For example, faced with a limited federal contribution to Medicaid, states are likely to accelerate their efforts to turn over more of that program to managed care organizations (MCOs) and leave it to them to find ways to control costs. Already 75 percent of Medicaid young adults and children are enrolled in managed care and about half the states are experimenting with managed care for frail seniors and younger people with disabilities. In those demonstrations, benefits include case management and sometimes personal assistance and social services.
Medicare’s managed care option, called Medicare Advantage, now covers about one-third of all enrollees. However, MA plans currently are not permitted to include non-medical services such as home care or transportation as member benefits.
How could Trump redesign Medicare and Medicaid to support those who need LTSS? He could make it easier for states to include these services in Medicaid managed care, accompanied by appropriate quality standards.
When it comes to Medicare, the GOP wants to increase payments to MA plans. In exchange, Congress could allow the plans to include social supports in their benefit packages. If those non-medical services reduce their hospital costs, the plans would jump at the opportunity. Or, Congress could require all MA plans to offer such services, though that seems unlikely in the new political environment.
Republicans may initially look to the private long-term care insurance market to address the LTC financing problem, perhaps by creating new tax subsidies for insurance buyers. But as attractive as it sounds, such a plan will fail. The market for stand-alone LTC insurance has effectively collapsed under the weight of rising premiums. And tax credits are unlikely to bring after-tax prices down enough to attract middle-income buyers. Worse, it is impossible to buy true catastrophic insurance in the private market.
Who will pay for the roughly one of every seven seniors who will incur long-term care costs in excess of $250,000? In today’s system, the answer for many is Medicaid. But, remember, Trump wants to cut the federal share of that program. An alternative: a universal public catastrophic insurance program that would shift some of the burden from Medicaid. My colleagues at the Urban Institute estimate that such a program could reduce Medicaid LTSS costs for those over 65 by one-third. And the insurance industry backs the idea.
There are real opportunities here. First policymakers have to acknowledge the importance of long-term care to both Medicaid and Medicare. Then, they have to think creatively about how to make it fit in the redesigned programs.
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