Policy shapers in Washington are thinking more about long-term care insurance (LTCI) programs. But, really, it’s not about you, or your clients.
The wonks are always careful to mention the needs of the care recipients, and the heroic family caregivers, but, of course, their real prospect is state Medicaid programs.
The long-term care (LTC) planner in the wonks’ sights is Congress.
The Urban Institute, a bipartisan think tank associated with research that happens to appeal to Democrats, recently came out with two LTC financing briefs: “How Much Might New Insurance Programs Improve Financing for Long-Term Services and Supports?” and “How Much Could Financing Reforms for Long-Term Services and Supports Reduce Medicaid Costs?”
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In the briefs, the authors — Melissa Favreault, Howard Gleckman and Richard Johnson — propose three new types of user-paid LTCI programs and analyze how voluntary unsubsidized, voluntary subsidized or mandatory versions of each program might affect overall Medicaid long-term services and supports (LTSS) spending by 2070.
Favreault and her colleagues say better LTCI programs could provide older adults with more flexibility, but they emphasize another motive for encouraging LTCI sales: “New LTSS insurance programs with dedicated premiums or taxes would prefund at least some LTSS expenditures and reduce spending by Medicaid, which is financed through general tax revenues and strains government budgets.”
The private LTCI community has had a lousy relationship with LTC wonks since at least as far back as the early 1990s, when it lobbied against the Pepper Commission’s efforts to set up a universal nursing home care safety net program.
The federal Advisory Council on Alzheimer’s Research, Care and Services barely mentions private LTCI in the country’s national plan for fighting dementia. In the final report on the 2015 White House Conference on Aging, the conference staff refered to private LTCI only to sniff that issuers account for just 3.3 percent of U.S. LTC spending.
See also: White House asks for LTC funding ideas
Favreault and her colleagues have set themselves apart by suggesting that expanding use of some kind of user-paid LTCI program might be useful.
The team’s work could influence a wide range of LTCI proposals. For a look at some of what Favreault and her colleagues said, and what their analysis could mean for private LTC planners, read on.
1. Medicaid is already a gorilla of an LTC benefits program.
The Favreault teams says Medicaid alone spends about $100 billion per year on LTSS and accounts for about 60 percent of U.S. LTSS spending.
France and the United Kingdom are examples of countries viewed as having government-run “single-payer” acute health care systems. Government programs account for about 77 percent of health care spending in France and 84 percent in the United Kingdom, according to a report released by the Commonwealth Fund.
In other words: Medicaid already looks an awful lot like a universal, single-payer LTC benefits system.
See also: Single-payer programs also control costs
2. The Favreault team says it’s come up with a good way to analyze new LTCI options.
The team designed three hypothetical, easy-to-analyze LTCI products, then used Milliman data and its own simulation system to predict how the new products might perform.
Each of the three products would pay a cash benefit of $100 per day to insureds who qualified for benefits in 2015. The benefit would increase 3 percent per year.
The first product, a front-end benefits policy, would pay benefits for two years, after the insured got through a 90-day waiting period.
The second product, a back-end benefits policy, would pay benefits after an insured had been getting long-term care for at least two years.
The third product, a comprehensive policy, would pay for all long-term care a qualified insured received once the insured got through a 90-day waiting period.