The Covid-19 pandemic has killed a reported 54,000+ residents and workers of nursing homes and other long-term care facilities since it began spreading in the United States in February, with more than 282,000 infections. The federal Centers for Medicare and Medicaid Services (CMS) called nursing homes "an accelerator" for Covid-19 because of how quickly the virus jumps from resident to resident. How did we fail to protect our most vulnerable citizens, and what can we learn from this experience to be better prepared when the next pandemic hits?

On July 14, the Manhattan Institute hosted a virtual discussion with senior fellow Chris Pope and City Journal senior editor Steven Malanga, moderated by City Journal editor Brian Anderson. Pope and Malanga have both written about this issue recently. Malanga points to inadequacies in infection-prevention training and certification, along with lax employee-vaccination mandates, as contributing factors to the spread of the disease in nursing homes. Pope highlights successful innovative approaches to staffing during the pandemic that can be mimicked by other facilities.

Event Transcript

Brian Anderson:

Welcome to the Manhattan Institute's Eventcast. And thanks very much for joining us. I'm Brian Anderson, the editor of City Journal and today we'll talk about how long term care facilities bore the brunt of the COVID-19 pandemic and what we can learn from that fact. We'll draw upon recent writings on this important issue by City Journal and Manhattan Institute experts. Throughout the program please submit your questions as we go along and I'll try to include them into our discussion. Let me introduce our two panelists first, Steve Malanga. He's the senior editor of City Journal and the George M. Yeager fellow at the Manhattan Institute. Writing for City Journal Steve has pointed to the inadequacies in American nursing homes. Even before the pandemic as Steve notes, the US fell short of protecting the elderly in longterm care facilities from infectious diseases.

Brian Anderson:

Our other guests today is Chris Pope. He's a senior fellow at the Manhattan Institute. Chris's research focuses on healthcare, market regulation, hospitals, entitlement design, insurance market reform. In City Journal, Chris has highlighted successful innovative approaches to staffing during the pandemic that can be a model perhaps for other facilities. So we'll talk a bit about that.

Brian Anderson:

So let me start with you, Steve. The pandemic has proved devastating for nursing homes nationwide. According to some estimates, as much as 40% of the overall count of people who've died in America during the pandemic were nursing home residents. But as you pointed out in a City Journal piece back in April, though this is a horrible and tragic situation, it's also not all that surprising. So what went wrong?

Steve Malanga:

Well, first of all, let's talk specifically about the extent of it and where it went wrong. At this point, the best counts are that about 55,000 people may have died in longterm care facilities out of nearly 300,000. It's almost a 20% death rate which is really shocking although again, this is our most vulnerable population probably. To talk about where it's happened, New Jersey is actually led the way. The States with the most deaths in nursing homes are New Jersey, New York, Massachusetts, Pennsylvania, Illinois, California, Connecticut, Michigan.

Steve Malanga:

The States with the highest percentage of deaths in nursing homes, some smaller States, New Hampshire, Rhode Island, Minnesota, Connecticut, and Pennsylvania. We can talk a little bit about some of those States later on. However, here's then the real shocker in 23 States more than half of all deaths have been in longterm term care facilities. Now, the thing is, this was not completely unanticipated by some of us who were writing about early for this reason. Early on, I wrote a piece called the Virus and the Economy, which really attempted to look at what were the health implications of shutting down the economy because I wanted people to try to balance, understand there were health implications to shutting down the economy.

Steve Malanga:

And I wanted them to balance that with the predictions about deaths from COVID, because that's a very easy number to understand. One thing that impressed me while I was doing this, is that a number of health experts, especially epidemiologists were talking early on about those trade offs and they were afraid that a panic was emerging in America. Remember this was mid March I did this. They were afraid there was a panic that was emerging, that was going to make us miss the target. And one prominent researcher said something that stuck with me. He said, "Our focus needs to be on the most vulnerable." He said, "Nursing homes not schools." Immediately after hearing that, I went and started looking at what the record was if you would of nursing homes in terms of infectious diseases. Now, the thing about COVID-19 is it's new, it's unique, but it is basically a respiratory infectious disease and every flu season, we have similar problems with pneumonia and the flu. And I looked at the record in nursing homes. There's a lot of academic research on this and it's pretty startling.

Steve Malanga:

In particular outbreaks are very common. The notion of States mandating protections is very erratic. Only about half of States even require nursing home workers to get a vaccine. We have vaccines for the flu and we're talking so much about how the vaccine is going to save us from COVID but only about half of States require vaccines from nursing home workers. And if you look at it, not even nowhere near 80 to 90% of nursing home residents themselves get vaccinated. You would think that in this vulnerable population that we would be focusing on that and that nursing homes themselves are bringing doctors and make sure this is done or nurse practitioners.

Steve Malanga:

The other thing is there's a lot of criticism of the record on nursing homes in terms of infection controls. In some surveys, 40% of homes during flu season have essentially failed their inspection protocols for infection control. So all of this was very, very troubling. And what then occurred quickly after this, more than anything justified the concerns that we were starting to hear from some of these people like this expert who said again, nursing homes not schools. And yet at the same time, we'll talk about this a little bit more later, what I was hearing from some of the governors was that essentially this COVID was a nobody left behind.

Steve Malanga:

Phil Murphy, the governor of New Jersey said, when people brought up the idea that this was mostly a disease targeting older people [inaudible 00:06:23], "We're not going to leave anybody behind. Andrew Cuomo famously said, when people suggest what's the right focus here, he took that to mean we're going to leave the elderly behind. And he famously said, or infamously said, "My mother is not expendable." But the fact of the matter is when you look at the history of the way we treat the seasonal flu in which every year thousands of people, tens of thousands of people die in this country, and the way we treat the issue in nursing homes we have we've never had an attitude we're going to leave everybody behind. And so that was very troubling and the numbers we're seeing really reflect that. And we're not obviously out of it yet, so we'll have to see where.

Brian Anderson:

Thanks, Steve a lot. Chris maybe you can follow up a little bit on what Steve just said about the particular vulnerability to COVID of the nursing home residents. Why it's such an infectious environmental apart from the problems that Steve isolated. And then I'd like you to say a little bit about what role of finances and payment system that work in the nursing homes might've played a role in this crisis?

Chris Pope:

Yeah, well, Steve's obviously exactly right. This is not a new problem. It's [inaudible 00:07:48] we deal with every year. The idea of large amounts of elderly people dying in nursing homes from infections is certainly not a new thing. Every single year, an average of 380,000 people die of infections in nursing homes. And really we should have seen this coming, and I think Steve's rights make the comparison will we sacrifice for schools, will we sacrifice their [inaudible 00:08:10] versus will we sacrificed to have nursing homes kept safe, secure, and doing the job that they are to do.

Chris Pope:

We've clearly had a failure political will really in terms of dedicating the resources and dedicating the sacrifice to protecting nursing homes that we've been willing to make for all the sectors as a society. And I don't think there's really much indication that that's going to change at all soon. The basic thing I think you can say about nursing homes in the COVID crisis, like so much of healthcare policy is really the old adage, you get what you paid for. And when it comes to nursing homes, we really try and skimp.

Chris Pope:

Nursing home revenue's are very heavily dependent on the Medicaid program to an extent that no other part of the healthcare system is. So if you think of a hospital, usually about half of the hospital's revenues comes from private insurance, which is generally a very generous reimbursement source. It generally supports a lot of intensive care, means that no expenses spared in terms of safety, in terms of cleanliness, in terms of quality of equipment, but when it comes to nursing homes, the majority, I think about 52% of nursing home revenues come from Medicaid and private insurance is probably only about 15% of nursing home revenues.

Chris Pope:

And as with hospital care, Medicaid rates are very, very low. So on average, Medicaid pays about 89% the average cost of looking after someone in a nursing home, which means the nursing homes have to scramble to get revenues from Medicaid, from self paying patients, really to stay afloat. And they tend to cut corners. They tend to cut corners on staff, they tend to cut corners on safety, we saw in a lot of cases that personal protective equipment was often really absent, but also when you cut corners on staffing, that really means that quite often homes are relying on sort of free to medical interventions and medicating residents who may be or not to be medicated if staff are overstretched, they're not really taking as much care with each patient as they ought to be. And so you end up with a lot of lapses essentially in what should be the provision of a basic service.

Chris Pope:

In an environment where any kind of disease can really spread very, very quickly, the idea that everyone has a personal room really doesn't apply to most nursing homes. Most rooms are shared, most staff visiting numerous rooms one after the other. And so if you sort of think about, there've been discussions of herd immunity that maybe if 60% of the population catches the disease, then it'll die off. Well, in some nursing homes you've seen it go like over 90% of people within the nursing home have gotten the disease just because people whether they're asymptomatic or whether the staff are with dealing with light cases are going from room to room before they're really withdrawing from the nursing home. And pretty much everybody in many homes have been infected.

Brian Anderson:

Thanks, Chris. So shifting gears a little bit Steve here in New York the estimates are that as many as 6,000 seniors have died of COVID-19 in senior care facilities. And governor Cuomo has come under some fire for this outcome. I'm wondering, what's your view of what happened in New York and have we seen similar situations in other States?

Steve Malanga:

Well, if you look in terms of the percentage of people in States dying from this, it's fairly high in many places. The controversy about New York is actually controversy that occurred in a dozen places where governors or public health officials as part of the administration ordered essentially nursing homes to take back residents who had gone into the hospitals and then were released when they were thought to be out of danger. They were released in some cases without actually requiring that they test negative for the disease. This happened in New Jersey, it happened in Pennsylvania to different degrees.

Steve Malanga:

So some of the controversy is number one, that staff in some of these places, first of all, the nursing home operators themselves in New York and other places vigorously objected to this, the idea of sending people back. In New Jersey, the kind of public health bureaucracy meaning the longtime bureaucrats not the actual administration, director of public health for commissioner of public health who was politically appointed, but the staff kind of revolted against this. They've even sent letters, whistleblower letters if you will, to members of the legislature in New Jersey, complaining that they objected to this, that the governor didn't listen to them, that this was not a good thing to do for obvious reasons.

Steve Malanga:

So essentially what happened was there was a panic. And this is where the whole idea that the panic was driving unwise decisions really comes into focus. Because in New York they feared and in New Jersey that the hospitals were going to be overrun. And because they feared that they said, "We've got to get people out of hospitals as fast as we can." This occurred even though there was supplemental hospital beds available, even though for instance in New York, they built up a temporary hospital facility in Javits Center, they had the US Navy ship come in and many of those beds were never used yet they were pushing people because there was this panic about almost a hospital bed apocalypse, if you will.

Steve Malanga:

And this is where the whole idea that we were kind of losing control of the circumstances and the situation really becomes evident. Now it's fair to say that there would have been a problem anyway given a couple of things. Number one, as Chris said we were in the middle of flu season and a lot of nursing homes didn't have adequate protective gear anyway. And I know there was a shortage of protective gear once COVID hit, but many of these nursing homes didn't even have adequate protective gear. We're in the middle of pneumonia season, we're in the middle of flu season. That clearly would have been a problem.

Steve Malanga:

There is no vaccine obviously for the workers, there's no vaccine for family members who were visiting until we realized the seriousness of the problem. Having said that, there's still a lot of criticism of those particular States. And in particular, first of all, just the idea of sending people who still haven't tested negative yet for the disease back into nursing homes to the most vulnerable population, how does anyone make that decision?

Steve Malanga:

Now, in fairness, the... I guess you could say in fairness, New York state has released its own study of what really caused the problem in nursing homes. And they have concluded, not shockingly that it wasn't that decision by the governor and the the public health authorities, they've concluded that it was the workers. Their idea is that about in some cases, they estimate that as many as almost 30% of all nursing home workers were infected and they've brought it in from the outside.

Steve Malanga:

Now, there are a bunch of people contesting this idea. First of all, there are people just even people in both parties in New York state saying, "We need an independent study of this." But the reason people are... One of the reasons is there is an unusually high number of workers in a particular industry that got these infections. And the idea is yes, there is a history of workers bringing infectious diseases into nursing homes but it works the other way too, when you're sending people who are infected back into the homes, you're likely to infect the workers as well as the other the other member of the other residents and those workers are working on five, six, seven different residents a day. So they're essentially spreading it around. So essentially the notion that it was the worker's fault, if you will, or it was an unavoidable factor, it's gotten a lot of criticism.

Steve Malanga:

Also this report, controversially absolve, the nursing homes, it said the nursing homes could do nothing to stop this wave. And that that upset a lot of people who are very critical of the past experience of nursing homes because what their procedures have been lacking again with the seasonal flu, with pneumonia and past flu seasons of past infectious disease seasons. And so the idea that this was just a train wreck actually that no one could stop, that the state couldn't stop and that the nursing homes couldn't stop, or at least ameliorate strike some people as a little bit naive. So that's kind of where we are right now. Now, again, it's important to understand that it wasn't just New York. There were 12 States. New Jersey was another one and New Jersey, New York lead the list of total deaths.

Steve Malanga:

And in particular one of the things again, there's some things that are upsetting about this. One of the things that I find very upsetting is that in New Jersey, they actually, when this first started and people weren't even aware, the general public wasn't aware that the governor or the government had ordered the nursing homes to take back the workers, when these deaths started the state actually began a naming and shaming effort to name the nursing homes where lots of people were dying. Now, this was actually consistent with what was going on in New Jersey. If you drove around New Jersey during the pandemic, you'd see those electronic signs that are by the side of the road, they also had signs, which said, "Don't be a knucklehead." Now this is the governor. The governor was saying that the reason that the COVID was spreading across the state, because there were so many people, they weren't observing social distancing, they were being knuckleheads.

Steve Malanga:

This was another version of this. They're actually blaming the nursing homes. They're actually have a program of naming and shaming until it came out that the government itself had ordered people back from the hospitals into the nursing homes. So that I think has upset a lot of people. Let me just say out another thing. Not every state did this by any means. Florida was one state that did something very different. Florida has, still a large percentage of the deaths are in nursing homes. But the total numbers of infections and deaths in homes is much smaller. Now here's the thing. Florida did a bunch of different things. They never of course put out this ruling, this executive order to send people back into the nursing homes. They actually did the opposite.

Steve Malanga:

What they did was rather than worrying about hospitals filling up too quickly, when outbreaks began in nursing homes they took everybody in those facilities. These are smaller facilities. They took everybody and they sent them to hospitals where they could be isolated and cared for and watched much more carefully. They even got a waiver from the federal government so that the people who had not yet tested negative, [inaudible 00:20:21] positive rather for disease could still be sent to hospitals and reimbursed at the rate that the federal government was reimbursing for COVID care because they felt it was important to get these people in an environment where there was better care.

Steve Malanga:

Connecticut did something different in that they created, COVID only nursing homes to isolate their patients from essentially the rest of the population. It took them a while to do that, which is one of the reasons why they still saw a significant number of deaths but they eventually did it. Now we're at the point for instance, in Florida and a bunch of other States where they're testing nursing home workers twice a week, and they're testing residence numerous times a week. And so that may account for some of what we're seeing as this kind of part of the wave slows down if you will. The momentum and these kinds of deaths starts to slow down.

Brian Anderson:

Chris, speaking of Connecticut one of the things you wrote about in your piece on this is to the kind of innovative assistant living facility in that state that really avoided at least the last we checked a lot of these problems. Maybe you could say a bit about that institution and what they did, and whether that could be a kind of model going forward for other such institutions.

Chris Pope:

Yeah, of course. I think a lot of the big challenges with the nursing homes has been, we really underestimated what took initially to keep the disease out. Like the initial advice was wash your hands, a little bit of social distancing, maybe check people's temperature on the way in. And as we know there were lots of asymptomatic cases and so all it takes is a couple of asymptomatic staff members to go into the nursing home and all of a sudden the disease is everywhere. Staff members are potentially living with other family members that have jobs as essential workers or that work in other nursing homes or they're taking public transport into the nursing home every day.

Chris Pope:

And so while much of the population is sort of social distancing or safe at their home, nursing home workers are actually exposed to the disease all the time because they're circulating in the community and really quite often connects to other people who are in high risk situations. And our initial attempts to basically keep the disease out of the nursing home was pretty ineffective in so many cases. In New Jersey, 85% of nursing homes have had cases of COVID within the nursing home.

Chris Pope:

And obviously once the wall is breached in a sense, and your best you can do often is just to pray that you get lucky. So what one facility in Bristol, Connecticut tried to do the [ShadyX 00:23:22] facility is they decided that they wanted to set up a perimeter around the facility and almost put themselves in a bubble and say that nobody comes in, nobody comes out. All the staff would be housed within the facility, they would stay there overnight and they actually rented some trailers to be parked in the parking lot. They rented the house next door to house the staff and they would make sure that the facility for the duration of the big wave would be cut off from the outside world so that everybody would be safe and that there would be no disease coming in and out.

Chris Pope:

This was an assisted living facility so it wasn't getting any money from Medicaid, it wasn't getting any money from Medicare. It was really a private pay facility but what they own a dad is he basically cut off his own money to keep the facility secure. Now, part of this actually is... Part of it obviously is kind of smart and sort of forward thinking, but then also part of it also works out sort of in a self-interested way in the sense that it gets very expensive if you have many, many cases in your facility. And it gets very, very expensive if your resident start dying and you're not getting paid, you're having to potentially sort of keep a disease outlets already within the facility. Your exposure to lawsuits becomes much greater.

Chris Pope:

And so securing the facility at the outset actually is in some ways a smart business move as well. The difficulty for other facilities is really just the liquidity problem to a large extent. Now nursing facilities have very very thin profit margins. Usually over the past few years, really less than 3% on average. And so their ability to put the outlays to basically pay hazard, pay for staff to stay overnight for staff to basically not go back to their families is very, very limited.

Chris Pope:

What the Connecticut facility decided was you have to make it worth staff's while to be away from their family for a couple of months. That was what they did. You got to basically pay them enough extra money that the staff can go to their families and go to their spouses and kids and say, "I'm going to be away for a little while but this is going to be worth our while as a family to do this." And that's what they did. And they basically wrote out the way in Connecticut while two thirds of the nursing homes in the state were basically subject to cases. They kept it out of the facility very successfully.

Brian Anderson:

Just a quick reminder that anybody in the audience watching can submit their questions below and we will try to incorporate some of them throughout the remainder of the discussion. And with that in mind here's a question from Nila. She wonders whether longterm care facilities have been equally affected or are there certain demographic characteristics whether, well for race that have made certain facilities more vulnerable to infection?

Chris Pope:

Well, the biggest vulnerability is obviously going to be associated with comorbidities. So longterm care facilities have a... There's a spectrum around the peculiarity of medical needs that they treat assisted living facilities and generally people who don't have ongoing medical needs. And then at the other end of the spectrum, you have the skilled nursing facilities where there is constant needs for assistance whether it's changing colostomy bags, constant medication needs or you have patients who might have dementia, patients who have emotional and mental problems, as well as severe needs for basic medical conditions that are almost life threatening.

Chris Pope:

And so with the spectrum of acuity in terms of medical needs, you also have a similar spectrum of vulnerability to the disease itself. Nursing homes in general cater to the frail, the most frail members of society and this is partly, partly why are they being so hurt by this disease. It's almost like when the tide comes in that the people who're the shortest get drowned first. Do you understand? Like these are people who are already in a bad sense in a very vulnerable situation.

Chris Pope:

And so now it's not just that the environment of a nursing home facilitates the spread of the disease. It's the fact that these are people who are often in very, very [inaudible 00:28:00] in bad shape. That's why they're there in the first place.

Brian Anderson:

I'd like to go back to something you briefly mentioned at the top Steve on vaccines. There are some encouraging news reports that a vaccine for COVID-19 maybe on the near term horizon than we first thought. But how is that going to work in terms of nursing home protection when as you noted there hasn't been always a widespread willingness among nursing home residents or workers to be vaccinated against the flu.

Steve Malanga:

Well, let's put it this way, even if there were no laws mandating and I'm going to suspect that most States are going to mandate that for healthcare workers, that vaccine, I think that there's enough awareness and enough fear about nursing home operators and workers that you will see much higher vaccination rates with this. The bigger problem is going to be finding a vaccine for this. When the vaccine does emerge, we don't know how effective it's going to be with older people because they're doing separate tests that to determine what level of dose is necessary. Even with the seasonal flu there's a dose for people over 65 which is a stronger dose and that's been tested in... So it's not going to be a magic bullet and here's the thing.

Steve Malanga:

It doesn't matter if it is because even when we have this for COVID, we're going to go back to the seasonal flu and pneumonia season which occurs every year for which we already have vaccines. And so the real question is going to be coming out of this, do we just say, "Shoosh, we were done." And forget about it or do we say these are the reforms that are absolutely necessary. Do those 50% of the States that don't even require vaccines for healthcare workers, vaccines that we already have, are they going to now require them for those diseases too?

Steve Malanga:

I think that's the larger issue and there just are on multiple weaknesses and vulnerabilities in these places that we have not accounted for in previous years and a COVID vaccine isn't going to in any way fix those. And those vulnerabilities account for many, many people dying of something other than COVID.

Brian Anderson:

Nursing homes, face staffing problems. Chris, this is something you've noted and the CARES Act has actually worsened the situation. Do you want to speak a little bit about that and what should be done about it?

Chris Pope:

Yeah. The CARES Act which was the major legislation was Congress enacted at the end of the spring was really intended and sort of conceptualized as dealing with the economic fallout of the pandemic, really to provide support for people who go out of work, who lose their jobs, who are no longer able to, or who are required to look after their kids to give them income that enables them to stay home and to do so. And that was really disconnected to a large extent from the disease finding. There were titles to the legislation that were intended to sort of assist the medical efforts but they were sort of, and the way this was in Congress is that they were created by a separate committee and kind of stapled together and really developed independently from each other.

Chris Pope:

And the problem with this is that it really undermined the incentive for nursing home workers or it rarely kind of didn't strengthen the incentive for nursing home workers to go to work. And part of the upshot of this is that because your average nursing home employee who earns about $13 now could then earn more by not going to work by staying home by claiming the CARES Act funds, that caused many people who might've been able to make arrangements to still go into work, to still go to nursing homes, to stay home. And this is a problem because this has actually caused the staffing ratios in nursing homes to fall really quite substantially. And as we know from a lot of the research literature on nursing homes, the staffing ratios are really, really closely correlated to the quality of care that's received.

Chris Pope:

If you're understaffed as a nursing home it can feel a lot like spinning plates on the sticks and you're not going to be able to do all of them. And we certainly seen many cases come crashing down as a result.

Brian Anderson:

We have a question from a viewer, from Kim. What can be done to give residents a greater say in their care instead of just being housed in a facility that isn't necessarily responsive to their needs and concerns. So I've put that to both of you.

Steve Malanga:

Well, one thing is, this is a choice that people make. Sometimes they feel they don't have another choice, particularly when Medicare or Medicaid is going to pick up the bill. Medicaid is going to pick up the bill. For a long time, we've tried to in our society States have tried to encourage other options, particularly in home care. Home care is sometimes a half to maybe even 60% cheaper than the nursing homes and it's a real option that people sometimes don't choose because their relatives would rather just see them in a nursing home. That's a real option. It's not an option for everybody in a nursing home by any means. And sometimes the reimbursement protocols for that are more difficult so that it's easier to get the government to pay if you will, if you just go into a nursing home.

Steve Malanga:

That's a solid alternative for people but there seem to be things mediating against it. And so a lot of people just wind up in nursing homes because it seems almost to be the easiest alternative.

Brian Anderson:

Chris.

Chris Pope:

Yeah. Steve is right that that's definitely been a big issue that the policy makers have talked about. The big problem from a policy point of view is what's known as the woodwork effect, which is on the one hand no one really goes to a nursing home because they want to be in a nursing home, it's definitely something that the elderly really resist. But a lot of the services that are helpful to keep elderly people in their own homes, healthy people might even like who wouldn't want someone to clean their house for them, who wouldn't want somebody to help prepare meals for them or do shopping and provide those kinds of general assistance with living needs.

Chris Pope:

And so it's been very, very hard to sort of put almost like boundaries around in home services in such a way that it serves to save money overall. So the end home services [inaudible 00:35:48] case, were probably about a third of the cost maybe even less than the cost of nursing home care. But because the volume increase that it induces is so much higher, it ends up costing more in total unless it's very strictly sort of targeted at the ones who are sort of on the cusp of being able to sustain themselves at home or with assessments.

Chris Pope:

Some most States are now doing this, but that that's a little tricky. The one big challenge that I would say in terms of choice in nursing home is that we really don't have a good competitive market for nursing homes. This is in part because of certificate of need laws which basically create artificial shortages of nursing home spaces. Part of the theory here A... Well, the theory is almost twofold. One it's like a desire to basically limit budgets, like sort of an imperfect way of limiting Medicaid spending has basically been an attempt to limit the amount of nursing home places in the view that it will constraint capacity, constraint the aggregate volume of people who are going into nursing home and keeps spending down in that respect. And then secondarily, the view has been that if you start to limit the amount of nursing time places then you don't have so much excess capacity in each facility, which means the overhead costs are spread over a higher patient population.

Chris Pope:

Now, these two dynamics basically mean that every nursing home, there was almost a shortage of nursing time places, and so every nursing home is almost guaranteed a full quota of patients sort of like they don't have to do much to attract patients. And in many cases they can cut costs and quality and still be assured of the revenue which is low quite often from the Medicaid program. And so there isn't a healthy, competitive dynamic that you might see in many markets where there is a reward for quality, but instead you sort of have this sort of artificially suppressed volume which sort of suppresses [inaudible 00:37:47] or sort of reduces the incentive for facilities to increase quality and to cater to the needs the individual might be looking for.

Brian Anderson:

Earlier we had mentioned the problem of infection prevention in nursing homes. And one study showed that I think staffers at only about 3% of nursing homes were adequately trained or certified in preventing infections. What could be done to improve that in terms of training, in terms of funding streams but it does seem like a big part of the problem? Steve.

Steve Malanga:

Well, it is a big part of the problem and what it goes back to our that the fact that these homes are operating on very, very short margins or very small margins. And that the majority of the reimbursement is coming from the federal government, from Medicaid and Medicare and that they are expert at pushing reimbursement rates down. That's how they save money. Whenever we talk about saving money through those programs, it's just we're going to pay doctors less, we're going to pay hospitals less. And that's the big problem with nursing homes. Let's face it. State's tried for, I'm going to go back 15 to 20 years. States tried to encourage their residents to start to buy longterm nursing home care, longterm care insurance.

Steve Malanga:

It hasn't gone well. It's turned out to be far more expensive and people just essentially don't buy it and as a result they rely on the government. So there has to be probably another funding stream specifically for that. Maybe Chris has some ideas about what that is or where that can be, but that's an enormous problem.

Chris Pope:

That's, that's a nice preview of a paper that I got hung up in the next month or two. The core problem with longterm care insurance is that the eligibility for the Medicaid benefit is so loose. To qualify for Medicaid, longterm care benefit, you're not expected really to... So there's no restriction on eligibility. Even if you have a house with home equity update, $140,000 and so what happens is if you qualify for Medicaid, Medicaid will pay for the nursing home, will pay for the home health in many sick and in many situations.

Chris Pope:

But if you then want to buy long term care insurance, you'd lose the Medicaid benefit. And so you're mostly paying for a service that you would be getting anyway. So you have to pay for the whole amount of the service that you will be getting through Medicaid plus maybe if they're radically a little bonus in quality, if you wanted to get to a better facility but in practice, it's worked out that it's effectively like... You can think about it as like the fact that you stand to lose the Medicaid benefit or the value of the Medicaid benefit when you buy longterm care insurance is almost like a 60 to 70% tax on the purchase of such insurance. And so that's basically done where you might expect it to do which has caused that market to collapse and basically crowded it.

Chris Pope:

The one thing that I think is really worthwhile as a solution to this is if you instead kind of do what I think conceptually everyone understands and kind of wants the Medicaid longterm care benefit to do, which is to provide a real good quality safety net to people who genuinely don't have any ability to purchase private insurance or any ability to sort of punch coverage for their own care and good quality care. It's not like people who are higher up in the income spectrum actually think that Medicaid is providing a good quality longterm care. If you segment it so that people who are in the middle class and above have the ability and the incentive to purchase his private longterm care insurance, that can create a thriving, private market that provides the adequate revenues to reward quality nursing homes.

Chris Pope:

And if you do that, it takes all those sort of middle class out of the pool of people who are drawing a Medicaid funds, which can also mean that the Medicaid funding can go so much further on the people who really do need to be in the program. So it really, the solution is a matter of being much more strict about the eligibility for the Medicaid benefits. Not saying if you have a house up to $840,000, that you don't have to contribute anything to longterm care but basically saying we're going to have a Medicaid longterm care eligibility that's really going to be limited so that it's people who don't have the ability to buy insurance for themselves, and then expect people who are in the medium [inaudible 00:42:50] everybody comes to provide for themselves.

Chris Pope:

This is why we have sort of a thriving, private market in most of the healthcare we say, "If you are able to provide for yourself, you should be expected to [inaudible 00:43:01] to purchase your own insurance. That ensures that there's a lot of private resources coming in rather than having a fixed pool of Medicaid dollars that are expected to be stretched to cover the whole of society, which is the problem that we've ended up with in longterm care which is in some ways the sort of classic socialized medicine problem of having a fixed pool of resources that's supposed to cover everybody.

Brian Anderson:

I'd like to get a few questions from viewers in. Here's an interesting one from Peter, New York he writes, changed its method for accounting for nursing home deaths retroactively in early May to only count people who die in the nursing home, someone who was transferred to a hospital is no longer counted as a nursing home death in New York. Have you looked into what the actual New York nursing home deaths number might actually be? It's even higher than the already awful number is the implication of that question. Is that right?

Steve Malanga:

It's not just the implication. It's probably the fact. It's clearly a fact. New York accounted nursing home deaths in ways that other States did not. Here is simply explain, I think the question actually explains most of it. If you were in a nursing home, you got very sick and were sent to the hospital, you were not counted as a nursing home death even though you had been infected in the home and may not have gotten to the hospital. Certainly early on people weren't being sent to the hospital until they were near critical condition. Other States have accounted that people who were infected in nursing homes and later died as nursing home deaths. So there's no question that the number of New York deaths would be higher.

Steve Malanga:

The problem is there's no way of going back and actually finding that, figuring that out. A number of different people who studied this just to come up with the nationwide numbers because the numbers that are coming from government aren't great, they've used various databases just to come up with the basic numbers haven't been able to kind of determine what this is. It's possible that if there's ever an independent study, commissioned by the state that maybe will actually look into this, but right now it's pretty clear that they under counted significantly a number of the nursing home deaths, excuse me.

Chris Pope:

Hamilton of the Empire Center up in Albany has suggested a good way of getting maybe an upper bound on this amount is to look at the change of vacancy rates in nursing homes. Those increased from about 8% in usual times to over 20% this year after the COVID pandemic. Now part of that is actually also the fact that people have been reluctant to put new, [inaudible 00:45:51] been reluctant to answering a nursing homes. And then also there's been fewer just elective surgeries that have been sending people to nursing homes as opposed to acute care. But the one thing I think is kind of interesting about that figure is that when you look at new York's performance on that, it's actually not that much out of line. We're without the States where we're with Pennsylvania, with Massachusetts or New Jersey through [inaudible 00:46:19] similarly.

Chris Pope:

I think looking really for... We certainly heard a lot about why New York has done some things wrong in terms of sending people back into nursing homes in hospitals, and I'm sure if they had to do it again, they probably would not do so but there is yet little in terms of hard data that really shows that New Yorkers necessarily or even visibly an outlier relative to other States in the region.

Brian Anderson:

Here's a question from Sandy. What about cases that have recovered? So people in nursing homes who've had the illness, who've recovered. Are they going back to the same home? What is being done with them? Do we know?

Steve Malanga:

Oh, well, first of all on average, about 75%, if we consider recovered meaning not died about 80% of people in nursing homes recover. Whether they recover with serious complications and how long they live after that, we don't know but at present now what's happened is most States are now requiring that a person test negative at least once in some cases twice before they are sent back. So presumably at that point they're no longer infectious and they're back in the nursing homes whether families have the wherewithal to take them out after this or whatever but the recovery rate the only evidence we have is the number of cases and the number of deaths. It's about 80% and now we are trying to certify that these people actually are virus free before we send them in. And presumably they also have antibodies which might offer some future immunity.

Brian Anderson:

Here's another question. This one's from David. This is a kind of technical question. So has the Certified Nursing Assistant, the CNA hindered or improved care for seniors?

Chris Pope:

Well, there was some evidence that certification is associated with a better quality of care. When you think of the longterm care, it really does run the spectrum from things that are basically sort of activities that a spouse would be able to do for an elderly relative. The essence of longterm care is really sort of another person compensating for individual's frailties for activities that a healthy individual will be able to do by themselves. But it also runs up to sort of medical care and there was a sense that if you're an elderly relative and your spouses is frail, that you will start to perform tasks that are more medical in nature there will be bandaging, there will be, like you'll be constantly dealing with a medical condition.

Chris Pope:

And so there are some sense in which that's useful. I think in the case of the current virus, this is obviously a very serious medical condition for which like being a nurse is not necessarily going to change the outcome of any case. If someone needs hospitalization, they need hospitalization and a higher level of certifications is not necessarily... It is unlikely really to, to lead to a lower transmissibility and it's not going to stop people getting sick in the first place.

Chris Pope:

So I think in a specific case if the corona Virus I don't think it's really going to have had much effect. But there were certainly, if we think about the broader story that Steve was talking about, the fact that we just in normal times have a real big problem in nursing homes in quality, I think there you starts to think that having higher levels of staff quality, staff training is as you might have some impacts on outcomes.

Brian Anderson:

We're almost out of time. So let me ask a very general question to both of you to conclude. Cases have continued to rise in a number of States, I would say the majority of States right now, it is possible that we're going to be hit with a second wave of COVID-19 here in New York in the fall. What do you see in terms of the near and longterm future for nursing homes? Do we have a better sense now of how to go forward? Are there policy movements a foot that that could make things a little better if we go through this again?

Steve Malanga:

One thing I would say, which is also, I think in a way an answer to a question which was what's the ideal policy for nursing homes is we are inching our way towards that. There are a couple of things that we should have been doing it from the very beginning, which we're doing now. We're again, I said this before, we're testing the workers several times a week. Number two, we're actually checking residents several times a day for symptoms including temperature checks and we're testing residence. These things enable us first of all to see who's positive very quickly.

Steve Malanga:

We also now have a root out of nursing homes. They've geared up with their protective equipment. So beyond all of the ideal kind of solutions longterm like better reimbursement and higher levels of staffing and better care, the stuff that we're doing now that, believe it or not weren't doing in March, we weren't doing in April and we weren't even doing at some places in May, including just checking people for symptoms, testing people every day and nobody, no governor was going to say to a nursing homes and ever again, at least during this pandemic, "You have to take people back before they've tested negative for the virus." So those things alone I think are probably a fairly big leap forward.

Chris Pope:

All right. I completely agree with Steve actually on that. I think that firstly get the basics right. Things on PPE protective equipment, the testing that we really should have been doing from the outset. Now we're actually a little bit more prepared. Those are going to get done. And then it's just basically if the financial issue. Making sure that these homes have got the money often being like it's not like these aren't bad. These are bad people that aren't trying.

Chris Pope:

They're just incredibly stressed for resources. And that kind of comes to the final issue and probably the crux of the matter is how much the people care. Are we willing to just allow nursing homes to be like a place that you will avoid and place that you really want to it just kind of allowed to fall apart in the way that we have or is there going to be some kind of political mobilization to maybe put these a little bit higher up the list of political priorities? Are we going to start, to sort of reflect Steve's earlier point, which I thought was the best one is like, we care a lot about schools. Are we going to start caring equally about getting nursing homes right in future. It's not a healthy situation in a year when we get vaccines, nursing homes are still not going to be completely fine.

Brian Anderson:

I wanted to thank Steven Malanga and Chris Pope for your informed commentary today. And I want to thank all of you for joining us today. Please consider subscribing to the Manhattan Institute's newsletters, making a contribution to our mission. We have posts both links for doing so right in the comments window on your screen. So thanks again to both of you and thanks everyone for joining us again today.

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