Initial Recommendations to Improve the Financing of Long-Term Care

Source: Bipartisan Policy Center (BPC), February 2016

From the summary:
In April 2014, the Bipartisan Policy Center (BPC) released a report on long-term care, America’s Long-Term Care Crisis: Challenges in Financing and Delivery. That report outlined the roles of Medicaid, private insurance, personal savings, and direct unpaid care provided by friends and family members in long-term services and supports (LTSS), and it raised concerns about the sustainability of these financing mechanisms. Specifically, the report noted that the demand for LTSS will more than double over the next 35 years and is fiscally unsustainable.

Over the years, federal policymakers have attempted to advance comprehensive proposals to address the need for, and financing of, LTSS for older Americans and individuals with disabilities. Although those efforts have proved unsuccessful—the most recent was one of the few parts of the Patient Protection and Affordable Care Act that was repealed—Congress has enacted incremental efforts over the years. These efforts include legislation to improve care for low-income individuals who meet the eligibility criteria to qualify for Medicaid, and for middle-income individuals who exhaust their personal or retirement savings to qualify for LTSS under the Medicaid program. While some states have taken advantage of new opportunities to expand the availability of LTSS under Medicaid, others have not. This has resulted in significant variation in eligibility and benefits from state to state.

Congress has sought to encourage individuals to purchase private long-term care insurance (LTCI) by providing tax benefits for those who purchase policies that meet certain standards. The rationale for expanding private LTCI is to improve financial security for older individuals and to reduce or delay future reliance on Medicaid for middle- to upper-income individuals. Despite those efforts, sales of private LTCI continue to fall, largely because premiums are unaffordable and the traditional product design has proved to be unsustainable for carriers.

This report offers initial recommendations to help address the financing of LTSS. In late 2016 or early 2017, BPC will release additional recommendations for new approaches to finance LTSS and also to reform LTSS delivery and improve integration of care for persons with multiple chronic conditions and functional limitations.