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Life Health > Long-Term Care Planning

Senate panel still thinking about public LTC options

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Medicare actuaries strangled the Community Living Assistance and Support Services (CLASS) public long-term care (LTC) finance program just two years ago, but some health policy makers say Congress is going to have to come up with some other kind of new public LTC program sooner or later.

Sen. Bill Nelson, D-Fla., chairman of the Senate Special Committee on Aging, opened an LTC policy hearing Wednesday by citing Congressional Budget Office estimates that LTC expenditures will eat up 3.3 percent of U.S. gross domestic product (GDP) in 2050, up from 1.3 percent of GDP today.

Judy Feder, a professor at Georgetown University, testified that a public insurance program has to be at the heart of any serious national LTC finance effort.

Even advocates of private LTCI programs generally concede that those programs can cover only about 20 percent of the people who need coverage, Feder said.

Anne Tumlinson, a budget analyst at Avalere Health, said she looked into the issue and was surprised to find herself agreeing that setting up a mandatory, public LTCI program might be the only way to bring in enough revenue to cover the cost of LTC needs without triggering adverse selection and death spirals.

In the real world, Tumlinson said, there’s no way most ordinary people can afford to use private LTCI to prepare for LTC needs.

“I don’t even have long-term care insurance, and I know a lot about it,” Tumlinson said.

Mark Warshawsky, an analyst affiliated with the American Enterprise Institute, agreed that public programs will have to play a role in paying for long-term care.

But he said Congress could help expand use of private LTCI dramatically by helping Americans use the cash in retirement accounts to pay for LTCI, and by promoting the sale of life care annuities.

The life care annuity, or an annuity-LTC hybrid purchased when workers retire, is probably the most practical private LTCI financing vehicle, because getting people who are retiring to think about LTC costs is much easier than getting young workers to think about the subject, Warshawsky said.

The biggest revelation may have come from Sen. Tim Scott, R-S.C.

Scott, who joined the Senate in January, pointed out that he is the grandson of a grandmother who died of Alzheimer’s in 2001 — and an insurance agent who sold private LTCI policies.

Scott said he thinks the right kind of support could help private LTCI benefit as many as 40 percent of Americans.

He said one major problem with any kind of voluntary LTCI program is that letting workers know LTCI benefits are available is much different from actually getting workers to sign up for coverage, especially given how many people think Medicare or ordinary health insurance will pay for nursing home care.

“The misinformation really takes away the motivation,” Scott said.

But the emphasis has to be on making as much use of private programs as possible, because the country is having a hard time paying for the public benefits programs it already has, Scott said.

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