Long-term Care Coverage Research Articles

The Complementarity Of Public And Private Long-Term Care Coverage

Discussions about long-term care financing often get mired in the false dichotomy that long-term care should be primarily either a public or a private responsibility. Our starting premise is that public and private long-term care coverage can best serve complementary roles. Therefore, public policy should focus on supporting both mechanisms to achieve efficient and equitable outcomes. The current state of the private long-term care insurance market, and the possible reasons for its modest size, provide a starting point for exploring how public policy might interface more productively with it, in the context of both existing and potential programs, such as the proposed Community Living Assistance Services and Supports (CLASS) Act.

A Different Approach to Providing Care to Utah’s Nursing Home Patients in a High-Cost, Dynamic Environment

Keywords: home- and community-based services; deinstitutionalization; waiver; long-term care The State of Utah foresees a boom in the growth of its senior population over the next 40 years. This increase will potentially create more conflict between the financing of human service programs for seniors and other state priorities (e.g., public education, transportation, and corrections). A major concern in this area is the State's Medicaid program. Medicaid is the major payer of long-term care services for the senior population, and at the same time Medicaid is responsible for the financing of the health care needs for an increasing number of the lower income persons. Compared to Medicare, which pays for 19% of long-term care costs, Medicaid supports nearly half of the total national long-term care expenditures. These dollars constitute about one-third of Medicaid spending. Despite initiatives diverting individuals to community- based settings, nationally 63% of fiscal year 2005 Medicaid's long-term care spending went to nursing homes (Georgetown University, 2007). This continuing reliance on nursing home care for the delivery of long-term care services may be difficult to sustain for several reasons; (a) the increase in the age 65+ populations, (b) the expense of nursing home care, and (c) consumer's apparent preferences regarding where to receive long-term care. These all point toward a need to decrease the reliance on nursing homes as the dominant service provider of such services. Given these issues, states have been working to develop ways to provide more flexibility in their long-term care delivery systems. With the expected rapid acceleration in the growth of the age 65+ population and the consequent increasing utilization of high-cost, long-term care services, additional planned and tested options are needed. Without carefully planned, cost-effective options, the accelerated growth in the senior population may soon result in an inability to sustain coverage of other Medicaid populations, fund expansions for uninsured populations, or maintain levels of support in other areas of state responsibility. It is not clear that the current, ever-tightening federal regulatory approach to the Medicaid program facilitates the needed development of new, innovative program models. This article will address the intersection of the demographics of Utah's population with the historical approaches to Medicaid longterm care coverage. It will describe an alternative model developed in Utah for providing care to nursing home patients that responds to the cost pressures in long-term care and individual preferences in service delivery. It will also describe how Utah has recently been forced to undergo major modifications as a result of regulatory compliance issues. UTAH DEMOGRAPHICS The aging of the baby boomers in Utah is changing the state's population. In 2004, the Utah's growth rate of its senior population started to exceed that of the overall population, and is expected to continue to do so through 2050 (Ellis & Dodge, 2005). The projections for the increase in Utah's age 65 and older population are sobering. They indicate a growth of 4,167 people in 2006, increasing to an estimated 13,186 in 2020 (Utah Commission on Aging, 2006). As a proportion of Utah's total population, the age 65+ population will increase from 8.5% in 2000 to a projected 17.8% in 2050 (Ellis & Dodge, 2005). Additionally, the state is experiencing a rapid increase in the number of residents turning age 75 and 85. The 85+ population is considered to be the most fragile of the senior population. There will be 55% that require some form of long-term care (Melnyk, 2005). Utah's age 85+ population is predicted to grow from 28,340 in 2006 to 59,470 in 2030, increasing 110%, compared to a national projected growth of 80% (Utah Commission on Aging, 2006). While the senior population will increase rapidly in Utah, the under age 18 population will remain relatively constant. …

Ageing and Long-Term Care: Key Challenges in Long-Term Care Coverage for Public and Private Systems

Ageing populations in developed countries are being driven by strong social and structural demographic movements leading to a significant growth in the over 65 population. In the light of this, long-term care costs will be a major threat to individual assets and public finances over the next 40 years. Existing public schemes covering long-term care exhibit some significant issues, driven by pay-as-you-go designs combined with weak risk definitions. These difficulties will accelerate the need for new financing sources to cover the risk and call for early preparation by both public and private sectors. A new and advantageous public–private partnership has to be invented to meet the ambition of a sustainable and universal coverage. Against this background, key challenges facing the insurers include increasing public awareness of long-term care costs and challenges, risk monitoring and designing innovative and robust solutions for both wealth accumulation and protection products.

The Medical-Spending Debate Continues

The Medical-Spending Debate Continues

Who is willing to pay for long-term care insurance in Catalonia?

Both public and private insurance for long-term care (LTC) in European countries employed is underdeveloped. However, limited evidence is gathered on the behavioural demand responses to the introduction of insurance schemes expanding insurance coverage. This paper aims at empirically examining the determinants of the ex ante demand for LTC coverage drawing upon an insurance-based WTP referendum approach format. Data is collected from a representative population sample of Catalonia (Spain), before a countrywide funding system was developed. Our findings suggest that (based on our questionnaire format) only one-fifth of the population is willing to pay for LTC coverage though it is a highly elastic product. Ex ante demand for LTC coverage is driven by individual's perceptions of old age disability risk (private information asymmetry) and housing tenure (giving rise to self-insurance), the latter reduces the probability of insurance coverage demand.

The costs of long-term care: distribution and responsibility.

Long-term care costs will result in financial hardship for millions of elderly Americans and their families. The growing number of elderly people has focused public attention on the catastrophic problem of coverage for long-term care. Social insurance is unlikely to emerge as a solution in the USA. One reason is that the expected total cost is viewed as an unmanageable burden by both Federal and State governments. To others, it is the uncertainty surrounding the projected costs. This paper reports on the results of a double-decrement life-table analysis, based on a national survey of the elderly taken in early 1977 and one year later, that estimated the distribution and total lifetime nursing-home costs of the elderly. Combining the probability of nursing-home entry and length of stay, a 65-year-old faces a 43% chance of entering a nursing home and spending about +11,000 (1980 dollars). The distribution of lifetime costs is however very skewed with 13% of the elderly consuming 90% of the resources. Thus, while the costs of nursing-home care can be catastrophic for an individual, spread across a group they are not unmanageable. Given the distribution of income and assets among the elderly, a sizeable proportion could readily afford the necessary premiums of different emerging insurance and delivery programmes. Alternative private and public models of long-term care must be evaluated in terms of the goals of a finance and delivery system for long-term care.

Eliciting the demand for long‐term care coverage: a discrete choice modelling analysis

We evaluate the demand for long-term care (LTC) insurance prospects in a stated preference context, by means of the results of a choice experiment carried out on a representative sample of the Emilia-Romagna population. In this paper, these methods are first of all used in order to assess the relative importance of the characteristics that define hypothetical insurance programmes and to elicit the willingness to pay for some LTC coverage prospects. Moreover, thanks to the application of a nested logit specification with 'partial degeneracy', we are able to model the determinants of the preference for status quo situations where no systematic cover for LTC exists. On the basis of this empirical model, we test for the effects of a series of socio-demographic variables as well as personal and household health-state indicators.

Illiquid Housing as Self-Insurance: The Case of Long Term Care

Long term care is one of the few observable triggers for home sale among the elderly. Combined with a thin reverse mortgage market, this helps rationalize weak demand for Long Term Care Insurance (LTCI). Home equity typically tapped primarily in the event of long term care reduces the gain to insurance transfers from healthy states. Households exposed to large increases in home equity in the recent housing boom were relatively unlikely to add LTCI coverage and relatively likely to drop coverage.

Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey

This paper provides empirical evidence of Medicaid crowd out of demand for private long-term care insurance. Using data on the near-and young-elderly in the Health and Retirement Survey, our central estimate suggests that a $10,000 decrease in the level of assets an individual can keep while qualifying for Medicaid would increase private long-term care insurance coverage by 1.1 percentage points. These estimates imply that if every state in the country moved from their current Medicaid asset eligibility requirements to the most stringent Medicaid eligibility requirements allowed by federal law--a change that would decrease average household assets protected by Medicaid by about $25,000--demand for private long-term care insurance would rise by 2.7 percentage points. While this represents a 30 percent increase in insurance coverage relative to the baseline ownership rate of 9.1 percent, it also indicates that the vast majority of households would still find it unattractive to purchase private insurance. We...

Eliciting the Demand for Long Term Care Coverage: A Discrete Choice Modelling Analysis

We evaluate the demand for long term care (LTC) insurance prospects in a stated preference context, by means of the results of a choice experiment carried out on a representative sample of the Emilia-Romagna population. Choice modelling techniques have not been used yet for studying the demand for LTC services. In this paper these methods are first of all used in order to assess the relative importance of the characteristics which define some hypothetical insurance programmes and to elicit the willingness to pay for some LTC coverage prospects. Moreover, thanks to the application of a nested logit specification with 'partial degeneracy', we are able to model the determinants of the preference for status quo situations where no systematic cover for LTC exists. On the basis of this empirical model, we test for the effects of a series of socio-demographic variables as well as personal and household health state indicators.

Long-term Care Insurance Policy Dropping in the U.S. from 1996 to 2000: Evidence and Implications for Long-term Care Financing

While the market for private long-term care insurance in the U.S. has grown dramatically, consumer advocates have argued for increased regulatory attention and for broadened consumer education programs concerning long-term care insurance. We analyse Health and Retirement Survey data from 1996, 1998, and 2000 using a zero-inflated negative binomial regression model of the counts of consecutive periods of long-term care insurance coverage. We find that while a significant proportion of Americans over the age of 50 purchase long-term care insurance, many of these purchasers drop their coverage within a five-year period. This finding raises questions for long-term care insurance researchers and it contains implications for market regulators, public policy makers interested in financing long-term care, as well as for insurance companies and consumer advocates.

Paid Home Care in the 21st Century: Need and Demand

Diverging trends will affect the use of home-delivered, paid, disability-related services over the next 30 years. Age-adjusted rates of disability appear to be declining, but the sheer numbers of elders in future cohorts imply that use of all types of long-term support services (LTSS) will increase markedly. Trends in ability to pay, home ownership, and long-term care insurance coverage will combine with consumer preferences for care at home thereby shifting an increasing proportion of LTSS to home settings. Most important for home-delivered care is the unflagging commitment of spouses and other family members to provide informal support complementary to home-delivered, paid services, which continues despite demographic and labor market challenges. Working against these trends in resources for LTSS at home are the increasing cost of services and the reluctance of government to pay adequately for LTSS, whether for lower income elders or as universal coverage for needed supportive services at home.

A modeling framework for optimal long-term care insurance purchase decisions in retirement planning.

The level of need and costs of obtaining long-term care (LTC) during retired life require that planning for it is an integral part of retirement planning. In this paper, we divide retirement planning into two phases, pre-retirement and post-retirement. On the basis of four interrelated models for health evolution, wealth evolution, LTC insurance premium and coverage, and LTC cost structure, a framework for optimal LTC insurance purchase decisions in the pre-retirement phase is developed. Optimal decisions are obtained by developing a trade-off between post-retirement LTC costs and LTC insurance premiums and coverage. Two-way branching models are used to model stochastic health events and asset returns. The resulting optimization problem is formulated as a dynamic programming problem. We compare the optimal decision under two insurance purchase scenarios: one assumes that insurance is purchased for good and other assumes it may be purchased, relinquished and re-purchased. Sensitivity analysis is performed for the retirement age.

Medicaid: lessons from a decade.

Drawing on a decade of analysis and examination of the Medicaid program, this paper assesses what we have learned about Medicaid--its role, its successes, and its setbacks. In the absence of universal coverage for health and long-term care, Medicaid is a critical component of our social safety net, taking on the highest-risk, sickest, and often most expensive populations from private insurance and Medicare. Yet the substantial costs to federal and state governments incurred in filling this role, especially in lean economic times, remain its greatest challenge.

Funding Long-term Care in the United States: The Role of Private Insurance

This article complements an earlier publication (Chen, 1994) in which I discussed financing long-term care as a significant public policy issue in the United States because of a confluence of factors, which juxtaposed the growing number of older people against the slower-growing public and private resources. The major demographic and economic factors summarized then included the continued graying of America; the relative shrinkage of informal (non-paid) caregivers; declines in the growth rate of productivity; and federal budget deficits. Since then, although productivity has reversed course and budget surpluses have replaced deficits of late, public resources are not becoming more available because of other policy priorities. Meanwhile, as the large cohort of baby-boomers will be entering older ages beginning in about ten years, the trend toward fewer available informal caregivers is showing no sign of abating. Therefore, financing long-term care is becoming more of a challenge, not less. Although I am discussing the condition in the United States, funding long-term care is an issue that pervades most societies. I believe some of the solutions I am suggesting for the U.S. may have applicability in other countries as well. The way we fund long-term care in the U.S. now may be likened to sitting on a stool with only two legs because the bulk of costs is paid out of personal savings (out-of-pocket payment) and public welfare (Medicaid and other public sources), with social insurance and private insurance playing a minor role. This method of funding is unlikely to be sustainable because it tends to impoverish many people and severely strain Medicaid budgets nationwide. It is my view that a better funding method could be found by (a) more widespread use of the insurance principle for both private- and public-sector programs, and (b) linking several sources of funds in each sector that already exist so as to increase the efficiency with which these resources may be used. I therefore propose a ‘‘three-legged stool’’ funding model, consisting of social insurance, private insurance, and personal savings. When these three sources fail to provide for some individuals, public welfare will serve as a safety net. These are the same sources of funds presently in use, but they will be deployed vastly differently in the proposed model. Given the dim prospect for new public and private resources for meeting long-term care costs, I suggest use of a trade-off principle. Applying the trade-off principle in the public sector, we could create a social insurance program to provide basic long-term care coverage Yung-Ping Chen, PhD, holds the Frank J. Manning Eminent Scholar’s Chair, Gerontology Institute, University of Massachusetts Boston, Boston, MA. He expresses appreciation for the research support of Home Care Research Initiative of the Robert Wood Johnson Foundation, but he alone bears responsibility for the views contained herein.

Law Concerns Privacy, Transfer of Patient Data

Law Concerns Privacy, Transfer of Patient Data

Long-Term Care Insurance in a Two-Generation Model

The purpose of this contribution is to investigate why private insurance of the risk of long-term care (LTC) has known little market success in major industrialized countries, even among the relatively well-to-do. Using a principal-agent framework, it shows that the purchase of LTC insurance by the parent (the principal) is likely to diminish the amount of LTC provided by the major caregivers; namely children earning a comparatively low wage in the labor market. Anticipating this moral hazard effect, the parent is predicted to renounce the purchase of LTC coverage in many cases. This finding throws serious doubts on the welfare effects of recent moves to introduce compulsory social LTC insurance, as, for example, in Germany.

Social insurance financing for long-term care: creative public policy to halt pauperization of the elderly and disabled in nursing homes

Long-term care (LTC) in institutions is one of the last major remaining gaps in the social insurance safety net provided to beneficiaries of Social Security.(1) However, Medicaid pays almost half of the costs of nursing home care after institutionalized elderly or disabled persons become impoverished. Structural reasons make it impossible for private insurance to cover institutional LTC for the bulk of the elderly and disabled. The paper demonstrates that there is an efficient, equitable and feasible social insurance solution to this serious social problem. The second section details a plan for a Medicare Part C Trust Fund to cover extended stays in nursing homes by Social Security beneficiaries (virtually the entire elderly population and most of the long-term disabled). It involves: (1) maintenance of current government funding indexed to inflation; (2) a premium taken from the cost-of-living allowances (COLAs) due to beneficiaries in the years immediately after they qualify for Social Security; (3) a substantial copayment; (4) a deductible consisting of the first three months of nursing home care; (5) a two-year waiting period between qualification for Social Security and full LTC coverage. The three revenue streams will all increase automatically with inflation. The plan is designed to cover only institutional LTC costs in order to reduce complexity, minimize the price tag and maximize its political chances. However, it could be expanded to cover home and community-based care. The second half of the analysis explores the policy justifications supporting such a plan and considers the political reasons why this carefully crafted proposal might appeal to moderate conservatives as well as to progressives.

Continuing care retirement communities: prospects for reducing institutional long-term care.

Continuing care retirement communities (CCRCs) combine housing and long-term care (LTC) services, including personal and nursing home care. The amount of LTC that is prepaid varies by type of CCRC, with one-third offering extensive (fully prepaid) contracts for LTC. CCRCs are a potentially promising model for LTC delivery because they offer a full continuum of services and can substitute less expensive supportive care for institutional care. Using data on CCRCs, we tested one central hypothesis: Provision of supportive services, particularly when combined with capitation, reduces use of nursing home care. To test this hypothesis, we studied the effect of various contract types for LTC services offered by CCRCs and provision of support services on utilization of nursing home and personal care units. Compared with other types of CCRCs, those offering completely prepaid LTC coverage reduced use of nursing home care by 13 percent and personal care by 5 percent. CCRCs with prepaid LTC coverage did not use more stringent health screening at entry, so "cream-skimming" does not appear to explain this result. However, affordability is an important issue: CCRC residents with extensive contracts were wealthier than were other CCRC residents.

Caring and Curing A Medicare Proposal

When the Medicare program for the elderly was enacted in 1965, it provided well and amply for their acute care medical needs, and it did so regardless of income. That was not true of their long-term care, which was put under the Medicaid program and its recipients subjected to an income means test. That bifurcation remains the perfect symbol of a health care system that has always given priority to cure over care--as if the preservation of life were more important to the elderly than how they would live that life. That has never been the stance of the elderly themselves, who invariably report that they fear impoverishment and dependency more than death. The time has come to correct the imbalance. The most straightforward way to do that would be to change radically the present Medicaid program for long-term care, fully subsidizing it. Yet there is, unfortunately, little likelihood that President Clinton and Congress, under great pressure to provide for those with no health insurance at all, will advance any ambitious program to reform, much less substantially expand, the long-term care program. I may be wrong about this (writing as I do prior to the 1 May date set to announce a new health care plan), but given the expected price tag of genuine reform of long-term care (the figures range from $30 to $50 billion additional funds a year) it is improbable. The greatest pressure is likely to be that of finding ways to lessen the Medicare burden on the federal government. I want to propose an exchange, which I will call Medicare: Part C. Part A of Medicare now covers hospital costs, while Part B covers physician charges (at a modest monthly cost). Part C, as I propose it, would provide the voluntary option of allowing the elderly to exchange their mandated right to extended hospital acute care coverage for enhanced long-term care coverage. At a certain age, say eighty, elderly persons could choose restricted hospital coverage and receive in return improved long-term care support. Ideally, they would be allowed to balance the two forms of coverage in any way they saw fit. The attraction of such a plan for the elderly is that it would allow them to decide what they feared most about their old age and to make a choice about the kind of care they wanted. There is simply no likelihood in the future that they are going to get both care and cure to a substantial and acceptable degree; so they could make their own determination about which mattered the most for them. For the government, it would allow a way out of the now almost impossible dilemma of trying both to maintain decent Medicare benefits and also to expand and improve long-term care coverage--and to do that while at the same time adding new programs to cover the 35 million or so uninsured Americans. There are a number of alternative way such a Medicare Part C exchange program could be organized. First, it would be important to insure that the elderly would always have access to primary care and to simple emergency care, and of course to hospice and all forms of palliative medicine. …