The pandemic spending surge subsides, but ...

Preparation for the next pandemic, nursing home staffing challenges go unfunded

Nothing changed.

Despite the fact 300 Americans are still dying every day from Covid-19 (making it the third leading cause of death in the U.S. after heart disease and cancer), spending on health care has largely returned to its pre-pandemic pattern.

According to the latest annual report from the Centers for Medicare and Medicaid Services, the pace of increased spending on hospitals and doctors slowed down in 2021 compared to 2020, the first pandemic year when an infusion of federal aid flooded the sector. But it still rose smartly.

Meanwhile, spending on nursing homes, the sites of 21% of all Covid deaths through August 15, 2021, according to a recent study, was down sharply. Home health was flat.

What drove this return to normal patterns of spending, which for some key health care sectors like public health agencies and nursing homes amounts to unbenign neglect? Federal emergency aid and support for public health fell precipitously while spending by private businesses, individual households, Medicare and Medicaid gre at a faster-than-usual pace. The government cut nearly half its emergency aid to providers in 2021 after patients returned to hospitals and physician offices for routine and discretionary care.

The bottom line: Health care’s share of the economy fell to 18.3% in 2021, down from 19.7% in 2020. With federal emergency aid projected to unwind further for 2022 and 2023, I predict health care’s share of the economy will return to the mid-17% range in next year’s annual report, which is the same level it maintained for most of the 2010s.

Source: Health Affairs, Centers for Medicare and Medicaid Services

At one level, a return to normalcy is a good thing since it beats health care gobbling up more and more of the nation’s economic resources. But with the U.S. still in the midst of multiple infectious disease outbreaks; longevity still on the decline from Covid and deaths of despair from alcohol abuse, drug overdoses and suicides (epidemics that pre-date the pandemic); and widespread staffing shortages in the health care sector, especially among the lower paid positions in hospitals and nursing homes; the national emergency should have forced some changes in spending patterns.

It did not.

What didn’t happen

We might have seen a huge increase in non-emergency public health spending to better deal with the current and future waves of Covid-19 and prepare for future pandemics. The American Recovery Act passed early in the Biden administration earmarked $3 billion for the Centers for Disease Control and Prevention to hand out in grants to states and localities to improve the public health infrastructure. But ongoing financial support for public health operations, which was included in the original Build Back Better bill, fell by the wayside to assuage conservative Democrats Joe Manchin of West Virginia and Kyrsten Sinema of Arizona (now an independent).

A July report from Trust for America’s Health, which advocates for public agencies across the country, pointed out that the CDC’s regular budget in inflation-adjusted dollars is half of what it was 20 years ago. The report called for investing $4.5 billion annually to build new capacity at the CDC to gather data and give grants to states and localities to meet local public health needs and prepare for future pandemics.

“Emergency funding is important but not sufficient to fill the longstanding gaps in public health investments,” Dr. J. Nadine Gracia, CEO of Trust for America’s Health, said in a statement accompanying the report. “The ‘boom-and-bust’ cycle of public health funding has meant that the system does not have the tools or workforce to modernize and respond to the range of threats impacting our communities.”

Nursing home horrors

We might also have seen the Democratically controlled Congress begin grappling with the disastrous state of affairs in the nation’s nursing homes. Over the course of the pandemic, more than 235,000 workers or about 15% of the total workforce left the nation’s 15,000 nursing homes, according to a recent article on the AARP website.

Nursing home workers say the exits are being driven by low pay, dangerous working conditions and burnout. A frequent complaint: They get no respect for the help they must provide their elderly and disabled patients, who almost always need daily help with hygiene, going to the bathroom (or changing if they’re in adult diapers), getting dressed, eating meals and taking their medications.

Many are leaving for better paying jobs in the fast food and warehouse industries, which in many cities offer more than the $18 an hour that a starting certified nursing assistant earns. The industry’s trade association likes to blame the low reimbursement rates by state Medicaid programs, and it’s true that Medicaid pays for two-thirds of the patients in nursing homes but generates just half the total revenue. But is this just another case where private-paying families, who must pay $100,000 or more a year when a loved one enters a home, heavily subsidies the underpaying government sector?

Only in part. Simply pouring more taxpayer money into the nursing home industry would not be wise until the Biden administration takes a hard look at the role that private equity investors are playing in siphoning money out of the sector. The New Yorker magazine recently ran an eye-opening article describing how conditions at one nursing home deteriorated after its acquisition by Portopiccolo Group, a private-equity firm based in Englewood Cliffs, N.J. that owns 130 facilities along the East Coast.

The company, run by two thirty-somethings, amassed that portfolio after selling a durable medical equipment supply house accused of overcharging Medicare to another private equity firm. The article’s author, Yasmin Rafiei, began working on the story as a medical student after reading a study by a University of Pennsylvania economist that concluded the death rate in nursing homes rose 10% on average after they were acquired by private equity firms.

In his first State of the Union address, President Biden promised to address the issue and proposed reforms that would ensure every nursing home had adequate staffing; cut federal funding for homes that provide unsafe or improper care; and provide the public with better information about conditions inside homes. Here’s hoping the Health and Human Services Department led by Secretary Xavier Becerra and the CMS led by administrator Chicquita Brooks-LaSure follows through.