Katie Smith Sloan

A universal, catastrophic insurance program sufficiently could finance the needs of those who need long-term services and supports, and a “managed cash” benefit design might best pay for service delivery, LeadingAge concluded in a report issued Wednesday.

The report is titled “A New Vision for Long-Term Services and Supports.”

LeadingAge issued a similar report last year, and reports issued then by the Urban Institute, the Bipartisan Policy Center and the Long-Term Care Financing Collaborative used the same modeling to reach their conclusions. The new report, LeadingAge said, offers more details about the key elements of the LTSS financing mechanism that it had recommended last year.

Only 11% of older adults had private long-term care insurance in 2014, LeadingAge said. This was despite the fact that about half of people aged more than 65 years will need some sort of assistance with activities of daily living at home, in assisted living or in a nursing home at some point, the organization said.

“The current financing system offers no protection against the severe economic consequences associated with a high need for expensive services and supports, particularly over long periods,” according to the report.

The answer, LeadingAge maintains, is a national, universal insurance program; it would “[insure] against the risk of long periods of high need and greatly diminished independence. …would provide new funding to meet care needs, and would stimulate service delivery innovation.”

“LeadingAge recognizes that a universal, catastrophic insurance approach might not be accepted readily in today’s budgetary and political environment,” LeadingAge President and CEO Katie Smith Sloan said in a statement. “However, given projected demographic trends, we are confident that the need for reform of the LTSS system will not disappear. We continue to advance the movement for reform that is guided by the principles of rationality, equity and affordability.”

Three essential features of an improved LTSS insurance program, LeadingAge said:

  1. Universal coverage. The mandatory program would spread risk over a large population, thereby lowering expenses for individuals and increasing overall LTSS funding.
  2. Catastrophic benefit period. The program would finance care for those with high LTSS needs. Benefits would begin after people had financed their own care for two years through private long-term care insurance or out-of-pocket spending.
  3. Managed cash benefit structure. Beneficiaries would purchase services and supports related to an LTSS need with cash.

The managed cash benefit structure is most similar to the Medicaid program’s Cash and Counseling demonstration project, where project funds paid for services and supports related to an LTSS need, LeadingAge said. Unlike the pilot project, however, the managed care structure allows flexibility in the way funds are used and does not narrowly prescribe service types or providers the types, according to the report.

“A managed cash structure gives people with LTSS needs the option to manage a budget and decide what mix of goods and services best meet their goals,” the report said. “Individuals may use their benefit to hire personal care workers, purchase items and make home modifications that help them live independently.”