America’s system for financing long-term care is failing, and the window for creating a payment system that works is rapidly closing. That was the conclusion of a morning-long expert session sponsored last week by the SCAN Foundation.
While the participants differed on specific solutions, most agreed on four key issues:
- The existing system for funding paid long-term supports and services is built on a wobbly three-legged stool: low private savings, an underfunded Medicaid program, and a hobbled private long-term care insurance market.
- The solution must include an affordable way for Americans to prefund their long-term care costs. This could include tapping financial assets or home equity, or buying insurance (either government, private, or some combination of both). Low-income people would require some form of safety net protection.
- Any future system should finance high-quality long-term supports and services that are well-integrated with medical care. This is especially important since recipients of care services suffer from chronic disease or injury that often requires complex medical interventions.
- There is currently no political consensus on how to do any of this.
That is where everyone agreed. Here is where they did not:
Several panelists focused on ways to enhance private insurance, where the market for traditional long-term care coverage has effectively collapsed. A paper by Marc Cohen of Lifeplans, Inc. and professors Richard Frank and Neale Mahoney of Harvard described a broad package of design changes that might make policies more attractive.
Their ideas include simplifying and standardizing insurance products, indexing premiums annually instead of requiring carriers to ask for big rate increases every few years, allowing insurers to sell high-deductible plans (where buyers could be responsible for as much as two years of LTC costs), and better educating consumers about the price of long-term care and the limited government resources available to pay for it.
They also propose industry-funded reinsurance pools that would protect insurers against unanticipated risks. Another suggestion: Require that companies over a certain size offer LTC insurance and force workers to buy unless they make an active choice to reject insurance. They also recommend new highly-targeted government subsidies, such as tax credits, to encourage moderate-income consumers to purchase long-term care insurance.
Finally, they suggest linking long-term care and health insurance, an idea I raised last year.
Several of their proposals, such as catastrophic coverage and standardized plan designs, are aimed at substantially lowering rates.
Expanding the role of employers may be especially critical since 80 percent of workers currently have no access to coverage through their jobs, according to a separate paper by Jeremy Pincus and colleagues at the insurance industry consulting firm Forbes Consulting Group. Like Cohen, Frank, and Mahoney; Pincus also believes an employer mandate would significantly boost the number of workers who would buy LTC insurance.
But all that may not be enough. Other conference participants felt that even with these broad-based changes, voluntary private insurance would remain unattractive for many people. As a result, some sort universal coverage is the only way to make LTC insurance truly affordable for middle-income households. Voluntary insurance, even with reforms, would remain out of reach for tens of millions of middle-income people.
Anne Tumlinson of the consulting firm Avalere Health, Josh Wiener of RTI International and their co-authors found that mandatory insurance would be significantly less expensive than voluntary coverage. Tumlinson said that maintaining the voluntary system would do little more than preserve the unworkable status quo.
Insurance officials tell me privately that, even in the best case, perhaps 20 percent of Americans would buy voluntary LTC insurance. Perhaps another one-third have lifetime incomes so low that they can’t be expected to pay for their own care, either through savings or insurance, and will need some sort of public support.
That leaves perhaps half the country at risk. The challenge for policy makers and the market is to figure out what will work for them. The SCAN program was a great start, but much more needs to be done.
Am increasingly convinced that the only viable solution is to end Medicaid long-term care and replace it with a Medicare Part E long-term care program that includes coverage for home and community-based services and an income-based sliding scale co-pay provision. This would greatly facilitate the integration of acute and long-term care, standardize coverage across the fifty states, and reduce the burden on state Medicaid programs at a time when they are struggling to expand acute care coverage under ACA. Understand that there would be significant political and fiscal hurdles but if boomers and seniors were to get behind it in a big way, these hurdles could be overcome.
I also agree on the issues identified. The problem with long term care insurance is the expense and limited coverage (usually three years). You cannot be covered if you have a mental health diagnosis and receive medication due to the risk of early onset dementia and potentially increased coverage. In long term care facilities, Medicare and Medicaid are structured for eliminating therapy and/or quality restorative therapy for people with chronic conditions and limited mobility.This leads to increased loss of function, risk of contractures/bed sores and potential for hospitalizations. The entire system needs to be restructured or it will eventually implode.It is like that old car commercial; “you can pay me now or you can pay me later”.
Sounds familiar from areas of consensus identified that previous groups identified.
For example, in a 2010 national survey of over 1,000 long-term care consumer advocates, provider representatives, public officials, policy experts, and other experts, 83.6% favored the view that paying for long-term care should be a shared responsibility, as opposed to a responsibility primarily of government, employers, individuals, or adult children (Miller, Mor, and Clark, 2010).
cited in http://www.lewin.com/publications/publication/411/
Also, experts interviewed agreed that the current financing system is no longer viable and that services should be more integrated.