September 9, 2013

Big Questions Lurk in LTC’s Future

One expert expects ‘superficial overview of the importance of the issue’ from commission report; another sees ‘radical’ change in LTC financing

Long-term care specialists are at odds over what they believe the Long-Term Care Commission will submit to Congress on Thursday as part of its first set of recommendations to better ensure LTC coverage is available for the elderly and disabled.

After the Community Living Assistance Services and Supports (CLASS) Act was repealed by the American Taxpayer Relief Act, better known as the “fiscal-cliff” law, in January, the Long-Term Care bipartisan commission was set up.

The commission, which consists of 15 members appointed by Democratic and Republican congressional leaders and the White House, was then tasked with reporting to lawmakers by Sept. 12 on how to establish, implement and finance a “comprehensive, coordinated, and high-quality system that ensures the availability of long-term services and supports for individuals in need.”

Jesse Slome, executive director of the American Association for Long-Term Care Insurance, told ThinkAdvisor that at best, he believes the commission will recommend only a “superficial overview of the importance of the issue and the lack of a cohesive approach to dealing with it.” With only a few meetings under its belt, Slome says that it “would be foolhardy” for the commission to recommend legislation.

Rather, he expects the commission to “likely ask for an extension, some money and an opportunity to continue exploring.” Long-term care “simply remains an issue that is overlooked by politicians,” something he doesn’t see changing “anytime soon.”

But Chris Orestis, a long-term care specialist and former insurance industry lobbyist who is CEO of Life Care Funding, expects the commission’s report to “radically alter the ways in which long-term care is financed.”

He told ThinkAdvisor in an email message that "the aging population and longer life expectancies is putting too much pressure on Medicare and Medicaid to sustain," so he expects the commission’s report to recommend that “alternative forms of funding long-term care must be found and/or serious cuts and higher barriers to entry onto these programs will be necessary.”

LTC insurance “has not lived up to expectations,” Orestis argues, with proof of this being the major insurance companies such as MetLife, Prudential, UNUM and Guardian having “quit the market.” Those companies that are still in the business, like John Hancock and Genworth, are raising rates and cutting benefits, he says. LTC insurance “is, at this point, a niche market that primarily serves higher-net worth individuals who would probably not go onto Medicaid anyway.”

Orestis argues that there’s a need for “new innovations” in the LTC marketplace and that “private market solutions to find cost savings and new methods to fund long-term care must be sought out and encouraged.”

He added that programs such as “Veterans Aide & Attendance Benefits or converting life insurance policies into a Medicaid qualified long-term care benefit based on the law passed in Texas this year have been submitted to the commission as policy recommendations.”

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