taking the Long View on Long-term care reform CONTINUED
TABLE 3: Distribution and Duration of Long-Term Care Services
Average number of years
people use this type of card
Share of people who use this
type of care
3 69%
Type of Care
Any services
Home
Unpaid care only 1
Paid care < 1
Any care at home 2
Facilities
Nursing facilities 1
Assisted living < 1
Any care in facilities 1
Source: National Clearinghouse for Long-Term Care Information
59%
42%
65%
35%
13%
37%
the importance of understanding that different segments of the
population will respond to certain options better than others.
For example, lower-income but not Medicaid-eligible individuals may be more likely to purchase long-term coverage with
some type of public subsidy than to purchase insurance in the
private market.
Back to the Drawing Board
There’s now an opportunity, building on the public profile raised
by CLASS, to study all options and take concrete action to address long-term care needs. This should include looking at the
successes and challenges other countries, such as Germany,
France, the Netherlands, and Japan, have faced with long-term
care (see “Health Care Reform: Learning From Others—A Global Perspective on Financing Long-Term Care,” in the March/
April issue of Contingencies), as well as the experience of the
Federal Long-Term Care Insurance Program (see Page 30). Out
of this examination, policymakers could end up revisiting public
program options, focusing on the private insurance market, or
considering options that combine the two.
Expanding Medicaid—Public
At a time when states are facing significant budget deficits, the
focus has been on reducing, not adding to, Medicaid costs. As
a result, expanding Medicaid to provide more benefit options
and/or increase eligibility (in terms of income and level of disability) may not be a feasible option. But to provide a safety net
for low-income individuals who need the most protection from
the costs of long-term care, investing in Medicaid to create a
sustainable Medicaid long-term care program is important.
Some policy experts have suggested that encouraging more
home- and community-based long-term care services might be
a way to reduce costs. As illustrated in Table 3, people seem to
prefer home-based care, and it is often less expensive than nurs-
ing home care. The policy question is—if states provide more
home- and community-based care, will increased demand offset
any potential savings to the Medicaid program?
Encouraging Private Long-Term Care Insurance—
Private
As noted, private long-term care insurance can be expensive. It
typically is offered in the individual and group markets (although
an employer may provide long-term care insurance, it’s usually
not subsidized). Pricing for long-term care needs that may not
materialize for decades is highly dependent on assumptions,
which actual experience either supports or proves inadequate. In
recent years, experience has shown premiums to be inadequate.
As a result, individuals have been faced with significant rate increases. This raises the question of whether private insurance is
only for the affluent (who can afford it) or whether it can be tailored to protect other segments of the population for long-term
care costs. Some industry experts have suggested that the solution lies in changing benefit designs or even developing products
that serve multiple purposes. Allowing shorter benefit periods,
longer waiting periods, and longer elimination periods are all
examples of ways to offer enrollees more choice when financing
long-term care. And while some companies are getting out of the
individual private long-term care insurance market, others are
looking at offering products such as combination life insurance
or annuity policies with long-term care riders.
Partnership Programs—Public/Private
The Long-Term Care Partnership Program began in 1987 as a
demonstration project in which four states participated—
California, Connecticut, Indiana, and New york. Its purpose was
to encourage middle-income individuals to purchase private
long-term care insurance while giving them the opportunity
to protect some of their assets from the need to spend down
to qualify for Medicaid. In 2006, the Federal Deficit Reduction Act of 2005 expanded the initiative by giving all states the
28 CONTINGENCIES JUL | AUG. 12
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