The benefits of expanding Medicare and Medicaid benefits for long-term care recipients – covering more people – may not outweigh the heightened financial burdens on the programs, according to a new Congressional Budget Office report. The report, “Financing Long-Term Care for the Elderly,” was prepared for the House Budget Committee to address the growing fiscal pressure on long-term care spending and the aging demographics.

The CBO estimated that $135 billion will be spent on long-term care services in 2004 from a variety of sources, including Medicare, Medicaid, personal savings and private insurance. Medicare will spend $16 billion in 2004 for skilled nursing care and $17 billion on home health care, while the private market will account for $6 billion.

The CBO looked at possibly offering individual tax credits and increasing eligibility requirements for Medicaid and Medicare.

While a tax credit might be more attractive to potential long-term care users than expanding Medicare or Medicaid benefits, it would also increase costs to the federal budget, said the report, which was released Monday.

A way to increase Medicaid eligibility would be to raise the program’s limits on income and assets. Applying stricter standards on individuals’ transferring of assets to qualify may offset the costs of this. However, more Medicaid beneficiaries may depress sales of private coverage by strengthening Medicaid’s “distortionary” impact.

Medicare coverage could be expanded by dropping the three-day prior hospitalization rule for nursing home care, the CBO said.