Senators weigh need for individual mandate in long-term care financing reform

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Sen. Susan Collins (R-ME)
Sen. Susan Collins (R-ME)

Senators and a panel of experts wrangled over whether effective long-term care reform hinges on a federal mandate for all individuals to buy some type of LTC insurance, at a Special Committee on Aging hearing on Thursday.

Currently, many Americans are misinformed about payment mechanisms for long-term care, and many do not understand that they might need to exhaust nearly all their assets to qualify for Medicaid LTC coverage, hearing participants noted. Yet, people do not have a viable long-term care insurance option in the private market, where premiums are unstable. 

Improving the LTC financing system with either a more robust and tailored government program or better private insurance might depend on getting many people, including young people, to sign up and pay in. Achieving this is one of the foremost challenges of reform efforts, and one which some experts say will require a so-called individual mandate. That is, a government requirement to participate or face penalties.

An individual mandate to buy long-term care insurance is indeed a prerequisite for meaningful LTC financing reform, according to panelist Anne Tumlinson, MMHS, senior vice president at Avalere Health. She explained that she reluctantly embraced this idea after long and careful study of the issue, and noted it would likely be “the least popular point” advanced at the hearing.

The ranking member of the Special Committee on Aging, Sen. Susan Collins (R- ME), did not dismiss Tumlinson's idea out of hand, even though conservatives strenuously protested the Affordable Care Act's individual mandate to buy health insurance. Noting that she had spearheaded the adoption of a long-term care insurance option for federal workers, Collins said she had been “shocked” at how few enrolled — a nod to the challenges of building an adequate risk pool for LTC insurance.

The reasons few people buy LTC insurance are various, said panelist Mark Warshawsky, Ph.D., who served as vice-chairman of the Congressional Commission on Long-Term Care. They include the presence of Medicaid as a payment mechanism and a general resistance to thinking about potential long-term care needs.

The panelists offered different potential solutions to the dilemma.

One possibility would be to create hybrid private insurance policies that include a life annuity benefit with long-term care coverage. This type of policy was developed by Warshawsky. By combining these benefits, insurers could appeal to a broader consumer base and better manage their risk, he argued. The natural demand for these policies would make an individual mandate unnecessary, he suggested.

Another possible route to reform would be to implement a joint public-private insurance system. This option was advanced by panelist Judy Feder, Ph.D., of Georgetown University and the Urban Institute. She also served on the LTC Commission.

The public-private option might involve a basic government LTC benefit that would be means-tested, taking effect later in life for people who retire with more savings. This would help limit insurers' risk and help consumers plan better for potential LTC needs, Feder argued.

Senators and panelists alike agreed that the current system is broken and that it is all but impossible for individuals to prepare for LTC needs in the absence of a stable insurance option, either public or private.

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