A mandatory, universal approach to long-term care insurance that covers catastrophic events could optimize coverage while minimizing costs, LeadingAge maintains in a new report. The approach could provide a better alternative to the current system for financing long-term services and supports, which is “unsustainable, irrational and unfair for individuals and families,” according to the organization.
“Private and public insurance products have important complementary roles to play in offering meaningful alternatives to Medicaid that are widely affordable and accessible and preserve and strengthen essential safety nets,” LeadingAge maintains in “Perspectives on the Challenges of Financing Long-Term Care Financing,” issued Feb. 17.
The document, also known as the “Pathways Report,” follows up on a 2013 report in which the organization outlined seven options for financing LTSS, ranging from ones that rely heavily on private markets to ones that rely heavily on public programs. The 2016 version of the report is based on research into three insurance options recently conducted by the Urban Institute and Milliman with funding from LeadingAge, AARP and the SCAN Foundation.
“LeadingAge has long believed that the current financial infrastructure supporting LTSS is broken,” the organization’s president and CEO, Katie Smith Sloan, says. “The great work by Urban Institute and Milliman Inc. now confirms this and gives us a platform for working with policymakers to fix it.” LeadingAge is committed to keeping the topic in front of federal policymakers, the report notes.
Although the research does not align with the specific pathways outlined in LeadingAge’s 2013 report, the organization says that the new findings can be applied to the pathways described three years ago. One of the options, a private or public catastrophic plan, “offers the strongest option for offsetting Medicaid spending when enrollment is required,” according to the 2016 report. “This pathway could also relieve individuals of their out-of-pocket costs, albeit in a limited way, since out-of-pocket costs tend to be incurred in earlier years of need.” In the model studied, catastrophic benefits would not kick in until two years after a policyholder became eligible for LTSS.
Although LeadingAge “feels strongly” about mandatory, universal insurance, the organization says that it realizes that a catastrophic program is not the only way to address issues with the LTSS financing system.
“We are committed to facilitating further dialogue needed to move this issue forward,” Sloan says. “We aim to develop a new financing system that is insurance-based and guided by the principles of rationality, equity and affordability.”