John Cutler, Senior Fellow, National Academy of Social Insurance
The long-awaited launch of a modeling project on long term services and supports (LTSS) on November 17 is expected to set the stage for a new round of discussion and debate about how to reform LTSS (formerly referred to as long-term care).
The report, released at a Health Affairs briefing at the National Press Club in Washington, D.C., was based on work done by DYNASIM, or the Dynamic Simulation of Income Model, developed by the Urban Institute, with strong support from HHS’ Office of the Assistant Secretary for Planning and Evaluation and the Milliman Company. DYNASIM is a dynamic microsimulation model following representative samples of individuals and families aging the data year by year over 75 years. It has typically been used to simulate various demographic and/or economic events and now a component dealing with long term services and supports has been added.
Some highlights from the briefing:
- Richard Frank of the office of the Assistant Secretary for Planning and Evaluation (ASPE) of the U.S. Department of Health and Human Services emphasized that transparency is key to policy efforts like this. People need to see what is behind the curtain.
- Al Schmitz of Milliman said modeling results must meet certain minimum standards, including: financially stability, sustainability, and affordability over time; comprehensive benefits and choice in benefits; and coverage of a large minority of the population, the latter of which has not been met in proposals to date (e.g., the Federal Long Term Care Insurance Program and the CLASS Act).
- Richard Johnson of the Urban Institute emphasized the importance of examining your goals and knowing what you are looking for when modeling. Some examples: Is it to reduce Medicaid costs? Subsidize lower income individuals? Make people buy it? As part of that "make people buy it" discussion what is often called "mandatory versus voluntary" came up as an issue. What that means in terms of this modeling exercise is that you can either design a program to be mandatory and impute that everyone will be covered, or you can design a program where enrollment is voluntary. This is a critical issue for LTSS (and LTC insurance) since programs must enroll a large number of healthy persons to cover the cost of those who are less healthy. In a voluntary market all too often only those who need the insurance will sign up and those who are in good health will simply go without coverage. From the discussion at the briefing, it was apparent that “take up rates” (i.e., enrollment) might be fairly low in any voluntary LTSS or LTC offering. There are a few ways to get around that and boost enrollment. For instance, you can model some level of premium subsidy to help enrollees meet the cost or assume there is auto enrollment and that enrollees will elect to stay in the program.
- Eileen Tell, an independent consultant, and until recently, vice president at the Long Term Care Group, discussed the importance of learning from insurance company experience, although she also mentioned that there is no way an insurance company solution alone will solve the LTSS problem. It might be that the industry will have a niche role and/or be a gap-filler to a social insurance program. She also picked up on the “participation is critical” theme and mentioned that employer affinity might help with take up if insurers and the government are not perceived by consumers as trustworthy.
The Health Affairs briefing was the brainchild of the SCAN Foundation, stepping forward as a key player in LTSS reform efforts. AARP and LeadingAge are also major contributors. Urban provided the microsimulation work analyzing various financing options, and Milliman did premium estimates for those options.
The study can be found at the SCAN Foundation website.
Other links of interest: