Long-Term Care Financing
total = $177 . 6 billion
“MeDiCAiD AND LONG-TeRM CARe SeRviCeS AND SUPPORTS”
THe HeNRY J. kAiSeR FAMiLY FOUNDATiON, MARCH 2011
Note: Total LTC expenditures include only spending on nursing home and home
health services. Some community-based services financed primarily through
Medicaid home and community-based waivers and delivered in other settings are
not represented here.
Source: KCMUY estimates based on CMS National Health Accounts data, 2010
Actuarial models unsurprisingly cited adverse selection leading
to a death spiral, because the law demands too much from the
CLASS program. A disproportionate membership of elderly and
particularly disabled people will extract too much benefit too
early on, and render it effectively unmarketable to younger or
healthier middle-aged adults.
In particular, HHS insiders said the biggest obstacle lay in
guarding the risk pool against a crushing level of disabled participants, who could enroll as early as at 18 years and not be
made to contribute more. Without some controls in this area, it
became hard to see how agency staff could secure the necessary
sign-off from the Centers for Medicare & Medicaid Services’
(CMS) chief actuary, Richard Foster, who had publicly criticized the current model.
In written communications with HHS in 2009, the Academy
urged the agency to make key changes in an effort to bring the
plan closer to actuarial soundness. These included hiking the
average premium to $160 a month from the $123 estimate that
the Congressional Budget Office (CBO) calculated, requiring
a minimum 30-hour workweek as part of the three-year employment standard, establishing a cutoff date for benefits, and
adjusting premiums for inflation. It’s not clear to what degree
the law allows for these changes.
HHS Secretary Kathleen Sebelius acknowledged in