Since last year’s demise of the CLASS Act, those of us worried about how the U.S. will finance the long-term care needs of the frail elderly and younger adults with disabilities have been looking for an opportunity to reopen the issue. Today, in a small first step in that direction, about two dozen state and federal officials, advocates, insurance company executives, and researchers met privately for almost six hours to exchange ideas.
The group wants to keep a low profile and asked me not to identify any of the participants. And they are very far apart on important questions. But they agreed on some key issues: The nation is poorly prepared to face the high cost of long-term care and the current system (built on Medicaid, out of pocket payments, and a handful of consumers who own private long-term care insurance) is not sustainable.
With the help of research by retirement consultant Anna Rappaport, the group focused on the needs of three groups of people 55 and older–those with low incomes and few assets, those with high incomes and high net worth, and those in the middle.
Participants generally agreed that low income seniors (those with income of roughly $25,000 or less) would inevitably require government assistance, whether through Medicaid as they do today, a new version of Medicare, or some other form of heavily subsidized insurance.
They also agreed that those between ages 55 and 64 with net worth in excess of about $1.3 million can manage pretty well in today’s system. Many already own private long-term care insurance and others have enough savings, home equity, or other resources to self-insure.
The big challenge is what to do about those in the middle. Is expanded Medicare the answer for them? Or is it a program that somehow combines private and public insurance?
And if we do try again to adopt a national long-term care insurance system, should it be mandatory or voluntary? Should those with high incomes and high assets participate? And if we do try to combine both public and private insurance, should the federal government cover, say, the first year or two of care or should it provide only catastrophic benefits (say, all costs after that first year).
The group agreed on a half dozen benchmarks that could be used to measure any new insurance program. It should be financially viable, affordable, cover as many people as possible, include appropriate incentives for consumers to spend wisely, and provide choice. In the real world, no plan is likely to meet all of these standards and some will conflict with each other.
The meeting concluded with many more questions than answers. But a group of smart people was able to sit down, talk candidly, recognize where they disagree. That is, I hope, a first step toward solving the difficult challenge of financing long-term care services.