Medicaid Privatization Begins in Florida, Likely to Grow Nationally

“You only have so many dollars to go around, and we have a growing senior population,” said Chris Orestis, CEO of Life Care Funding. “The sad reality I that very few people plan for long-term care.” While retirements are ideally funded by long-term investments and Social Security, the sudden and unexpected need for assistive services can quickly drain savings and drop seniors into the low income brackets necessary to qualify for Medicaid.

In fact, Orestis said he has already worked with several states,  including Florida, to introduce legislation that allows seniors to augment Medicaid payments for long-term care by selling their life insurance policies. Designed to lower future Medicaid bills and increase middle class access to much-needed care, one of these bills has already passed in Texas. Similar to Florida’s program, this new law allows seniors to use the proceeds from their policies to pay for the long-term care providers of their choosing.

Critics in Florida and other states worry that these HMO-like schemes will lead to lower-quality treatments, lapses in care during transitions and fewer choices for recipients. “These are valid concerns,” according to Orestis, “But people need to remember that when they’re on Medicaid and funded by taxpayer dollars, they have very limited choice. Both privatized and public have pros and cons, and you’re not going to get the same benefits that you would if you were paying with your own money.”

Ultimately, however, Orestis and other privatization proponents said these kinds of programs will make long-term care a better and more viable option for struggling seniors. “If you’re a private company and working on a certain amount of dollars, you’re going to operate with efficiency,” he said. “In a competitive marketplace, you can’t sacrifice quality.” While Florida’s new system does limit recipients to a small set of provider networks, those providers will still have to compete for Medicaid funds.

Planning for the Future  In the long run, retirees of all income levels will need to better plan for their futures. Seemingly secure families can lose a great deal of their savings through unexpected long-term care expenses, but Medicaid only covers people in the lowest income and asset brackets. “The economic and demographic drivers that are pushing forward things like privatization could also open the doors to further means testing for participation,” said Orestis. “I think it’s inevitable that more seniors are going to have to fund their own care, long-term and otherwise.”