intended to help with the cost of medical care is the Federal-State program called Medicaid. The Federal Funds come through Title XIX of the Social Security Act. Medicaid is provided to aged, blind or disabled individuals, pregnant women, individuals age 20 or younger and parents or caretaker of a dependent children as long as the individual meets general and financial eligibility criteria. People who enter nursing homes, deplete their financial assets, and then apply for Medicaid coverage, are commonly identified as a population which experiences severe financial impacts from using long-term care. This process is commonly referred to as “Medicaid spend down” (Adams). Not all persons spend down to Medicaid as a result of an extended nursing home stay. In fact, “the spend down” research suggests that between 40 and 55 percent of people who spend down do so within six months of nursing home admission (www.hcfa.gov). Thus, many people who spend down are people of modest means who spend their available assets rapidly once they enter a nursing home, and qualify for Medicaid 50()fl after admission. With individuals so rapidly depleting their assets they enter Medicaid far soon then should and place more of a strain on the limited resources.
At present the cost of long-term care is extending far beyond the financial capability of most elderly individuals. In 1998 the average cost of a nursing home ranged from $30,000 to $40,000 depending on the location and amount of personal attention received (www.senioraltematives.com). With a constant growth in nursing home costs, the price of aided living will become a greater burden then most older people are capable of sustaining. Within the next five years the cost of long-term care could be as high as $60,000 a year and insurance companies could charge up to $2000 a month in premiums.
The cost of living in the United States is among the highest worldwide so it could be financially beneficial for elderly individuals to retire in Mexico to lower their living cost. The growth rate for elderly needing long-term health care is constantly increasing along with the cost of medical care. HMOs and other insurance providers are continually profiting and as the baby-boomer generation begins reaching retirement age. As a result medical companies will continue to profit and the elderly will continue to rapidly spend their assets. The need for nursing homes and the high price of care is placing great financial pressure on individuals. Without alternatives, most Americans will be unable to afford a decent retirement. Medicare and Medicaid will have to struggle to keep up, as an increasing number of individuals become dependent upon government programs.
The United States government regulates nursing homes and it is reasonable to assume that foreign countries intending to use long-term health as an industry would have to follow similar guidelines if they were to be financed or occupied by primarily American retirees.
‘Some of government and state mandated requirements are: nursing and related services and specialized rehabilitative services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident; medically-related social services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident; pharmaceutical services (including procedures that assure the accurate acquiring, receiving, dispensing and administering of all drugs and biological) to meet the needs of each resident; dietary services that assure that the meals meet the daily nutritional and special dietary needs of each resident; an on-going program, directed by a qualified professional, of activities designed to meet the interests and the physical, mental, and psychosocial well-being of each resident; routine dental services (to the extent covered under the State plan) and emergency dental services to meet the needs of each resident; and treatment and services required by mentally ill and mentally retarded residents not otherwise provided or arranged for (or required to be provided or arranged for) by the State. During the course of a covered Medicare or Medicaid stay, facilities may not charge a resident for the following categories of items and services: nursing services, dietary services, an activities program, room/bed maintenance services, routine personal hygiene items and services, as required, to meet the needs of residents, including, but not limited to: hair hygiene supplies, comb, brush, bath soap, disinfecting soaps or specialized cleansing agents, when indicated to treat special skin problems or to fight infection, razor, shaving cream, toothbrush, toothpaste, denture adhesive, denture cleaner, dental floss, moisturizing lotion, tissues, cotton balls, cotton swabs, deodorant, incontinence care and supplies, sanitary napkins, and related supplies, towels, washcloths, hospital gowns, over the counter drugs, hair and nail hygiene services, bathing, and basic personal laundry, and medically-related social services’ (www.hcfa.gov).
One of the most feasible and economically reasonable alternatives to long-term health care in the United States is creating a long-term health care system within Mexico. This alternative would be considerably cheaper and create less of a strain on Medicare, Medicaid and individual’s financial security. It is reasonable to assume that individuals wishing to move to Mexico for cheaper long-term care would qualify for Medicare or Medicaid within the United States. In reality, there would be little difference between choosing to relocate to Florida or to a community near one of the Club Med resorts in Mexico.
Individuals interested in moving to Mexico should still be entitled to all of the benefits that they are guaranteed while living in the United States and be able to continue to draw on Medicaid, Medicare or other primary insurance companies. The North American Free Trade Agreement (NAFTA) entered into force in Canada, the United States and Mexico on January 1, 1994. Designed to foster increased trade and investment among the partners, the NAFTA contains an ambitious schedule for tariff elimination and reduction of non-tariff barriers, as well as comprehensive provisions on the conduct of business in the free trade area. Because of the NAFTA agreement, there should be little if any hesitation in allowing individuals to chose to relocate to Mexico upon entering a long-term care institution. As long as the Mexican institutions followed the same guidelines as the American long-term care institutions there would be virtually no difference a patient seeking care in America or Mexico.
The cost of living within Mexico is the most attractive offering of creating a long-term health care industry within Mexico. At present there are not enough nursing homes within Mexico to support the new industry. But with the financial backing of Hispanic American companies, land could be cheaply acquired and care centers could be build at a much lower cost then in the United States. To date within the United States there is a constant rise in the need for nursing homes and the cost of constructing new housing ranges from 3 to 4 times that of construction costs in Mexico. The actual living cost and medical cost of living in Mexico is nearly 1/3 that of the United States. If these long-term care centers were build and managed by Hispanic American companies they would be able to create a cheap but profitable new economy within Mexico. The total cost for the elderly would drop by two or three times the current cost in the United States Individuals would be able to live in nursing homes comparable to those found in the United States, but at a fraction of the price, while at the same time receiving equally good care.
There are many other nations outside of North America that might prove advantageous for the elderly to move to, such as England, France, or Denmark. Because of the structured socialized medicine and in some cases a slightly lower cost of living. In most European countries the cost of living would vary from half to 95% the current living cost within the United States. But for the elderly, socialized medicine would be the primary factor behind relocating to a European country. Many European countries have socialized medicine, which means that government provides coverage to the individual. If some European countries were willing to take in immigrant from the United States it would allow the elderly to live at relatively similar cost of living, but the medical benefits would be greatly higher. Socialized medicine would allow the elderly to receive more attention from the hospitals and enable them to constantly receive their medications and not have to forgo medication for financial reasons (Sherwood). Yet this would not eliminate the problem of placing a strain on these European countries medical resources, which in some cases are already being strained by a lack of money. Medicare and Medicaid would still be available to these relocated elderly but it would be placed directly into the European countries medical budget. Because the individuals lived within the United States for their entire lives they paid more then their share of taxes and should still be eligible to receive their retirement funding.
There are few reasons that a new long-term health care industry would not act as a reasonable alternative to the growing cost of retirement within the United States. There are those groups or individuals who would argue that creating this new industry would be taking jobs away from Americans, but my creating this industry within Mexico it actually falls inline with the ideas of NAFTA and a more united continent. The cost of retirement and medical care is becoming more then most middle and lower class individuals can afford to pay. Providing the elderly with an alternative to currently expensive long-term care systems would reduce the strain on both Medicare and Medicaid. In their current state, Federal-State programs such as Medicaid would be able to sustain individuals if they were to move to retirement communities in Mexico. These communities could be located near other resort areas and help tourism because families could take a vacation and visit their parents and grandparents at the same time. Voluntary exportation of the elderly to Mexico would be beneficial to both countries while allowing individuals the peace of mind that they will be able to substantial long term health care without being financially burdened.
Sylvia Sherwood, Hirsch S. Ruchlin, Clarence C. Sherwood, Shirley A. Morris, “Continuing Care Retirement Communities”, 1997, Johns Hopkins University Press
Matthews Joseph, “Beat the Nursing Home Trap : A Consumer 5 Guide to Choosing & Financing Long-Term Care”, 2nd edition 1993, Nob Press
Barbara R. Hegner, Esther Caldwell, Joan Fritsch Needham, ‘Assisting in Long-Term Care”, 3rd edition 1998, Delmar Publishing Company
Adams, K., “Medicaid Spend-Down in Nursing Homes: A Synthesis of Recent Research.” [Executive Summary], John Hopkins Press
Web Sites with related information
http://www.medicarehmo.com/. The web site for everyone interested in considering joining, or learning more about Medicare ITMOs.
http://www..hcfa.gov/, The Health Care Financing Administration (HCFA), the federal agency that administers the Medicare, Medicaid and Child Health Insurance Programs.
http://www.medicare.gov, The official U.S. government site for Medicare Information
http://www.familiesusa.org/medicaid/, The Medicaid Clearinghouse.
http://www.hcfa.gov/medicaid/ltc1.htm, Medicaid page based on educating and giving options for Medicaid recipients.
http://www.senioralternatives.com/, A site to inform the elderly about alternatives to Medicaid, Medicare and financial insecurity.