State Long Term Care Insurance Partnership programs are not likely to save any money for Medicaid and may even increase state Medicaid spending slightly, a new government report maintains.
A Government Accountability Office survey of the 4 states with existing LTC Partnership programs finds about 80% of current Partnership policyholders would have bought traditional LTC insurance if the state-sponsored policies did not exist. The remaining 20% said they would have paid for their own care if there was no Partnership program, the GAO says in its new report, “Long-Term Care Insurance: Partnership Programs Include Benefits That Protect Policyholders and Are Unlikely to Result in Medicaid Savings.”
Partnership policies enable individuals who buy qualifying policies to exempt some of their personal assets from Medicaid eligibility requirements.
[Under the Deficit Reduction Act of 2006, all states are now allowed to adopt a qualified LTC Partnership program, providing certain requirements are met. At least 25 states are developing Partnership programs, and Idaho has received approval for its program for the Department of Medicare and Medicaid Services.]
For its study, GAO used data from 2002 through 2005 from the 4 states that had Partnership programs at the time–California, Connecticut, Indiana and New York–along with other sources.
During the period, Partnership policyholders bought more extensive coverage than traditional LTC insurance policyholders, GAO found.
According to the agency’s report, both Partnership and traditional LTC insurance policyholders earned more and had more assets on average than did those without such insurance.
In 2 of the 4 states, more than half of Partnership policyholders over 55 had a monthly income of at least $5,000, and more than half of all their households had assets of at least $350,000 when they bought their policy.
GAO’s analysis suggested that an individual could self-finance care–thus delaying Medicaid eligibility–for about the same amount of time as they could finance such care through a Partnership policy. GAO also noted, though, that some situations could delay or speed up Medicaid eligibility.
While most LTC policyholders potentially could increase Medicaid spending if they exhausted their benefits, the GAO concludes that few policyholders are likely to drain their benefits, due to their wealth as well as the likelihood that their policy would cover most of their LTC needs.