Policymakers will be able to use newly released information to solve problems related to the financing of long-term services and supports that Americans increasingly will need, but they’ll face trade-offs related to services covered, costs, duration of coverage and other factors.
That’s the message of the Urban Institute authors of a new paper published in Health Affairs. In the research, which builds on LeadingAge’s previously released Pathways report, the Urban Institute and actuarial firm Milliman modeled several LTSS insurance options to show how new policies might affect LTSS costs for families and the Medicaid program.
Women will need an average of $182,000 to cover LTSS as they age, and men will need a average of $91,000, according to LeadingAge, and when individuals don’t save money to pay for these services, their families often bear the costs. Families are spending more than $100 billion annually, directly paying for about half of paid care provided in the United States, according to the organization.
“The cost to families is now bigger than the cost to the public programs, and the public programs are imploding because there’s not enough money to sustain them,” LeadingAge President and CEO Larry Minnix told those attending the Nov. 17 press conference at which the findings were discussed. “Yet we’re spending more than anybody else in the world. Go figure. The good news is, here, these studies point us in the right direction to solutions.”
Authors Melissa M. Favreault, Howard Gleckman and Richard W. Johnson modeled three options for LTSS insurance: a “front-end” policy that would provide up to two years of benefits 90 days after enrollment; a “catastrophic” or “back-end” policy that would begin two years after enrollment but provide a lifetime of benefits after that; and a comprehensive policy that would begin after a 90-day waiting period and provide a lifetime benefit.
Each option was modeled as insurance for which that enrollees voluntary could sign up — including subsidized and unsubsidized versions — and also as a mandatory program for workers that could be financed through payroll taxes, consumption taxes, premiums or another way. Each program could be operated by the government or private carriers, according to the authors.
“Policy makers will have to choose between imperfect options that achieve quite different goals,” they wrote. Requiring mandatory enrollment in an LTSS insurance program, for instance, would increase coverage for LTSS needs significantly among Americans more than would voluntary enrollment. If, however, policymakers’ main objective is to cut Medicaid costs, then the best options might be comprehensive and “back-end” coverage, according to the authors.
“Our project demonstrates that models can help ground discussions in evidence-based evaluations of these trade-offs. This exercise is only a first step,” they concluded.
Minnix told press conference attendees that he is confident that politicians can work together to find a solution to the problem. “Of the things I’ve been involved in in 15 years in Washington, this issue has drawn more collaborative brainpower, regardless of political affiliation, than any one that I’ve worked on,” he said. Many politicians, Minnix added, understand the need to address the LTSS financing issue because they have experienced LTSS-related issues through ill or aging relatives.
Minnix also credited the SCAN Foundation, which along with LeadingAge and the AARP funded the modeling project, for increasing awareness of the issue.