Affordable Long-Term Care
Posted by James O'Rourke on April 25, 2008
Affordable Long-Term Care
By Jeanne Lambrew | April 21, 2008
04:23 PM CDT on Monday, April 21, 2008
America is in desperate need of a long-term care solution. On the verge of the baby boomers’ retirement – the 65-plus population will increase by some 30 million over the next 20 years, a three-fold increase over the previous two decades – the United States is utterly unprepared to finance their long-term-care needs.
From the start, Medicare has resisted expanding its limited long-term care coverage. Many seniors pay for long-term-care costs out of income and savings, but Medicaid has become the default payer, assisting three out of five nursing home residents.
A better approach uses Medicare, rather than Medicaid, to leverage long-term-care insurance. This would be achieved by creating a new catastrophic, long-term-care benefit for seniors who also purchase a private long-term-care insurance policy – the Medicare Long-Term Care Partnership. The benefit would be “triggered” once the fixed-dollar amount of lifetime coverage has been spent. The trigger would be reduced for low-income seniors. Medicare would, in effect, be a reinsurer for long-term-care insurers.
The policy would be optional and available only during an open-enrollment period, upon joining Medicare at age 65, or for a limited time upon enactment. People already needing long-term care could not enroll. This limits the potential for adverse selection and ensures time for premium payments to accrue.
To offset its new federal costs, the partnership would be a “swap”: Beneficiaries who opt for it would forfeit Medicare’s home-health benefit, which would be covered by the private insurance plan. In addition, the increase in Medicare spending would be partially paid for by the resulting decrease in Medicaid spending.
The Medicare Long-Term Care Partnership would offer the possibility of jump-starting long-term care insurance for seniors. Most important, it would restructure the relationship between private and public coverage – a necessary relationship if the nation is to adequately finance long-term care for baby boomers.
Jeanne Lambrew is an associate professor at the LBJ School of Public Affairs at the University of Texas and a senior fellow at the Center for American Progress.
candiceos1 said
This is a great idea. I’m still young, but I researched this and found that even younger people need long term care insurance at times due to certain illnesses, car wrecks, etc. You never know what could come upon you at any age. I was surprised that Medicare doesn’t cover many types of long term care in my research article below – go figure!
Candiceos
http://www.selectwriters.com/article-categories/finance/longtermcareinsurance.html
Ian said
Thanks for the article. The issue of insurance for long term care needs to be addressed now, not later. As you said, more and more baby boomers are entering retirement and as we now know, what looked like a healthy retirement fund isn’t the case anymore. Nursing homes, home health care…it’s all extremely expensive. Conveying to people that there are ways to make is more affordable will help disclose some of the stereotypes of such coverage.
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