Overview of Current Long Term Care Finance Options Eileen J. Tell Senior Vice President Univita Health
No single option today perfectly meets either current or growing needs. Some cost more than many people feel they can pay; Some provide only limited/partial protection; Some limit eligibility based on health, income, age or other criteria; Others impose asset and income restrictions. Options mistakenly believed to offer LTC protection: Medicare and Medicare supplement insurance Private disability insurance Social Security disability benefits Also, today s LTC options provide limited reach due to the challenges of raising awareness, motivating and enabling planning, and overcoming denial.
Characteristics of Today s Long Term Care Financing Options Option Evidence of Good Health Required? Income and Assets Must Be Medicaid No Low to qualify or be spent down. Long term care insurance (LTCI) (8.2 million) Usually (group may have guaranteed issue) Sufficient to pay premiums. Other Eligibility Criteria? Certain level of impairment No LTC services covered Limitations on providers and nonnursing home care All Hybrid insurance products Yes, usually Substantial to afford products. No All (266,000) Health savings accounts (HSAs) No Sufficient to make sizable contributions Covered by highdeductible health plan All (13.5 million) Personal savings No Substantial to set aside and maintain funds. Reverse mortgage No Home ownership required. (775,000) Veterans Affairs No Low to qualify in some cases No 62 or older, remaining in and maintaining home Veteran, clinical need, availability of services All Cannot leave home to live in facility. Limitations on nonnursing home care
Workers Without Access to Long-Term Care Insurance Coverage Jeremy Pincus, Ph.D. Katherine Wallace-Hodel Katey Brown Forbes Consulting Group
Percent of employers sponsoring insurance: Health insurance: 61% (all); 98% (lg) LTC insurance: 0.3% (all); 20% (lg) Shaping Affordable Pathways for Aging with Dignity Percent of workers covered by ESI: Health insurance: 58% LTC insurance: 1% Access: 28m No access: 111m Forbes Consulting Group
Workforce is concentrated in large companies Figure 1 Gain Chart of Concentration of Employees by Company Employment Size Cumulative percentage of employees 64,000 firms 55% of total employees work at 0.4% of U.S. companies 80% of total employees work at 9% of U.S. companies Cumulative percentage of companies Target 3k prime, 24k subprime, and 19k revisit Forbes Consulting Group
Why Most of What Everybody Knows about Medicaid Spend Down Is Wrong Joshua M. Wiener, Wayne L. Anderson, Galina Khatutsky, Yevgeniya Kaganova, and Janet O Keeffe
The Issue Shaping Affordable Pathways for Aging with Dignity High cost of long-term services and supports (LTSS) results in catastrophic out-of-pocket costs People who have been independent all of their lives are impoverished and must depend on welfare People who spend down are a substantial part of Medicaid spending for LTSS Data 1996/1998 to 2008 Health and Retirement Study merged with Medicare data
Results Shaping Affordable Pathways for Aging with Dignity 10% of non-medicaid population over age 50 spent down over 10-12 year period 46% of people who spend down not use LTSS About 15% of spend down population had total assets greater than $112,000 vs. 56% of people who did not spend down Policy Implications Medicaid spend down is not just an issue of LTSS Few people who spend down are likely to be able to afford private insurance without large subsidy
Insuring Americans for Long-Term Care: Challenges and Limitations of Voluntary Insurance based on work by: Anne Tumlinson, Eric Hammelman, Elana Stair and Joshua Wiener (RTI International)
Key choice: Continue to rely on welfare (Medicaid) financing or change to insurance coverage Two pathways for increasing insurance coverage: voluntary and mandatory Can voluntary insurance: cover a substantial portion of the population? reduce the number of people who depend on Medicaid for LTSS? reduce Medicaid expenditures significantly? Our research, using the Avalere LTC-PS, shows that voluntary participation would not meet these objectives Enrollment large enough to meet these goals requires a higher level of participation than we can reasonably expect in a voluntary LTSS insurance program
Model Results for a $50/day, 5 year insurance program enrolling working population By the 15 th year, a voluntary program: Covers 8.4 million lives Delays spend-down by 1 year for 3 million people Saves Medicaid $5.6 billion Costs enrollees $48.58 per month in the first year By the 15 th year, a mandatory program: Covers 86.7 million lives Delays spend-down by 1 year for 36 million people Saves Medicaid $49 billion ($275 billion when non-working seniors are enrolled) Costs enrollees $35.26 per month in the first year Policies that promote voluntary enrollment are implicitly making the choice to maintain Medicaid funding as the primary source of payment for LTSS
Social Insurance: A Critical Base for Financing Long-Term Services and Supports Lee Goldberg & G. Lawrence Atkins National Academy of Social Insurance www.nasi.org @socialinsurance
Advantages of Social Insurance Voluntary nature of private insurance leads to gaps in coverage. Only social insurance can ensure universal coverage and address externalities. Not an either/or proposition. Administrative, demographic advantages of Medicare as a social insurance platform.
Benefit Incremental Medicare expansion First-dollar Medicare coverage Catastrophic Medicare coverage Medicare Advantage expansion Create Medicare Part E Cash Financing Payroll tax Income tax Premiums General revenue Limited duration can still provide significant assistance. Financing mechanism depends on scope of the program, progressivity, intergenerational transfer v. beneficiary financing. Taking into account changes in health system, fixed costs.
Making Progress: Expanding Risk Protection for Long-Term Services and Supports through Private Long-Term Care Insurance Richard G. Frank Marc Cohen Neale Mahoney
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