The Centers for Medicare and Medicaid Services has ruled to cut payments to skilled nursing care by up to $16 billion over the next ten years, which could boost the sale of LTCI by as much as 20 percent, says the American Association for Long-Term Care Insurance, an industry trade group.
Because 70 percent of nursing home budgets are eaten up by labor costs, the proposed Medicare cuts will likely affect the care seniors receive. “When these regulatory cuts are considered in addition to possible congressional Medicare cuts, nursing homes will have to face very difficult decisions, including the possibility of staff reductions,” said Bruce Yarwood, President of the American Health Care Association.
Yarwood noted that funding for Medicare and Medicaid are interdependent and that cuts to both programs could negatively impact care for seniors and employment for caregivers. Jesse Slome, executive director of the AALTCI, explained, “Everyone would like the government to pay but no one wants to pay more taxes. As more people recognize the importance of planning for the risk of needing long-term care, insurance will become an increasingly attractive and affordable option.”
Currently, some 40,000 insurance professionals sell approximately 350,000 policies a year. The industry would like to see the number of insurance professionals offering LTCI to increase by 10,000 in 2010 to go along with a projected 20 percent increase in sales.
The AHCA anticipates $44 billion in total Medicare cuts over the next ten years. Cuts will vary by state, with Texas facing the deepest cuts of more than $2.7 billion, the fourth highest state cut. Other states face cuts of more than $1 billion over ten years, including California, Florida, New York, Ohio, Illinois, Pennsylvania, New Jersey, Massachusetts, Michigan, Indiana, North Carolina, Virginia, Connecticut and Tennessee.