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Life Health > Long-Term Care Planning

House panel considers public catastrophic LTCI proposal

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Creating a new, government-run catastrophic long-term care insurance (LTCI) is one long-term care (LTC) finance proposal that came up today at a House hearing on LTC finance reform.

Witnesses also talked about the possibility of letting workers use some of the cash in their 401(k) to pay private LTCI premiums.

The House Energy & Commerce health subcommittee organized the hearing to look at a wide range of ideas for shoring up the country’s public and private LTC finance systems.

See also: Diseases are bad, but that can be good politics

Rep. Joseph Pitts, R-Pa., the subcommittee chair, said in his opening remarks that his colleagues are rightly skeptical of any proposals that might create anything that looks like a new LTC entitlement program.

Medicare alone has about $35 trillion in unfunded obligations, Pitts said. But “caution against new entitlements doesn’t equal closed-mindedness to new approaches,” Pitts said.

Subcommittee members from both parties talked about personal reasons for having an interest in LTC finance.

Rep. Michael Burgess, R-Texas, a medical doctor, recalled that his mother acted as a caregiver for his father, who was disabled. Back in 1989, he said, she told him to buy private LTCI by the time he was 50, before it became too expensive.

“There need to be safety net programs,” Burgess said. But “you need to be prepared for these things,” he added. “They can happen to you.”

Alice Rivlin, a former vice chair of the Federal Reserve board who has been working on the package of LTC finance proposals recently released by the Bipartisan Policy Center (BPC), stumped for the public catastrophic LTCI program proposal, the 401(k) plan LTCI premium proposal, and other proposals from the BPC package.

A public program that helped protect the small number of consumers who need LTC services for five years or more might help lure private LTCI issuers back into the market, Rivlin said.

Anne Tumlinson, a former LifePlans LTCI analyst and Office of Management and Budget (OMB) Medicaid analyst, warned that LTC finance is much more complicated than it looks.

“We often simply fail meet long-term care needs,” Tumlinson said.

In some cases, Tumlinson said, people who have unmet LTC needs and are unable to prepare meals go without eating.

Because there is so much unmet need for care, and because the families providing much of the unpaid care people do get today are so overwhelmed, any new LTC finance program will draw out and address unmet needs, Tumlinson said.

The magnitude of the previously unmet LTC needs that come to the surface may slash the ability of the new LTC finance program to improve the finances of state Medicaid nursing home benefits programs, Tumlinson said.

Rep. Kathy Castor, D-Fla., asked colleagues for support for another LTC-related proposal: H.R. 3039, the Recognize, Assist, Include, Support and Engage (RAISE) Family Caregivers Act bill, which calls for the government to develop a National Family Caregiving Strategy.

Burgess highlighted a lawmaker LTCI understanding gap when he talked about his own LTCI coverage.

House members have exposure to private LTCI information, through federal employees’ voluntary LTCI benefits program.

Burgess misspoke and said he pays about $1,500 to $2,500 per month for his LTCI coverage. Rep. Frank Pallone, D-N.J., assumed that Burgess was correct, and that private LTCI costs the policyholders about $24,000 per year. Burgess then left the hearing room.

None of the witnesses on the hearing panel corrected the private LTCI premium figure. Discussion proceeded for about 20 minutes based on the $24,000-per-year figure, until Burgess came back and said he actually pays about $1,500 to $2,500 per year for his LTCI coverage, not $1,500 to $2,500 per month.

Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI), said in an interview that lawmakers’ belief that private LTCI might cost $24,000 per year is a symptom of lack of LTCI industry outreach.

“If you don’t defend yourself and go out there and educate, you’re going to disappear,” Slome said.

See also:

Caregiving strategy bill sails through Senate 

Rosie the caregiver: 10 ways to help her rivet our LTC ship together


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