Medicare Drugs? What about Ltc? Partnership Offers Alternative
Meiners, Mark R., Aging Today
Medicare reform seems to hinge on how to handle prescription drugs, especially how to deal with the fact that many state Medicaid programs already pay significant drug costs for those who are eligible for both programs. Aside from the importance of insurance covering prescription drugs, states are desperate for fiscal relief from the growing burden of Medicaid. As the United States goes forward in preparing for an aging population's healthcare financing needs, prescription drug coverage is indeed a worthy focus. But what about long-term care (LTC)?
LTC has long been treated as an unwanted stepchild whenever the United States has made one of its periodic forays into healthcare reform. It has always played a weak third fiddle to concerns about the uninsured and catastrophic expenditures on prescription drugs. The states have been left to struggle with the issue of long-term financing as part of their responsibilities in funding and administering Medicaid, which is means-tested and available only to those impoverished enough to quality for the program's benefits.
A MODEL PROGRAM
Even while it is pushed aside, though, LTC continues to be a major cause of catastrophic expenditures for older Americans. Furthermore, it involves many of the same challenges currently faced in the debate over Medicare reform and prescription drug benefits: means testing vs. universal coverage; private market insurance vs. government-run insurance; federal vs. state responsibilities; uninsured vs. underinsured. Fortunately, a model LTC insurance program is working in four states (California, Connecticut, Indiana and New York) and has begun to take on these challenges successfully. This program is fiscally conservative, helps middle-income people avoid impoverishment, serves as an alternative to Medicaid estate planning, promotes better-quality insurance products, supports consumer-protection efforts, enhances public awareness regarding long-term care needs and options, and helps maintain public support for the Medicaid program.
The Partnership for Long-Term Care (PLTC) is a collaboration between state governments and private insurers that provides an incentive to middle-income people to purchase a state-certified private LTC insurance policy: It allows them to get help from Medicaid without first having to be impoverished. The PLTC approach achieves several objectives. It saves Medicaid dollars because the private sector will increasingly meet LTC needs, as people better prepare for this risk. The partnership model promotes greater self-reliance rather than reliance on a government entitlement. In addition, it assists expansion of the LTC insurance market, an expansion needed to meet the pending demographic shift as the boomers reach retirement age.
When a standard LTC insurance policy runs out, policyholders normally risk having to spend virtually all their savings before qualifying for Medicaid. In contrast, when a partnership policy is exhausted, policyholders are eligible for Medicaid coverage without having to deplete all their savings. The partnerships emphasize that everyone should have some LTC coverage and, if necessary, trade having less comprehensive long-term coverage for shorter-term high-quality benefits. Those needing care beyond the limited private coverage can then gain access to Medicaid benefits without spending down their assets to meet the poverty requirements.
A new "Index of Long-Term Care Uninsured," produced by the Long-Term Care Financing Strategy Group-a nonprofit, nonpartisan think tank in Washington, D.C.-indicates that 85% of Americans over age 45 (82 million people) have neither public nor private insurance coverage for LTC. Clearly, there is much to be done. The same index research suggests that among people 65 or older who would have a suitable income to qualify for a partnership policy, only 16% now hold private LTC insurance. The United States should seek to at least double this percentage of coverage in the next 10 years. …