Many options, no ideal solution for long-term care financing reform

Though about half of older Americans will need long-term care services and supports (LTSS) at some point, few people buy this type of insurance or save enough to meet their care needs. Given that reality, researchers at the Urban Institute examined three new insurance options for long-term care--though they admit they failed to find an ideal solution for this "decades-long policy challenge."

The number of individuals 65 and older who need severe LTSS also will grow as the population ages, as it's expected to jump 140 percent between 2015 and 2055 to reach 15.1 million people, according to the study, which was published by Health Affairs and conducted with funding from The SCAN Foundation, AARP and LeadingAge.

So to assist policymakers in determining how expanded insurance coverage could help meet this growing need, the study assesses three main categories of options:

  • A program with a front-end benefit that begins after a 90-day waiting period and covers a maximum of two years
  • A catastrophic-only, or back-end, program that begins after a waiting period of two years and then provides a lifetime benefit
  • A comprehensive program that begins after a 90-day waiting period and provides a lifetime benefit

To compare them, researchers modeled mandatory and voluntary versions of each option, as well as subsidized and unsubsidized versions of each voluntary option.

Though no one option stood out above the rest, the study notes that if the main goal is to increase insurance coverage, the mandatory options would be the most successful. If the main goal is to reduce Medicaid costs, the comprehensive and back-end mandatory options would work best. And one alternative approach could be to reform the private long-term care insurance market--but substantially reducing premiums could be a challenge.

"Policymakers will have to choose between imperfect options that achieve quite different goals," the authors conclude, but point out that their research is an important first step in starting evidence-based evaluations of the different LTSS financing solutions.

Policy solutions may even be found in other countries, as Japan offers its citizens compulsory long-term care insurance that is not based on their ability to pay, Mark Britnell writes in his book, "In Search of the Perfect Health System." And in addition to financing reforms, former Sen. Tom Daschle noted in a Health Affairs Blog post this past summer that there is an "urgent need" to improve the quality of long-term care and palliative care.

To learn more:
- here's the study (subscription required)
- read the Health Affairs Blog post about the study