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Office of the Press Secretary

For Immediate Release January 4, 1999
                            CHRIS JENNINGS             

The Briefing Room

1:10 P.M. EST

MR. TOIV: Good afternoon. Here to brief on the President's long-term care proposals are Secretary of Health and Human Services Donna Shalala, who -- you'll have to forgive her; she's looking a little tired, she's still recovering from celebrating Wisconsin's stunning victory over Ohio State in the Rose Bowl. In fact, Secretary Shalala --


MR. TOIV: Who did I say? Oh, well, they would have like that, too. Wisconsin over UCLA -- excuse me. And she actually gave the President a Rose Bowl teeshirt today.

Also, Janice LaChance, who is the Director of the Office of Personnel Management, will brief on the federal government's -- for federal employees, the piece that were trying to produce there. And Chris Jennings is also here to answer questions about the policy. Chris, as you know, is Deputy Assistant to the President for Health Policy. And Len Burman will be here -- Secretary Rubin couldn't be here, but Len Burman who is the Assistant Secretary of Treasury for Tax Analysis, will also be here to answer questions.

Q Where is Secretary Rubin?

MR. TOIV: He is not here. He was around this morning. He was there at the event.

Secretary Shalala.

SECRETARY SHALALA: Thank you very much. Before I brief a little on long-term care, let me say that I talked to Elizabeth Dole earlier this morning, and as you probably don't know, I'm the President's designee on the American Red Cross Board. I told her that you should always leave jobs when you still love them, and that was clearly the case for her. She has done a remarkable job to ensure the safety and the quality of the blood supply in the United States, which is the area in which the administration and the Red Cross have worked most recently.

In addition to that, I admire her intelligence, her skill and her integrity, which she brought to her leadership of the American Red Cross. And she leaves with our enormous respect and my personal affection. We've had a wonderful working relationship. I think that she'll have an announcement a little later today, but I wanted to make sure that I put our statement on the record.

Q Did you clear this with Al Gore, this effusive praise for someone who may run against him in the year 2000? (Laughter.)

SECRETARY SHALALA: That was not either part of my working relationship with Mrs. Dole. She noted that we had been able to work together in a nonpartisan way on issues that were nonpartisan, and that is the quality and the safety of the nation's blood supply.

Q I'd put you in her commercial.

SECRETARY SHALALA: Let me talk about long-term care, which I'd be happy to be in the commercial on. What the President announced today is historic and significant. You will remember that the U.S. government's entry into health care through Medicaid and then Medicare was essentially to put in place hospital programs to take care of people when they were hospitalized. And gradually, as people lived longer, programs have been added on, or as we had scientific breakthroughs, we have introduced changes in Medicare, for example, which improved flu shots early screenings. So we've been changing the health care system as people's lives change.

In this century alone, we added 30 years to our lives, and so we are now faced with a population that's getting increasingly older. In fact, at the turn of the century, we will have more people who are senior citizens than we'll have children in this country. And as people have lived longer, their health care needs and their own quality of life needs have changed dramatically. Everybody has talked about long-term care. We have a generation of scholars who have been talking about long-term care.

The proposal that the President has put out is the outlines of the first long-term care strategy in the history of the United States -- the federal government taking the leadership. But it's not a cookie-cutter proposal. We didn't walk in and say, okay, Medicare, we're now adding on long-term care to Medicare. In fact, Medicaid has carried most of the long-term care burden by paying for people who are very poor to go into nursing homes.

Instead, we responded in a very practical way, to give support to the way long-term care is being provided in this country -- for the most part, in people's homes, by caregivers that are related to them. And this is a program that supports the major caregivers in this country, who are often women, and people who are in the work force who are trying to take care of loved ones -- people with chronic illnesses that are disabled, but also senior citizens, members of their own family who they need to take care of.

Anyone can tell stories. Every family has a story. In fact, in my own family, over Christmas my cousins were talking to me about one of our aunts who has Alzheimer's -- and they're rushing home in the middle of the day to make sure that she eats -- very much like the woman who spoke with the President today. They couldn't find a single place to get information about comprehensive services in the city in which they live. They could find very few places that would help them because they're lower middle income -- they're above the line for Medicaid that would provide them with services.

This approach, which combines a tax credit to help people pay for it and a series of programs that strengthen the information people get and the services they get at the community level, giving money directly to offices of aging in the states, and community-based offices of aging, strengthening both information, the coordination of services, giving people access to where they can find care-givers for periods of time, giving people who provide this care some respite.

The one thing that does happen, as Mrs. Gore pointed out in the press conference, is that people under enormous stress are often quite depressed themselves because they're running around trying to take care of a loved one. So it's the comprehensiveness. The fact that we didn't find a single solution, we didn't simply write a check, but we're building a capacity out there to support people that are working in this field, a kind of continuity care. People that are 87 need a different kind of care than a younger person with long-term illness.

And so, giving people more choices and an opportunity to put together a program that works for themselves, for their own family while the tax credit is income-based, the other programs to build the capacity out there so that you can call a single place in your community and find out what programs were available, so there are more programs available, that those are not necessarily income-based; we'll ask the states to focus on people who need the services. But the information will be provided to everyone.

It is the comprehensiveness, the fact that this is the first strategy. Everybody has talked about long-term care strategies. We're starting to put the pieces together, it's very pragmatic, it focuses on the caregivers themselves who, for the most part in this country are women, and for the most part are people that are working, that are just struggling to put all of these things together.

Finally, Janice will talk a little about long-term care policies. My sister called me two months ago and said she had -- her insurance agent was in her house and he was trying to sell her a long-term care policy. And I said, wait a minute, don't sign anything. The fact is that we know some things about long-term care policies -- you want to make sure, for instance, that it has an inflation piece in it -- and there are some guidelines for people that want to buy these kinds of policies. What Janice and the OPM people will do -- the U.S. government, because of government employees, may turn out to be the largest purchaser of long-term care policies.

When we operate as purchasers, we can improve the quality of the market out there. So they will be developing insurance and developing instruments out there. And the fact that people like my sister will have a place to call -- in her state, the state insurance commissioner actually does have a pamphlet on the issue that gives people some guidance -- but people have a place to call where they can learn about what they need to ask about as they buy long-term care policies.

Another important element for younger people, for many of us, about what do you need in these policies, and informing people that Medicare doesn't cover long-term care, will also be part of this overall strategy.

One of the things we found out is we moved out to help people with Medicare pick between HMOs and other kinds of instruments; they don't know what's in their current policies. They don't -- many people, when they get our handbook and we start describing what their choices are, they don't know what they currently have. And pointing out to people that long-term care is not part of their Medicare program -- if they want long-term care insurance, they're going to have to buy something separately -- will be a very important part of this campaign. But we also need to make sure that there's an opportunity for them, particularly younger, to buy some long-term care insurance.

So it's comprehensive. It actually has a strategy in mind. It's not cookie-cutter, it's not all government, it's totally supportive of the people who are providing this kind of care.


MS. LACHANCE: Thank you, Secretary Shalala. I'm very excited that the Office of Personnel Management has been called upon once again to take the lead in making affordable long-term health care available to all federal employees, retirees and their family members.

It's inevitable, as the Secretary said, that many of us -- most of us -- are going to end up needing this kind of insurance at some point in our lives. And what we're going to do is allow federal employees and retirees some peace of mind in knowing that they will have this sort of coverage and to prepare for that eventuality by getting long-term insurance at group rates, which we think can actually realize a 15 to 20 percent savings for each one of them over individual policies that they may be able to get now.

We're very excited to be part of the President's initiative and the President's vision to make the federal government a workplace for the 21st century. We were the first to fully implement the patients' health care bill of rights for the 9 million people who are covered by our health insurance program -- and we did it at a cost of less than 25 cents per year per enrollee. And we've instituted a number of the President's other visions as far as family and medical leave policies, family-friendly policies. We're trying to make this the kind of workplace that every workplace in America and every worker in America could enjoy across this country.

So we're very excited about adding long-term insurance to our foundation for this wonderful workplace that we're building for American workers, and we're trying very hard to make sure that it gets expanded beyond the federal work force to all workplaces.

We'll answer any of your questions now. Thank you.

Q Secretary Shalala, one question on the tax credit. The documents say that it starts to phase out at $75,000 for individuals and $110,000 for couples. Where is it eliminated entirely?

SECRETARY SHALALA: At $95,000 and $130,000.

Q How many people who would otherwise be eligible will not be able to claim the tax credit because their income is too low?

SECRETARY SHALALA: Well, we're talking about 2 million people being able to claim it. Those people that will not be able to claim it, I suppose you could use the Earned Income Tax Credit piece as --

MR. JENNINGS: We're talking about the refundability issue?


MR. JENNINGS: Well, as Donna was mentioning, it's two issues that we tried to address as we were evaluating policy options. One is that the design of the policy is such that it can go to caregivers or the individual itself because it is for caregivers as well. And as Donna mentioned, many, many women who are daughters, who are taking care of people who are elderly, may have tax liability that they can take advantage of -- whereas a lower income person who has the actual disability would not. So the design of the policy is actually a creative way to get to that population in a low income way -- to have lower income thresholds.

Secondly, in the initiative that Donna has led with the Vice President through the Administration on Aging, the Caregiver Support Program, that is something that is going to be really targeted to all income thresholds, but particularly for the services component for lower income people. So for all those reasons, we think that we're taking care of that population in a significant way -- we can always do more.

One last point I would like to say about this policy -- no one here -- have you heard Donna or anyone in the administration say that this is the final answer, the only answer to long-term care. But this is the first time in a comprehensive way we've addressed this issue in a way that acknowledges for the first time the important caregiving services that people deliver on a daily basis. And we think for that reason, and that reason alone, it is a major, major development in this area.

SECRETARY SHALALA: That's not the question she asked. She asked how many people don't have any tax liability that won't participate on the tax credit side. And I think, Susan, that number is probably whatever the Earned Income Tax Credit number is, because we basically wipe out liability, tax liability through that program. So there are people who file for taxes that get the Earned Income Tax Credit that don't have any actual tax liability that would not participate.

So everybody who is a low-income worker below the poverty line, who has no tax liability would not participate in the tax credit side. What Chris is pointing out is that this is a comprehensive strategy because it anticipates that and provides services and access to services, and expands services for people who don't have a tax liability, don't participate in that part, but can participate in the other program.

Q You said there about 5 million people who need long-term care now?

MR. JENNINGS: Yes. Let me go through the numbers real quick -- about 5 million. About a million and a half, almost 2 million are in nursing home settings, in institutional settings; and obviously have caregiving, as Donna pointed out, mostly directed to the Medicare program. An additional 3 million who are community based. We project that there are going to be 2 million individuals who benefit this either directly or indirectly.

I want to point out one thing -- I'm sorry you didn't get the full -- the reason why we don't have the exact number of income distribution, of who benefits and who doesn't, is because this is the first time that we are implementing a program that caregivers themselves can benefit. And we don't have enough experience to project how many people at higher, middle, and lower income levels will be able to do that. So we don't have -- and I think, Len, you would confirm -- that we don't have a specific breakout of that at this point in time.

SECRETARY SHALALA: We are making it simple for them, though, because all you have to do is to have documentation that the person needs care, as opposed to handing in receipts to the IRS to justify the tax credit.

Q Is it correct, as we read, that you don't know how to pay for this yet, but however you pay for it will not come out of the so-called "surplus"?

SECRETARY SHALALA: We have paid for it in the new budget that we're submitting, Sam. And as you know, the President has committed that the surplus would not be sued to balance this budget, so this is paid for within the context of the new budget the President will be submitted.

Q The next fiscal year.

SECRETARY SHALALA: For the next fiscal year. It would kick in in October, the next fiscal year.

Q How is it paid for?

SECRETARY SHALALA: It's paid for, and we described that in some detail as you know, how we pay for the overall budget. So when the President submits his budget, this will be part of it.

Q Can you tell us today?


Q Why not?

SECRETARY SHALALA: Well, because we're not revealing the entire budget financing at this press conference. We're talking about the policy issues --

Q You're telling us the good parts, but not the pain.

SECRETARY SHALALA: But you're assuming it's going to be pain.

Q Is it correct that the tax credit portion of it will be paid for on the tax side of the budget through closing loopholes in other revenue-raising measures?

SECRETARY SHALALA: The answer is, yes, we will do this the way we normally pay for these proposals on the tax side.

Q Which loopholes?

SECRETARY SHALALA: I think that we'll reveal that as part of the budget.

Q Are you satisfied with the $1,000 level? It seems kind of skimpy -- people in nursing homes can eat that $1,000 up in less than a week.

SECRETARY SHALALA: The most important thing to the President, as this proposal demonstrates, is to get the major parts of a national strategy. And, therefore, there's a tax credit component, there's a service component, there's an information component -- and to get the strategy in place.

Now, does it have enough money in it to take care of absolutely everybody's needs? The answer is, no. But we see this as evolving over a period of time. And to get it off the ground with a significant first step was our goal and that's what this does.

Q Private long-term care insurance is fairly expensive. Do you have any idea, can you estimate what the premium costs would be for --

SECRETARY SHALALA: That's what Janice is going to do for us. She's going to help -- private long-term insurance for individuals buying into an individual market has been expensive. Remember that Janice used the word that they're going to do group buying. And the significance here is that by using the federal workers, the pool of federal workers, we're going to see what we can do to start bringing down the long-term costs by putting a population that's quite healthy -- with the exception of those that work at the White House -- into a large enough pool and see is we can bring down the long-term care costs.

Q Do you have a ballpark range of what --

MS. LACHANCE: We are anticipating a savings of between 15 and 20 percent.

Q Madam Secretary, would you explain, does everyone just get the full $1,000 automatically, they don't have to produce any documentation of expenditure? And what about people that stay home and lose revenue from working? How would that work without it being open to abuse?

SECRETARY SHALALA: Why don't you come up and answer that question? Do you want to introduce yourself?

DEPUTY ASSISTANT SECRETARY BURMAN: I'm Len Burman, Deputy Assistant Secretary for Tax Analysis at Treasury. The $1,000 credit would apply to people who have at least $1,000 of tax liability. It could substantiate your eligibility for the credit by establishing that you have at least three or more limitations in activities of daily living, or a severe cognitive impairment. People with lower incomes or whose caregivers have lower incomes would get a partial credit up to the extent of their tax liability.

Q And can different caregivers claim the $1,000 for the same individual?

DEPUTY ASSISTANT SECRETARY BURMAN: No, one person would have to claim that individual. If there were several siblings who were sharing in the cost, they would have to make a decision among themselves as to who would take the credit.

Q Madam Secretary, the Republicans have already indicated that they might find this acceptable if it does not include a tax increase. It seems to me what your answer to the question was before is that it will include closing of loopholes of the de facto tax increase. How does what they're saying affect what you might do with this? How would you address their concern?

DEPUTY ASSISTANT SECRETARY BURMAN: I think that what we want to do is get up to the Hill once the budget is announced and explain what we're trying to do and why the tax credit is an important component in the overall strategy, that this can't be a narrow, cookie-cutter approach, that it has to be comprehensive, because different caregivers have different needs. And so our response to them will be, let's sit down and talk together and let us justify why we think that the tax credit is a very important component of a long-term strategy.

Q But I'm not talking about the tax credit, I'm talking about how you're paying for the tax credit. Is there another way that you would do that --

SECRETARY SHALALA: That's always been our discussions on the Hill, that we make policy proposals, we identify the sources of funding, then we go up to Congress and we have a bipartisan discussion about, first to agree on the goal, and then we negotiate on how we're going to pay for it. So there is nothing unusual in the issues that they're raising; we welcome the opportunity to talk first about the importance of putting the policy in place.

Q Why are you requiring three or more limitations? One of the limitations could result in very expensive long-term care.

SECRETARY SHALALA: Because that's the common way to identify the need for home health care, that we have experienced -- this proposal didn't just come out of someone's head for long-term care. There is a body of literature and research that has been going on for almost two decades, including our own experience with the disability program in Social Security and with the home health care programs in Medicare and Medicaid. So growing out of experience, what we have identified is the most basic definition of people who need this kind of care, and we have to be on the firmest possible ground as we put this in place. Again, I would describe it as evolving.

Q Are there plans for the administration to resubmit its Medicare expansion policy --

SECRETARY SHALALA: I can't comment on that, because we don't want to preempt the President's right to make either an announcement before the budget or during the budget.

Q So that's a "yes," I take it?


THE PRESS: Thank you.

END 1:34 P.M. EST