For the first time in years, there is hope that the U.S. can create a new model to help families finance long-term supports and services. The solution isn’t yet visible, and lawmakers won’t address the issue any time soon. But a wide range of private interests including long-term care providers, consumer groups, the insurance industry, and policy analysts seems to be moving toward a broad consensus on how to address this important and difficult issue.
And that solution is likely to include some mix of private insurance and a public safety net beyond Medicaid—the current government program that is the single biggest payer of long-term services and supports.
In the past few months, three separate groups have taken critical steps toward a solution.
At the beginning of the year, Leading Age, a trade group representing non-profit long-term care providers such as nursing homes and assisted living facilities, released a framework for financing supports and services. The group did not agree on a single solution but described and compared six potential pathways for reform. Nearly all included some form of private insurance combined with a public safety net, especially for catastrophic costs.
This week, the Bipartisan Policy Center—a Washington-based group that tries to develop consensus solutions to policy problems—announced its own long-term care financing initiative. The effort will be led by four high-profile policy figures—former Senate Republican leader Bill Frist; former Senate Democratic leader Tom Daschle; former Secretary of the U.S. Department of Health & Human Services and Wisconsin Governor Tommy Thompson; and Alice Rivlin, who was the founding director of the Congressional Budget Office, the director of Office of Management and Budget, and former vice-chair of the Federal Reserve Board.
The group released a report describing the severity of the long-term care financing problem and put its considerable political weight behind finding a solution. While it will not have recommendations until late this year, its members are also thinking in terms of a mixed public and private solution.
Finally, a group sponsored by the Society of Actuaries issued a report on long-term care financing this week. While the actuaries’ project will inevitably get less attention than BPC’s work, its important report reflects what may be a key shift in the attitude of the long-term care insurance industry towards reform.
Actuaries are the number-crunchers upon whom the insurance industry relies to design its products. But the report reflects the views of a much broader range of insurance industry representatives, regulators, academics, and other policy experts (full disclosure: I was among the roughly 44 people surveyed for the project).
To prepare the report, titled “Land This Plane: A Delphi Research Study of Long-term Care Financing Solution,” the sponsors spent months questioning this expert panel on potential solutions. After three rounds, it distilled the responses down to a consensus package.
The results represent some real opportunities to break the Gordian Knot of long-term care financing.
For instance, the group overwhelmingly agreed that any solution needs to contain elements of both a government social insurance program and private insurance. For instance, by the third round of the process, 84 percent of participants agreed that some form of social insurance will be needed for a well-functioning long-term care financing system. This is a remarkable conclusion from a group heavily represented by the private insurance industry.
The group did not agree on what such a public program would look like. For instance, many participants supported catastrophic-type social insurance, though others felt a limited front-end benefit would be more affordable and attractive to consumers.
The group agreed on several other reforms including:
- Overhauling Medicaid by both tightening eligibility rules and providing more flexible services, especially for those living at home.
- Reforming state insurance regulations to make it easier for carriers to offer lower-cost and easier-to-understand products.
- Creating financial incentives to encourage family caregiving.
- Allowing people to use retirement savings accounts such as 401(k)s to buy long-term care insurance.
The actuaries, Leading Age, and BPC are just three of several groups seeking a solution to this vexing but critically important issue. The congressional long-term care commission, in a report late last year, was unable to address financing (though it did endorse some important delivery reforms).
Of course, many difficult details still must be resolved. But you can begin to see the outlines of agreement. But perhaps most important is the growing and vocal consensus that the status quo is not acceptable. It is, at least, a start.
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