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Life Health > Long-Term Care Planning

AARP analyst promotes LTCI rate stability provisions

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An analyst at the AARP Public Policy Institute is recommending that states consider trying to add laws and regulations to make long-term care (LTC) services and long-term care insurance (LTCI) more affordable.

The analyst, Ari Houser, makes those recommendations in a paper on the “private-pay affordability” of LTC services.

The more middle-income and high-income people in an area can pay for LTC services with their own resources, the more likely low-income will be able to be to supplement the services they get through public programs, Houser said.

House has included an 11-page table showing how the median cost of nursing home care and the median cost of home health care compare with the median annual household income of market residents ages 65 and older.

In most of Alaska, for example, the median cost of a year in a nursing home is $285,613, or more than 6 times the median household income of a senior living in the state, and the cost of a year of home health care 89 percent of the median income.

In New Haven, Conn., the median cost of a year in a nursing home is almost $152,000, or about 440 percent of the median senior’s household income.

Houser also talks briefly about private LTCI coverage and the cost of LTCI coverage.

Private LTCI “can make private pay services affordable for those with policies, but market penetration is low,” House said, noting that, in 2010, only about 8 million U.S. residents had LTCI coverage, and that there were already about 40 million U.S. residents ages 65 or older that year.

“The cost of premiums is cited as a main reason for not buying LTCI,” Houser said. “Rate stabilization provisions, so that people can be assured that their premiums will not rise too quickly before any benefit is received, are important because they help to ensure affordability of premiums.”

This year, 40 states and the District of Columbia have some kind of LTCI rate stabilization mechanisms in place, Houser said.

Houser said some states have made efforts to control LTC services prices.

In Minnesota, for example, the state prohibits nursing homes from charging private-pay patients more than the Medicaid rate. 

“While it is not clear that rate equalization is the cause, private pay nursing home care is relatively more affordable in Minnesota than in similar states; this is not the case for home care, which is relatively less affordable in the state,” Houser said.

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