Americans Cannot Afford Harris’s Home Health Entitlement

A fter becoming the Democratic nominee in August, Vice President Kamala Harris distanced herself from her past progressive positions such as “Medicare for All,” gun confiscation, and fracking bans. But, more recently, Harris made headlines on The View by announcing a proposal to expand Medicare benefits, specifically for long-term home-based health care.

This move, made as her campaign enters its final weeks, was intended to offer relief to the millions of family caregivers who provide a sizeable amount of the nation’s long-term care for the aged and disabled. While Harris’s plan might resonate with caregivers, it raises important questions about the cost, effectiveness, and broader implications of expanding entitlement programs at a time when health-care costs remain the biggest driver of the nation’s debt and deficits.

Harris’s plan to expand Medicare to cover long-term home-based health care is, at its core, a response to the staggering financial and emotional toll that caregiving takes on families. According to the AARP, family caregivers provided an estimated 36 billion hours of unpaid care in 2021, a contribution valued at $600 billion — far outpacing the $467 billion spent on formal long-term care (LTC). Family caregiving is prominent in the United States because paid LTC is exceptionally expensive. A private room in a nursing home can cost anywhere between $80,000 (in Texas) to nearly $200,000 (in Connecticut) annually. Many Americans simply aren’t prepared for such a financial burden, even though 70 percent of people over the age of 65 are likely to need LTC.

Harris’s proposal seeks to alleviate some of that pressure on family caregivers. She has suggested a version of a plan designed by the Brookings Institution, which would offer Medicare coverage up to $40 billion per year for home-based health care. The Brookings program would require higher cost-sharing for wealthier individuals and limit enrollment to those who need assistance with at least two “activities of daily living,” such as eating, dressing, or bathing.

Respite for family caregivers is long overdue. Many of them are women who juggle full-time jobs, raising children, and caring for elderly parents. The physical and emotional strain on them is immense. However, the annual $40 billion price tag of Harris’s approach is likely too optimistic. Home health services might be more affordable than institutional care, but the costs can still vary widely. An in-home health aide, for instance, costs on average about $75,000 annually for the industry standard of 44 hours of care per week. If a person needs around-the-clock care, the cost can balloon to more than $288,000. Additionally, the Harris campaign’s cost assumptions likely do not account for the “woodworking effect” — that is, if Medicare expands to cover in-home LTC, patients previously on the sidelines will likely “come out of the woodwork” to enroll.

The Brookings plan seeks to control costs by using a global budget that limits the number of care hours a home health agency can provide. Such a sledgehammer approach to cost containment would have unintended and destructive consequences. Prices for those outside Medicare would rise, as home health agencies would have less incentive to compete, while many Medicare beneficiaries would likely be stuck on waiting lists as the program fails to respond to rising demand.

To pay for the entitlement, Harris’s plan would largely rely on savings from Medicare drug-price negotiations, a feature of the Inflation Reduction Act (IRA) that she hopes to expand by increasing the number of drugs subject to negotiation from 10–20 to 50 per year. Our preliminary estimates at the Foundation for Research on Equal Opportunity find that the savings that would result from accelerating the IRA’s price negotiations would fall far short of paying for a Medicare home health benefit. Since 62 percent of Medicare Part D drug spending is on the top-100 in-demand drugs, negotiations on other drugs would yield little savings.

We therefore estimate that Harris’s proposal to accelerate price negotiation would only save an additional $25 billion beyond the $100 billion estimated by the Congressional Budget Office through 2031, and it would eventually plateau at the same annual savings expected under current law. As a result, we expect Harris’s IRA drug-negotiation expansion to cover less than 10 percent of the cost of her proposed in-home LTC plan through 2031, assuming that the program’s spending growth does not exceed inflation.

Finally, the Harris campaign assumes that transitioning Medicaid LTC beneficiaries to Medicare would yield additional savings. While the administrative cost of coordinating benefits between the two programs may decrease, Medicare reimburses home health at a higher rate than does Medicaid, so the transition would increase the cost per enrollee.

Instead of expanding Medicare’s footprint with a costly home health program, we should pursue more-sustainable solutions to address the LTC crisis. These solutions could include reducing the regulatory burden on LTC providers, encouraging individuals to plan for LTC needs earlier in life, and exploring other care-delivery models that provide better value. One promising option would be the expansion of adult-day-care centers, an affordable alternative to in-home care. Such centers provide vital health and therapeutic services, meals, and social interaction for those in need of supervision at about one-third of the cost of a home health aide. They not only relieve the burden on caregivers but also improve patient health through social and cognitive stimulation, which in-home care can’t match.

Regardless of how we proceed, it’s clear that America’s LTC system needs reform. Caregiver burnout is at an all-time high, and the cost of care is becoming unsustainable for millions of families. However, simply throwing more money at the problem through an expanded Medicare entitlement, without addressing the causes of inefficiency and high costs in the LTC industry, would not be the right approach. We need solutions that strike a balance between affordability, quality of care, and sustainability.

Conservatives, progressives, and everyone in between should take the time to examine the real costs and potential benefits of Harris’s proposal — and ensure that whatever solutions we pursue will improve the lives of families and caregivers who are struggling to make ends meet.