May 2006

Grant Results

National Program

Program to Promote Long-Term Care Insurance for the Elderly


The Massachusetts Executive Office of Elder Affairs (EOEA) created a conceptual model for a public-private partnership for long-term care. In the model, the exact amount of insurance to be purchased would be determined by the state — rather than by the individual — on the basis of the individual's income and assets.

The state would require that elders with high incomes buy policies with lifetime benefits at full price. Low and middle-income elders would pay a reduced premium for the same lifetime benefit package. Medicaid would take over after the private insurance expired, and all elders who participated in the partnership program would be assured they would never have to spend down their assets for nursing home care.

The project was part of the Robert Wood Johnson Foundation's (RWJF) national Program to Promote Long-Term Care Insurance for the Elderly.

Key Results

  • The project ran into trouble in 1991, when a change in gubernatorial leadership dramatically altered the political environment, and later that year — citing massive state budget problems — the newly appointed secretary of elder affairs terminated the project.

RWJF funded the project with three planning grants totaling $468,915.

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In 1990, long-term care in Massachusetts accounted for 75 percent of the $1-billion Medicaid budget. Conservative estimates project the state would spend more than $2 billion for long-term care by 2010. According to the project director, unless the long-term care system were made more effective, the tax burden that it generated might soon overwhelm the state budget. The initiative to reform the long-term care system, which led to this grant, originated in the state legislature in 1987.

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Midway through this project, operations were transferred from the Governor's Office of Human Resources to the Executive Office of Elder Affairs to reflect the consensus among state administrators that EOEA should be the lead agency for long-term care-policy planning within the state. The Massachusetts Health Research Institute, Inc., was the state agency responsible for administering health grants.

During these planning grants, the grantee institutions accomplished the following:

  • Developed the conceptual model of a public-private partnership for long-term care.
  • Held discussions with major long-term care-insurance carriers and HMOs to clarify objectives for partnership for long-term care.
  • Held discussions with and made quarterly reports to a broad-based advisory committee that included consumers, providers, insurers, academics, and state policymakers.
  • Conducted hearings and workshops across the state to solicit consumer response to the evolving partnership plan.
  • Conducted a study of long-term care service utilization in the state.
  • Attempted to gain support of congressional delegations for passage of the required federal waiver of Medicaid requirements.
  • Planned a consumer education campaign about the insurance partnership.
  • Developed and submitted a demonstration proposal to RWJF with draft interagency agreements and insurer input.

Policy Design

  • Minimum amount of insurance required: Policyholders would have been required to spend up to 5 percent of their incomes (including a percentage of their assets) on premiums. (For a full description of how assets were to have been included in the computation, see below.) Higher-income policyholders would have received policies guaranteeing lifetime benefits from the private insurers. Lower-income policyholders would have received policies guaranteeing coverage for a certain amount of time by the private insurer (less time for those with lowest incomes, more for those with middle incomes) before state Medicaid assumes lifetime coverage.
  • Minimum benefits: approximately 80 percent of the actual costs of care
  • Coverage after long-term care insurance expires: Medicaid, automatically, unless increases in income and assets require the purchase of additional insurance. Elders participating in the program would be assured they would never have to spend down their assets for nursing home care. When covered by Medicaid, an income contribution from the purchaser would not be required.
  • Inflation adjustments: Increases would have been indexed to Medicaid inflation adjustments.
  • Requirements for policyholders to begin receiving benefits: disability in at least two ADLs and demonstrated health service need or mental dysfunction.
  • State subsidies: no subsidy of premiums. Lower-income policyholders would be eligible for Medicaid earlier than those with higher incomes.

Massachusetts was the only state proposing to consider both income and assets — rather than only assets — in determining the exact amount of insurance an individual is required to buy. It also differed from other states in its determination that an individual should pay up to 5 percent of income for a premium (the 5 percent rule), but no more than the maximum required premium of $2,500.

The Department of Public Welfare would verify the applicant's income and assets at the time of application. (Assets other than housing were totaled; 7 percent of that total — the presumed annuity that these assets would make over 20 years if they were liquidated — was added to yearly income.)

Under the 5 percent rule, benefits for high-income policyholders would be covered entirely by the partnership's private insurers, and the policyholders would receive guaranteed asset protection. Medium- and low-income policyholders would be covered by the private insurers at the level that they could purchase with 5 percent of their income, and when that was exhausted, state Medicaid would assume coverage at no additional cost (or loss of assets) to the policyholder.

For example, the 5 percent rule might allow a low-income individual to purchase one year of private long-term care insurance, while a middle-income individual would have to purchase two years. When both of these expire — in one year or two — the policyholders would automatically receive lifetime benefits under Medicaid. (When the amount of insurance purchased is exhausted, the Department of Public Welfare would reassess the policyholder's income and asset level.

If income or assets increased during the period in which the policyholder was insured, an additional purchase of insurance might be required.) Higher-income individuals, on the other hand, would be covered for life by the private insurer.

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In January 1991 a change in gubernatorial leadership occurred at the same time that the application for a federal waiver of Medicaid requirements was denied. The new leadership viewed the RWJF initiative as "all but dead" due to the failed waivers (this was before successful efforts by other states to receive federal approval through the alternative route of amending their Medicaid state plans), and it terminated the state's involvement in the initiative in order to focus on higher-priority items on the governor's agenda.

For the partnership's advocates to keep the initiative alive would have involved a significant struggle, given that no lobbying force had emerged in support of the partnerships, that the state director of Medicaid was lukewarm about the partnerships, and that staff changes left the project team with few members who were familiar with the intricacies of this complex initiative.

The project director credits the Massachusetts project with:

  • Providing a framework for discussion of the long-term care-financing problem in the state.
  • Helping forge a consensus among insurers and state agencies on what needs to be done with respect to data collection and integration of long-term care data.
  • Educating the public on the limitations of the private sector.
  • Contributing to the insurance concepts of underwriting, nonforfeiture, and lifetime benefits in a public-private partnership.


Project staff produced five project-based reports, one brochure, one request for proposals, and one survey instrument. Thirteen articles were written about the project in the mass media. All articles predated 1995 — the cutoff date for bibliographies in this report.

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In 1991, Gov. William Weld's administration gained legislative approval of two pieces of legislation that linked Medicaid eligibility and private long-term care insurance:

  • A law imposing an automatic lien on the estates of Medicaid recipients.
  • A law specifying that an individual's home be counted as an asset in determining eligibility for Medicaid nursing home benefits.

Both laws allowed exemption for people who had already purchased a long-term care-insurance plan approved by the state's Division of Insurance.

This strategy differed from the partnership approach in that it relied on the Division of Insurance to establish standards for quality insurance products instead of having the state negotiate with private insurers for a partnership policy. The state was also involved in an effort to develop alternatives to nursing homes to care for the frail elderly. The state's long-term-care strategies, however, did not provide for lasting asset protection.

OBRA 1993's Effect on the Model

The Omnibus Budget Reconciliation Act of 1993 contained language with direct impact on the expansion of partnerships for long-term care to other states. The Act recognized the four initial states — California, Connecticut, Indiana and New York — plus a future program in Iowa and a modified program in Massachusetts. These six states were allowed to operate their partnerships as planned because their state plan amendments had been approved by the Department of Health and Human Services before OBRA 1993 went into effect. The remaining states were prohibited from doing so.

New Federal Legislation Expands the Model

In the spring of 2006, President George W. Bush signed legislation that was part of a larger budget-cutting measure 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.

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.

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Massachusetts Program to Promote Long-Term Care Insurance for the Elderly


Commonwealth of Massachusetts, Governor's Office of Human Resources (Boston,  MA)

  • Planning Grant
    Amount: $ 230,414
    Dates: August 1987 to February 1990
    ID#:  012556


Virginia M. Felice
(617) 727-7750


Massachusetts Health Research Institute, Inc. (Boston,  MA)

  • Planning Grant
    Amount: $ 69,755
    Dates: August 1989 to May 1990
    ID#:  015602

  • Planning Grant
    Amount: $ 168,746
    Dates: March 1990 to August 1991
    ID#:  012778


Virginia M. Felice
(617) 727-7750

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Report prepared by: Robert Crum
Reviewed by: Marian Bass
Reviewed by: Molly McKaughan
Program Officer: Stephen Somers
Program Officer: Pamela Dickson
Program Officer: Nancy Barrand
Program Officer: Andrea Gerstenberger
Evaluation Officer: Joel Cantor
Evaluation Officer: James Knickman

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