Limited Insurance Coverage
Most people with long-term-care needs have limited insurance coverage for long-term-care services.
An analysis of data from the Follow-up Survey to the National Health Interview Survey Disability Supplement (NHIS-D) (1994–97) by Georgetown University (see Program Results on ID# 037554) found:
- 38 percent of non-elderly and 20 percent of elderly people with long-term care needs were covered by Medicaid.
- The remaining 80 percent of elderly people, plus about half of non-elderly disabled adults were covered by Medicare or private health insurance, but those programs only provide limited coverage for long-term-care services.
- 10 percent of the non-elderly disabled adults were completely uninsured.
A study by the Center for Health and Long-Term Care Research found that private and public long-term-care insurance increases the amount of care received by disabled adults. (See Program Results on ID# 031352.)
- Private and public long-term-care insurance finances more formal care, but its benefits do not replace informal care. The presence of insurance increases weekly care for people with private or Medicare long-term-care insurance by 10 to 13 hours. People who need more help with activities of daily living receive more weekly care. People who have an informal caregiver and who also use formal long-term-care services receive more total care.
- Long-term-care insurance reduces the use of Medicare home health services. People without long-term-care insurance are about six times more likely to use Medicare home health services than those who are privately insured. As the market for private insurance expands, Medicare home health usage and expenditures should decline. For every 100 privately insured claimants, Medicare saves $20,647 annually (1999 dollars).
State Public/Private Partnerships Experiment With Long-Term-Care Insurance
Authorized in 1987, the Program to Promote Long-Term-Care Insurance for the Elderly worked with eight states to implement private/public partnerships that married private, long-term-care insurance with Medicaid, through what came to came to be called the Long-Term-Care Insurance Partnership model (Partnership). Such insurance protects individuals against impoverishment from the costs of long-term care. Four of the funded states—California, Connecticut, Indiana and New York—put partnership programs in place and have continued to sell long-term care policies since the program closed. (See Program Results on the program.)
Consumers who purchase such policies are insured for long-term care up to a pre-set dollar level through the private insurer. Once the private insurance is exhausted, they can continue their long-term care under Medicaid without spending their assets, as is usually required to meet the criteria for Medicaid eligibility.
Essential Features of the Policies
The state Partnership programs were designed to include the following characteristics:
- Suitability for a broad income and age group among the elderly.
- Protection of beneficiaries' assets and income against catastrophic chronic care costs (with different levels of asset protection in each state).
- Coverage of a broad range of services, including home- and community-based services and nursing home services.
- Case management and preadmission screening.
The Partnership program sold a total of 95,000 policies in the participating states between 1992 and 2000.
- Three states—California, Connecticut and New York—implemented long-term-care insurance programs that met expectations in terms of the numbers of policies sold. (See Program Results for California [ID# 019512], Connecticut [ID# 022226] and New York [ID# 032434].)
- Indiana implemented a long-term-care insurance program, but it failed to meet expectations. Policy sales were lower than expected, due chiefly, according to the project director, to the policy's high price and a lack of understanding and acceptance of the program by insurance agents. (See Program Results on ID# 016645.)
- The insurance programs in four states—Massachusetts, New Jersey, Oregon and Wisconsin—were not fully implemented. (See Program Results for Massachusetts [ID# 015602], New Jersey [ID# 013164], Oregon [ID# 013747] and Wisconsin [ID# 016185].)
- The Partnership programs have saved the four states $8 million to $10 million in health care bills, plus it allows them to be more assertive in encouraging people to get long-term care insurance because the policies are more affordable, according to Mark Meiners, the director for the Center for Health Policy, Research and Ethics at George Mason University and an architect of the partnership program.
- In the spring of 2006, President George W. Bush signed the Deficit Reduction Act of 2005 (DRA 05) that allows the long-term care insurance partnership model to be used in all 50 states. Besides increasing the incentives to purchase long-term care insurance, the bill made it harder for seniors to give away money and property before asking Medicaid to pick up their nursing home tabs. Policies in these new programs must meet specific criteria, including federal tax qualification, identified consumer protections and inflation protection provisions. National Program Director Mark Meiners, said he hoped the nationwide clearance for the programs will help spur interest in consumers to buy coverage and in insurers to offer it.
- In the fall of 2006, RWJF is thinking about supporting up to 10 states to develop the Partnership model through seed grants and technical assistance.
- Besides the four states with partnership programs in place, as of April 2006, according to a report by the AARP Public Policy Institute4, 21 others have enacted authorizing legislation: Arkansas, Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Maryland, Massachusetts, Michigan, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, Virginia and Washington.
The evaluators came to the following general conclusions about the likely future success of similar long-term-care insurance projects:
- Marketing is key. The success of the public/private long-term-care-insurance partnerships depended largely upon effective promotion and marketing efforts by the states and insurance companies.
- Train the agents. Communicating with and training insurance agents was crucial to the success of the public/private long-term care-insurance partnerships. Agents need to believe in the product in order to produce sales.
- Complete planning within a single gubernatorial term. Public/private long-term-care-insurance partnerships may have a better chance of reaching implementation stage if their planning stage can be completed within a single gubernatorial term of office. It usually takes a year to get initiatives moving within a state bureaucracy. If the timing is wrong, all of the work done previously needs to be repeated when a new administration takes office. In addition, difficulties can arise because new administrations are sometimes suspicious of activities in progress from a previous administration.
- Develop a concise description. The advancement of complex projects such as the public/private long-term-care insurance may be helped by a concise description that can serve as way of introducing the project to potential supporters. One project director says it was a significant liability that the concept could not be explained in 25 words or less.
- Americans are reluctant to purchase insurance for future risk. In projects that involve the creation of innovative, new insurance products, it is important to bear in mind the general reluctance of Americans to purchase insurance to cover future risk. Policy sales among the long-term-care partnerships did not meet expectations. The evaluation officer suggested that part of the reason for this is that the financial circumstances of most middle-class Americans, the chief target of this initiative, lead them to make purchases that cover immediate needs rather than unforeseeable risk. Marketing efforts for long-term care carry the extra burden of surmounting the denial factor among consumers.
4 Kassner E. Long-Term Care Insurance Partnership Programs, Research Report. Washington: AARP Public Policy Institute, April 2006.