Milken Institute LTC Financing Panel

The nation’s population is aging, and with 70% of Americans aged 65 or more years requiring long-term care at some point, access to affordable care is becoming an urgent priority, according to panelists speaking Wednesday at the Milken Institute’s 2020 Future of Health Summit.

Most older adults are unable to fully fund the high costs of care, and the private long-term care insurance market has contracted in recent years, they said. 

The Milken Institute’s Center for Future Aging partnered with its financial innovations team through the Financial Innovation Lab to come up with solutions and recommendations to expand affordable long-term care options for middle-income Americans. Nora Super, senior director of the Milken Institute Center for the Future of Aging and executive director of the Milken Institute Alliance to Improve Dementia Care, said the group narrowed those solutions down to three big ideas:

  1. A large-scale Medicare Advantage demonstration project to test the effectiveness of technology and home-based interventions in reducing cost and improving care across the continuum.
  2. Scaling up and adapting integrated care models to provide flexible, low-cost, high-value services for targeted enrolled with complex needs.
  3. Identifying the most viable and beneficial options for complementary public and private insurance solutions to expand long-term care coverage for the middle market.

Medicare Advantage, Super said, has grown in the past 20 years, allowing more flexibility so payers can test new ideas and bring technologies into the home to prevent people from needing to spend an extended period of time in the long-term care system.

Integrated care programs, she said, bring together both the long-term care and healthcare systems, but those programs haven’t been scaled yet.

“Medicaid is the safety net for the nation, but there is nothing for middle-class people,” Super said. “Costs are exorbitantly expensive.”

Turning to the public-private partnerships, Super said even though demand is high, the supply of insurers is much smaller. Over the past decade, she said, the industry went from more than 100 private insurers to 12.

“This is a problem facing the country, this aging population we’re not prepared for,” said David O’Leary, president and CEO of US Life Insurance Companies and Genworth Financial. “We can no longer ignore this. This is personal to everyone.”

The long-term care insurance industry, he said, is covering less than 10% of people who need it, adding that the average claim is around $200,000. He pointed to a recent Genworth 2020 Cost of Care Survey that looked at substantial cost increases in the long-term care industry and said the No. 1 reason people over 65 declare bankruptcy is a healthcare event.  

The solution, he said, is a public-private partnership that involves individuals taking accountability to be prepared for retirement with the understanding that a federal safety net will exist beyond that.

“Private industry can’t cover it all. The federal government and states can’t cover it all,” O’Leary said. “Personal accountability is where the insurance industry can come into play.”

Less focus should be on product innovation and more focus should be on raising awareness about the need for these types of partnerships, he said. That includes working at the state and federal levels to fund it and allowing the industry to come up with solutions that are attractive to people.

These partnerships, O’Leary said, can curtail the continuation of the deterioration of the healthcare financing system in the country, where families are placing their own futures in jeopardy to care for an aging loved one.

“That puts a ring-fence around it and enables the generation behind today’s aging population to see what’s coming up and allow them to prepare for aging,” he said. “This is multigenerational. It impacts families all the time.”

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