John Cutler, Senior Fellow, National Academy of Social Insurance
The Academy, which has a long tradition of exploring policy solutions to the challenges of long-term care, devoted a session at its January policy research conference to the financing of long-term services and supports.
The session, sponsored by The SCAN Foundation, presented data from modeling done by the Urban Institute and Milliman, Inc. which creates the basis for informed consideration of policy options regarding the future of long-term care. Presentations by Richard Johnson (Urban) and Chris Giese (Milliman) walked attendees through the tradeoffs inherent in various policy approaches, e.g. between voluntary versus mandatory insurance, subsidized versus unsubsidized approaches, and front-end versus catastrophic back-end designs. These are key issues which have bedeviled the reform debate for some time. Should we allow people to voluntarily decide to cover the risk or mandate that it be covered? The modeling suggests less than 20 percent take up in almost all scenarios in the absence of a mandate. But as Johnson and others pointed out, another approach would be a ‘soft’ mandate, e.g. auto enrollment with a possibility of opting out.
Another question is whether to subsidize private long-term care insurance coverage. This has been the model for health insurance coverage in the Affordable Care Act. It works well both for those who cannot otherwise afford premiums and for those who could afford some level of coverage but need an additional incentive. The modeling predicts, however, that this approach, without a mandate could leave many without adequate coverage.
The third concept tested was front- vs. back-end coverage. Front-end coverage is defined here as a two-year coverage period after which the person has to fund coverage by other means (most likely by spending down until eligible for Medicaid). A back-end design would provide catastrophic insurance coverage after a fixed term, without people having to spend down their assets. (The project also released a report on how reforming long-term services and supports could alleviate the burden on Medicaid.)
The next step for policymakers, researchers and advocates will be to analyze the data provided by Urban and Milliman and use it to design policy options for financing long-term care. The Long-Term Care Financing Collaborative, a group of policy experts representing a wide range of interests and ideological perspectives looking to re-focus attention on the urgent need to find ways to meet the challenge of financing long-term services and supports for seniors and people with disabilities, releasing a series of consensus recommendations on Monday, February 22nd, at an event at the National Press Club. In addition, Leading Age and the Bipartisan Policy Center took first steps in this direction with reports released this month. These reports represent significant progress, but more work will be needed in the coming years to flesh out how specific approaches would work in practice.