What if he wants you to buy long-term care coverage? (Library of Congress image)

The United States is now stumbling toward what, apparently, if a thousand gears click smoothly into place, will be a system in which having some kind of acute health care coverage will be almost mandatory.

Now health policy analysts have concluded in a new report that having any kind of mandatory long-term care insurance (LTCI) would probably be a lot more effective at shoring up the U.S. long-term care (LTC) system than any imaginable voluntary system.

The analysts  are Anne Tumlinson, Eric Hammelman and Elana Stair of Avalere Health and Joshua Wiener of RTI International. They prepared the report for the SCAN Foundation, a foundation created by the SCAN Health Plan.

The SCAN Health Plan is a nonprofit California health plan that runs health plans for Medicare enrollees and for people who are eligible for both Medicare and Medicaid, including many people who are getting LTC services either at home or in care facilities. 

But the work of the Tumlinson team focuses on a comparison of voluntary and mandatory LTC financing arrangements, not between private-sector and government-provided arrangements, and it’s possible that the kind of mandatory program described in the report could rely at least partly on use of private LTCI plans.

The analysts conducted their study in the wake of a decision by U.S. Health and Human Services Secretary Kathleen Sebelius to suspend work on efforts to implement the Community Living Assistance Services and Supports (CLASS) Act program.

Drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) added  the CLASS Act provision to PPACA in an effort to create a voluntary LTC program to be funded by worker premium payments. Sebelius ended up agreeing with critics that the program, as written, would likely be unsustainable, in part because PPACA would have required the plan to be open to workers who already were technically unable to handle some activities of daily living (ADLs).

But federal and state health officials already have turned Medicaid into a kind of patchwork universal nursing home care benefits program, by stretching the Medicaid definition of “poor” to include elderly people with substantial amounts of assets.

At the state level, many policymakers are eager to supplement the Medicaid nursing home benefits program with premium-supported insurance programs aimed at families that are not poor.

In Hawaii, for example, state lawmakers are giving serious consideration to H.B. 1, H.D. 2, a bill that would create a commission that would study the idea of creating a mandatory, government-run limited-benefit LTC benefits program.

The Tumlinson team used an Avalere Medicaid policy simulator to compare the effects of mandatory and voluntary versions of an LTC program that would be open to working people and provide $50 in benefits per day for five years.

The analysts found that the voluntary program would reduce Medicaid nursing home benefits enrollment by about 3,000 in the 15th year and save Medicaid $5.6 billion over 15 years.

The mandatory version of the program would reduce Medicaid nursing home benefits enrollment by about 36,000 and save Medicaid $49 billion over 15 years.

A similar mandatory that covered non-working older people as well as working people could save Medicaid about $276 billion over 15 years, the analysts said.

Letting use of private LTCI be voluntary might make sense for policy reasons, the analysts said. 

“Policymakers may not want to require individuals to pay premiums  or taxes,” the analysts said. “And, a voluntary approach can achieve important policy goals such as increasing the number of people with coverage.”

But, because of the need to exclude people with serious health problems from sustainable voluntary LTCI programs, and because of the need to charge older, sicker people who do get voluntary LTCI coverage higher rates, “the sheer number of enrollees will not be sufficient under voluntary insurance for it to be a major source of  financing for long-term services and supports,” the analysts said. 

To change Medicaid spending in a significant way, “mandatory coverage is needed,” the analysts said.

Today, the analysts said, private LTCI issuers and their agents immediately disqualify many would-be applicants who have obvious problems.

About 16 percent to 20 percent of the applicants ages 50 to 59 who go through a formal LTCI underwriting process fail, the analysts added.

“Mandatory programs have the advantage that they cover all people and would have premium contributions from all people, reducing average costs,” the analysts said. “By extending the population eligible to enroll to include everyone, notably non-working older adults, the required premium for the program increases substantially, but the program also covers a much higher percentage of disabled individuals than any realistic  assumptions for a voluntary program.”

Even with a mandatory program, policymakers would have to make tough decisions about trade-offs between monthly premium levels and Medicaid savings, the analysts said.

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