May 2006

Grant Results

National Program

Program to Promote Long-Term Care Insurance for the Elderly

SUMMARY

The state of California implemented the California Partnership for Long Term Care (CPLTC) — its public-private partnership to finance long-term care — in 1994.

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 first group offering, later replicated in Connecticut and Indiana, was CalPERS (the California Public Employees' Retirement System).

  • All California public employees, retirees, their spouses, parents, and parents-in-law are eligible for the CalPERS Long-Term Care Program.
  • CPLTC provides one dollar of asset protection for each dollar paid for long-term care by the purchaser's insurance policy.
  • Once the insurance has paid benefits in an amount equal to remaining assets, the purchaser may apply for Medi-Cal, the state's Medicaid program, to help pay for continuing long-term care and medical expenses without having to spend down remaining assets.
  • As of October 2000, 20,000 policies were in effect.

Funding
RWJF provided $384,944 for planning, $2,450,000 for implementation, and $50,000 for communications.

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THE PROBLEM

In the late 1980s, one out of every nine Californians — over 3 million people — was 65 or older. By 2020, one out of every six Californians — 6.2 million people — will be 65 or older.

During this same period, the oldest portion of this population — those aged 85 or older who are most likely to need and use extensive long-term care services — will increase nearly two and a half times. If rates for the utilization of long-term care remained unchanged from the late 1980s, Medi-Cal expenditures would rise from $1 billion a year to more than $2 billion annually by 2000.

By 2020 more than $5 billion a year in Medi-Cal funds would be needed. Studies conducted by the state's administration, research community, and legislature concluded that the public sector cannot long afford to pay for, nor is it equipped to deliver, the long-term care services that the state's aging population will require.

The task of developing a public-private solution to make long-term care available and affordable for Californians was given by the legislature to its Assembly Office of Research (AOR), which in 1988 submitted a proposal to LTCI for support in planning a partnership.

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THE PROJECT

The AOR initiated planning for California's long-term care health partnership and subsequently passed the task to the Department of Health Services. The AOR continued to contribute to the planning and implementation efforts, along with four other departments: the departments of aging, insurance, social services, and corporations. During the implementation phase, RWJF grant funds went to Nelson & Lucas Communications to conduct a publicity campaign that would educate the public about the program.

During the planning and implementation grants, the grantee institution accomplished the following:

  • Completed the design of a workable insurance partnership in which purchasers of state-certified, private long-term care policies and enrollees in HMOs with long-term care benefits would be eligible for certain in-home supportive services and Medi-Cal long-term care benefits under special asset eligibility rules. Faced with the possibility that the California partnership might fail to obtain a federal waiver of Medicaid requirements, project staff developed a plan for an alternative long-term care program — one that would not involve Medicaid and therefore not require a waiver — that would subsidize the premiums of seniors who joined an HMO that offered long-term care services in conjunction with an acute health care service plan.
  • Assembled a database to define and estimate the cost of different long-term care benefit packages.
  • Used the BICF to analyze the likely impact of different public-private long-term care options on Medicaid expenditures.
  • Created an organizational and administrative infrastructure to implement a statewide five-year demonstration project. This project included the California Long Term Care Insurance Partnership Consumer Protection Working Group, the California Long Term Care Insurance Demonstration Task Force, and the Consumer Standards Working Group.
  • Obtained state authorization for the pilot program.
  • Obtained federal authorization through an amendment of the state Medicaid plan, which was approved by HCFA.
  • Built consensus among major insurance companies and insurance trade associations in the state as well as among major senior citizen organizations; regulatory agencies; consumer groups; academic institutions specializing in representing providers of various long-term care services; state health, long-term care, and insurance agencies on aging and health; and key legislative staff.
  • Implemented CPLTC in August 1994.
  • Fostered state legislation to offer long-term care those associated with California's Public Employees' Retirement System (CalPERS). All California public employees, retirees, their spouses, parents, and parents-in-law are eligible for the CalPERS Long-Term Care Program.
  • Conducted outreach and education initiatives to consumers on CPLTC. Initiatives included an intensive media campaign scheduled around a Long Term Care Awareness Week, public service announcements on television and radio, a print ad campaign that appeared in approximately 2 million copies of newspapers and periodicals for seniors, newspaper articles, television and radio appearances by project staff, consumer seminars, mail inserts in Medicare correspondence explaining the limitations of Medicare, creation of an informational video and a consumer brochure, a consumer toll-free telephone number for consumer information, Spanish translations of CPLTC information, and articles targeting the periodicals of state organizations that endorsed the partnership. In addition, project staff put up a Web site with information related to CPLTC: www.dhs.ca.gov/cpltc.
  • Conducted outreach, support, and training efforts for insurance agents. These included a videotape and marketing kit for agents, assistance to insurance companies in making contacts with interested consumers, a partnership newsletter, seminars in which agents had the opportunity to meet with project staff, and advisory meetings in which agents shared their perceptions about the partnership and problems they faced in selling the product.
  • Established a public-use database for receiving quarterly data from insurers, editing it, incorporating it into the UDS, and using it to generate meaningful management reports.

Policy Design

The following description of benefits is based on the most current information available.

  • Minimum amount of insurance required: one year
  • Minimum benefits: $100 per day for nursing home, $1,500 per month for home and community-based services
  • Coverage after long-term care insurance expires: Medi-Cal, with asset protection equal to the amount of money the partnership policy paid out. An income contribution is required from the purchaser.
  • Inflation adjustments: mandatory, with increases of daily, monthly, and lifetime maximum benefits by 5 percent annually
  • Requirements for policyholders to begin receiving benefits: (1) deficiency in two out of six activities of daily living (ADLs); or (2) cognitive impairment.
  • State subsidies: up to 50 percent or more of the cost of premiums and enrollment fees for low- and moderate-income older Californians, according to their ability to pay
  • CPLTC provides one dollar of asset protection for each dollar paid out by the purchaser's insurance policy. Once the insurance has paid benefits in an amount equal to the insured party's remaining assets, the purchaser may apply for Medi-Cal to help pay for continuing long-term care and medical expenses without having to spend down remaining assets.

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RESULTS

As of October 2000, six insurance companies were participating in CPLTC, 20,000 policies were in effect (protecting a total of $2,868,059 in assets), 265 policyholders were eligible for benefits and eight policyholders had exhausted their benefits. These eight policyholders had not yet accessed Medi-Cal.

The number of policies sold increased significantly when Partnership policy provisions and premium rates became comparable to non-Partnership policies on the California market. Comparability was achieved largely as the result of changes to the California insurance code requiring the majority of consumer protection provisions found in CPLTC policies to be included in all long term care policies marketed in the state.

Communications

During the 10-year span of these grants, project staff published five project-based reports, one book chapter, and four journal articles. Nearly 250 informational presentations were given during the campaign, and the program was mentioned or featured in over 200 articles in mass-media print outlets and 70 radio or television shows. Detailed information concerning CPLTC can also be found on the program's Web site: www.dhs.ca.gov/cpltc. (See the Bibliography for details.)

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AFTER THE GRANT

California, along with Connecticut, Indiana and New York, continues to offer the specially tailored long-term insurance policies.

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 prodding people to get long-term care insurance because the policies are more affordable, said Mark Meiners, the director for the Center for Health Policy, Research and Ethics at George Mason University and an architect of the partnership program.

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, 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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GRANT DETAILS & CONTACT INFORMATION

Project

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

Grantee

State of California Health and Welfare Agency (Sacramento,  CA)

  • Planning Grant
    Amount: $ 384,944
    Dates: August 1988 to April 1992
    ID#:  012999

  • Implementation Grant
    Amount: $ 2,041,915
    Dates: February 1992 to May 1995
    ID#:  019512

  • Implementation Grant
    Amount: $ 408,085
    Dates: November 1996 to May 1998
    ID#:  013883

Contact

Sandra Pierce-Miller
(916) 657-0654

Grantee

Nelson and Lucas Communications (Sacramento,  CA)

  • Communications Grant
    Amount: $ 50,000
    Dates: November 1993 to March 1994
    ID#:  PC372

Contact

Donna Lucas
(916) 443-3354

Web Site

http://www.dhs.ca.gov/cpltc

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BIBLIOGRAPHY

(Current as of date of this report; as provided by grantee organization; not verified by RWJF; items not available from RWJF.)

Book Chapters

Mahoney KJ and Quinn JL. "Case Management for Private Payers." In The Annual Review of Gerontology and Geriatrics, R Newcomer and A Wilkinson (eds.). New York: Springer Publications, 1996.

Presentations and Testimony

Kevin Mahoney (discussant), "Public/Private Partnerships for Financing Long-Term Care: Early Findings From Connecticut," at the Annual Scientific Meeting of the Gerontological Society of America, November 22, 1995, New Orleans.

World Wide Web Sites

www.dhs.ca.gov/cpltc provides information related to the California Partnership for Long-Term Care. Sacramento, CA: California Partnership for Long-Term Care.

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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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