A new plan designed to improve our nation’s method of financing long-term care was recently discussed in a Forbes article titled, “A Bipartisan Plan to Pay for Long Term Care”. Four former government officials from the Bipartisan Policy Center, Democrats Tom Daschle and Alice Rivlin and Republicans Bill Frist and Tommy Thompson, recommend two major changes. First, they want to make private long-term care insurance more attractive to the middle class and second, they want to improve Medicaid benefits for lower income individuals.
The first element of their plan involves improving the private long term care insurance market. The group proposes a new type of insurance that would offer a limited, affordable benefit. These policies would provide a relatively modest daily benefit for two or three years, but not kick in until an individual has paid a deductible or waited a year after triggering benefits. They also propose standardizing benefits across companies, selling insurance electronically and allowing carriers to regularly increase premiums every three years rather than the level premium model now common. Furthermore, they recommend incentives to encourage employers to offer a long term care insurance products as a part of their employee benefit plan.
The second element of their plan would reform Medicaid to make it easier for states to offer home and community based care. This would shift Medicaid services from nursing homes to the community. The plan would also allow younger individuals with disabilities to buy into Medicaid long-term services even if their income exceeds current eligibility levels.
The bipartisan group has promised a second phase of reforms in which they will consider a public catastrophic insurance program and possibly include a long-term care benefit in managed care insurance.
Unfortunately, it is unlikely that these changes will really increase incentives to generate a big increase in long term care insurance sales. Ultimately long term care financing will continue to be a significant challenge for consumers.