Jul 6, 2021
"More than 40% of people over 65 years old
misperceive that Medicare covers long-term care."
-Marc A. Cohen, PhD
Long-term care is care across a range of settings and can include
medical and non-medical services that assist individuals who cannot
care for themselves for extended periods. Also, long-term care is
often provided at a person's home, largely by family and
friends.
Thus, it's a challenge to discern whether you even need long-term
care insurance coverage. If you can afford this type of policy,
it's even harder to know if the insurer and the policy will still
be there with adequate coverage whenever you need it.
In this episode of This Is Getting Old, Marc A. Cohen, PhD., will
talk about the basics of how long-term care is paid for now - and
discuss future trends for the long-term care insurance
industry.
Part One of “Do I Need Long-Term Care Insurance? And Future
Trends”
How Is Long-term Care Currently Financed?
Long Term Services and Supports (LTSS) are services designed to
help people with functional incapacities, limitations, or cognitive
issues. These circumstances limit a person’s ability to perform
basic activities of daily living like bathing, dressing, toileting;
all the things that one would need to be able to do in order to
live independently.
Unlike acute medical care, with services like hospital care,
physician care tends to focus on curing people of specific
ailments; long-term services and supports are designed to help
people living with chronic illnesses maintain their function or
reduce the decline in functioning over time.
In today’s market, long-term care is financed in three major
ways:
✅ Out-of-pocket: Disabled older adults and their families pay
out-of-pocket for care.
✅ Medicaid: A federal-state social safety net program. Older adults
must qualify for Medicaid by meeting very low income and asset
thresholds.
✅ and private long-term care insurance.
Is Private Long-term Care Insurance Still And/Or Going To Continue
A Valuable Product For Consumers?
The long-term care financing problem in the United States is
enormous. People over age 65 today, around twenty-five million of
them will require long-term care services and supports projected to
cost trillions of dollars; including family support provided care,
which is not often evaluated.
When we look at the dollars spent and put a dollar value to the
care provided by families, it's more than seven times what our
public program, Medicaid, pays.
So given that the bulk of care is provided by families, we have
these situations now, where the caring family network is stretched.
We used to talk about the “Sandwich Generation” - where you had an
older adult caring for an elderly parent and a school-aged child—
Dr. Cohen now calls this the “Panini Generation”. In other words,
paying for and providing long-term care can create a situation that
crushes families.
Given these circumstances, we need to have more financial resources
flowing into this system. The problem is so big that no one sector
can handle it on its own. That means that we can't fully publicly
finance long-term care —and we've already proven that it can't be a
privately owned, privately funded solution. Therefore, we need
roles for the public and private sector in order to find a viable
solution.
Part Two of “Do I Need Long-Term Care Insurance? And Future
Trends.”
Can Long-term Care Insurance Still Play A Meaningful Role In
Addressing The Challenges Of Long-term Care Financing? And What
Public Policies Need To Change For Long-term Care Insurance To
Remain A Viable Product?
We've seen in the private market that private insurance companies
can no longer handle that “catastrophic risk” that is called
“long-tail risk” or “long-term risk”.
Another one is that the private insurance industry is much better
at handling folks who need care for one, two, three, four, maybe
five years, but they get in trouble with rating agencies who think
that they're taking on uncapped liabilities. With that, the private
sector has stopped providing coverage.
So the long and the short of it is that each financial option has a
clearly defined role. The private insurance sector has to worry
about developing insurance products that will work based on their
terms. The public sector takes on the predominant part of the
risk—the catastrophic.
The idea is that by doing that, older adults can put together a
package of comprehensive insurance that starts with the private
sector and moves to the public sector.
"It's no longer an accident that we live long lives —we
expect to live long lives, but that brings functional impairment
and cognitive impairment levels that we haven't seen. And because
the long-term care financing problem necessitates bold action, it's
going to require bold action." -Marc A. Cohen,
Ph.D
A Catastrophic Public LTSS Insurance Program Can Significantly Help
The Market Thrive And Meet America's LTSS Financing Challenge.
The notion of “catastrophic public long-term services and support”
is an idea that proposes financial help would be variable,
depending on your economic circumstance. For example:
✅ If you're lower middle class, the public program would pay after
you need care for one year.
✅ If you are a little bit wealthier, you would pay for the first
two years with your savings or insurance, and then the public
program would kick in.
✅ And if you're wealthy, then potentially you have to worry about
the first four years of care, and then the public program provides
coverage.
What's nice is there are a couple of good things about this
scenario:
✅ First of all, when you have a well-defined public role, it will
help people understand, "Oh, I've got some personal accountability
or responsibility for worrying about whether it's one year, two
years, or three."
✅ Number two is about how the middle-income folks accessed Medicaid
because they spent down their income and assets. Well, if you have
an insurance solution for those folks, that means you have fewer
claims on the social safety net. This further means that states
will have some pretty significant savings to their Medicaid
programs. So it'll be relatively attractive to states and the
people accessing Medicaid—people for whom there are no insurance
alternatives and no savings alternatives.
✅ The third thing that it does is that it will stream new money
into the system. All of us know what happened during the pandemic,
especially in the beginning when the pandemic ravaged elders in
nursing homes in particular. Part of the issue is that we have
underfunded the entire long-term care system. So there has not been
enough money to support levels of wages that we need to attract and
keep people working, develop career ladders, pay for high-quality
care and safety. A public insurance program with private insurance
filling in the gaps and savings will stream more money into the
system and will have everyone benefit from a better system.
Congress.gov will have information on The WISH Act proposed by Rep.
Tom Suozzi (D-NY-3) shortly!
About Marc A. Cohen PhD
Marc A. Cohen, Ph.D. is a Professor of Gerontology at UMass Boston
and the Co-Director of the LeadingAge LTSS Center @UMass Boston. He
is also a Research Director at the Center for Consumer Engagement
in Health Innovation at Community Catalyst. Before joining UMass in
2016, Dr. Cohen founded and led LifePlans, Inc., a long-term
services and support (LTSS) research and risk management
company.
Over his 30 year career, Dr. Cohen had conducted extensive research
on LTSS financing and delivery issues, testified before Congress,
served on an appointed Massachusetts' LTSS financing task force,
and chaired a study panel on designing state-based LTSS social
insurance programs. He has been quoted extensively by major news
outlets and is viewed as a thought-leader on issues affecting
eldercare financing. He received his Ph.D. from the Heller School
at Brandeis University and his Master's Degree from the Kennedy
School of Government at Harvard University.
Connect With Dr. Marc A. Cohen through the following
social media platforms:
Twitter: @UMassBoston @LeadingAge @CCEHI @CommCatHealth
Facebook: @UMassBoston @communitycatalyst @LeadingAge
Instagram: @UMassBoston @LeadingAge
For more valuable resources, check
out the episode of Elder Care: Past and Future with Joanne Lynn,
MD, MA, MS, and Carrie Graham, PhD, MGS.
Watch the full episode
here: https://youtu.be/4S8ongyzMco
About Melissa Batchelor, PhD, RN, FNP-BC, FGSA,
FAAN:
I earned my Bachelor of Science in Nursing ('96) and
Master of Science in Nursing ('00) as a Family Nurse Practitioner
(FNP) from the University of North Carolina Wilmington (UNCW)
School of Nursing (SON). I genuinely enjoy working with the complex
medical needs of older adults. I worked full-time for five years as
an FNP in geriatric primary care across many long-term care
settings (skilled nursing homes, assisted living, home, and office
visits), then transitioned into academic nursing in 2005, joining
the faculty at UNCW SON lecturer. I obtained my Ph.D. in Nursing
and a post-master's Certificate in Nursing Education from the
Medical University of South Carolina College of Nursing ('11). I
then joined the faculty at Duke University School of Nursing as an
Assistant Professor. My family moved to northern Virginia in 2015
and led to me joining the George Washington University (GW) School
of Nursing faculty in 2018 as a (tenured) Associate Professor. I am
also the Director of the GW Center for Aging, Health, and
Humanities. Please find out more about her work at https://melissabphd.com/.