Medicaid pays for more than 62 percent of all long-term care (LTC) costs in this country so programs to encourage more people to carry long-term care insurance may be needed to lessen the burden to the federal insurance program to the poor.
This is the finding of a recently completed research report from Avalere Health, "Insuring Americans for Long-Term Care: Challenges and Limitations of Voluntary Insurance," published earlier this month.
"Our reliance on Medicaid to fund LTSS (long-term services and supports) raises concerns about whether we can reasonably expect this program to continue in its dominant financing role when the baby-boom generation moves into the later part of old age …", the report noted. "Without any change in the system, this demographic shift will produce rapid increases in Medicaid spending. It is not clear if the state and federal tax revenues that fund Medicaid will be sufficient, at their current levels, to cover the spending growth."
The report was published shortly after President Barack Obama named the final three people who will serve on the long-term care commission that was created earlier this year to study LTC issues and make a recommendations to Congress on how to create a sustainable system to pay for LTC services.
The recommendations of the LTC commission are meant to serve as an alternative to the Community Living Assistance Services and Supports (CLASS) Act, a voluntary LTC insurance program which was included in the Affordable Care Act. It came under a withering attack from congressional opponents soon after health reform was passed as too expensive and was repealed as part of the fiscal cliff deal effective Jan. 1, 2013.
[See also: HHS abandons CLASS implementation.]
According to Anne Tumlinson, senior vice president in Avalere's long-term care group and author or the report, the provisions of the CLASS Act made it a difficult sell for a couple of reasons: it promised to pay LTC care services in perpetuity for beneficiaries, and because it was voluntary it was unlikely to draw enough people to buy LTC insurance.
"This is at the very heart of how insurance works," Tumlinson said. "You have to have a pool over which to spread risk and the CLASS Act did not do that and so it became very challenging to implement it."
According to the Avalere report any recommendation on how to solve what could be an impending LTC payment crisis in the coming years that relies on a voluntary LTC insurance program would face many of the same problems faced by the CLASS Act even if the benefits for such insurance were changed.
"If we want to fundamentally change the way our long-term care insurance is structured today, so that it is not reliant heavily on private savings and Medicaid, then a mandate is the only way you can do it," she said.
That said, Tumlinson added that there is a lot that can be done to improve the delivery of LTC insurance to the market and to increase its uptake in a market where currently only around 7 percent of people have the coverage.
"The private insurance market (for long-term care) doesn't work for a lot of reasons that are both related to demand: people don't want to buy it – it is too expensive – and supply. Because the products are really complex, it is hard to sell and it is done on an individual basis," Tumlinson said.
Yet, there is a significant cohort of people in this country who could benefit from long-term coverage, who could protect their families from needing to spend down savings to the level of qualifying for Medicaid. Creating a program that targets this population would be a good start for the LTC commission, she noted.
She also thinks that despite the political vitriol surrounding the current health insurance mandate the commission could also recommend some form of "bare-bones" publicly-funded LTC insurance mandate.
"Even if there is only a three-year benefit (that pays) $50 a day, tacked onto maybe the health insurance exchanges or done in a way that links up with the health insurance mandate, if that was done, we would see an improvement in how we pay for and deliver those services. And it would shift it away from Medicaid," Tumlinson suggested.