7 forces for long-term care finance reformers to respect

The Long-Term Care Criteria Work Group wants policymakers to take economic constraints into account when they are thinking about how to meet the needs of the elderly.

The work group is part of the American Academy of Actuaries, a Washington-based organization that helps the government with gather and analyze data.

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The academy set up the work group to try to give members of Congress and others an idea of what a realistic long-term care finance program ought to look like.

Given how far apart top Democrats and Republicans are on acute health care, the idea that they could even think about agreeing on a long-term care finance proposal might seem far-fetched. But Republicans have talked seriously about the need to improve the U.S. long-term care financing system in the past year, and Democrats have acknowledged that paying for long-term care is difficult.

The Republican party included a plank in its platform stating that the country should figure out how help more people who need long-term care services stay in their own homes.

Mike Pence, the vice president-elect, said during the vice presidential debate that a society can be judged based partly on how it cares for the aged, the infirm and the disabled.

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Hillary Clinton, Trump’s opponent, talked about the need to improve pay and working conditions for home health workers. She also talked about the need to support caregivers. But behind the scenes, an aide acknowledged that making any promises about home health care or home health workers would be difficult, because “home health is a lot of money.”

But the oldest baby boomers will reach age 85, the cusp of the “oldest old’ stage of life, in just 14 years.

Private groups and congressional committees have held many discussions about preparing for the “silver tsunami” through strategies such as improving support for private long-term care insurance and other private funding vehicles, improving support for family caregivers, or adding new long-term care benefits to Medicaid or Medicare.

Bruce Stahl, the chairperson of the work group, and other committee members, developed an issue brief that lists seven different criteria for promising long-term care finance reform proposals, including criteria involving the quality and comprehensiveness of the benefits.

The actuaries also emphasize that any successful long-term care finance program must be set up in a such a way that consumers can be confident that the program will deliver the benefits that were promised.

Here’s a look at some of the economic constraints described in the sections on affordability, risk management and cost control, and financial soundness and sustainability.  

Actuaries say developers of any serious long-term care finance program need to think about how the cost will compare to the enrollee’s earnings. (Photo: Thinkstock)

1. Consumers’ current income

In a section on affordability, the actuaries say the purchaser of insurance or some other financing vehicle could be either an individual or an entire family unit. The affordability of coverage for a family may vary by level and source of income, type of coverage purchased, other household expenses, and other factors.

“Affordability may be usefully described on an after-tax, available-dollars basis, including income and assets,” the actuaries say.

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The actuaries point out that people may have a more difficult time absorbing increases in long-term care protection program costs once they retire. (Photo: Johnny Greig/iStock)   

2. Consumers’ future income

The actuaries point out in the affordability section that consumers’ income and assets may change over time, and that any realistic proposals have to reflect the reality that many purchasers who are closer to needing long-term care services may be living on a fixed retirement income, with little ability to handle ordinary, expected increases in costs, and even less ability to handle unexpected increases in costs.

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Keeping any long-term care finance program on track will require careful use of statistics from the past to come up with assumptions about the future, the actuaries say. (Photo: iStock)

3. Statistics

The actuaries say developers of any sound long-term care finance reform proposal will need help from actuaries to gather significant amounts of data about past claims experience, develop assumptions about what might happen in the future, and monitor how well the performance of the program is matching expectations.