The country’s long-term care financing system for consumers must be revamped within five years to meet the needs of aging baby boomers, according to The SCAN Foundation. In eight reports released Wednesday, the organization laid out policy recommendations for taking pressure off government programs while increasing the availability and affordability of long-term care financing for consumers.
“The current private long-term care insurance market is effectively broken, as it has never held more than 10% of the potential market and many insurers have stopped offering these policies altogether,” stated Gretchen E. Alkema, Ph.D., vice president of policy and communications at The SCAN Foundation. “Reasons for lack of uptake are many: lack of public understanding and interest, high monthly premiums, and underwriting standards that make it difficult for individuals to qualify for coverage.”
This “broken” market has resulted in massive costs to government programs. Almost one-third of all Medicaid spending in 2011 went to long-term care, according to National Health Policy Forum numbers cited by SCAN. Instituting a mandatory long-term care insurance program for workers is one option for bringing down this government spending without limiting access to care. A mandatory program of this type would bring Medicaid spending down $49 billion over 15 years, while a voluntary program would reduce spending by only $5.6 billion, according to an Avalere Health report funded by SCAN.
However, “recent debates over the design of the ACA highlight that there is little taste for new mandated benefits,” wrote researchers from Harvard University and LifePlans Inc., in another of the SCAN reports. These researchers put forward a number of policy changes they believe are more realistic.
They say simplifying long-term care insurance products, and mandating that employers and other institutional purchasers offer this insurance along with standard healthcare packages, will increase consumer understanding and demand. Private insurers should explore options for bringing down premiums, such as offering one or two-year deductible periods in addition to the standard 90-day period.
A robust consumer education program to raise public awareness of this issue is also a must, according to SCAN President and CEO Bruce Chernof, M.D. Along with devising “a new set of tools” for financing long-term care, addressing this “knowledge deficit” should be the top priority of the Congressional Commission on Long-Term Care, Chernof told McKnight’s.
Chernof is one of 15 people named to the commission, which should be convened soon, he said.