Financing Reform for Long-Term Care

The way the nation provides for the financing and delivery of long-term care is badly in need of reform. The principal options for change are private insurance, altering Medicaid, and 110 FROM NURSJNG HOMES TO HOME CARE public long-term care insurance. This article uses the Brookings-ICE Long-Term Care Financing Model to evaluate each of these options in terms of affordability, distribution of benefits, and ability to reduce catastrophic out-of-pocket costs. So long as private insurance is aimed at the elderly, its market penetration and ability to finance long-term care will remain scverely limited. Affordability is a major problem. Selling to younger persons could solve the affordability problem, but marketing is extremely difficult. Liberalizing Medicaid could help solve the problems of long-term care, but there is little public support for means-tested programs. Finally, universalistic public insurance programs do well in meeting the goals of longterm care reform, but all social insurance programs are expensive and seem politically infeasible in the current political environment. The way the nation provides for the financing and delivery of long-term care is badly in need of reform. No other part of the health care system generates as much passionate discontent as does long-term care. At the heart of the problem is the absence of any satisfactory way to help people anticipate and pay for long-term care. The disabled elderly find, often to their surprise, that the costs of nursing home and home care are not covered to any significant extent by Medicare or private insurance. Instead, they must rely on their own savings or, failing that, turn to welfare in the form of Medicaid. At a national average cost of $40,000 a year for nursing home care, long-term care is a leading cause of catastrophic out-of-pocket health care costs for the elderly. In addition, despite the strong preferences of the disabled for home and community-based services, current financing is highly skewed toward care in nursing homes. While the debate over long-term care reform has many facets, it is primarily an argument over the relative merits of private- versus publicsector approaches. Differences over how much emphasis to put on each sector partly depend on values that cannot be directly proved or disproved. Some believe that the primary responsibility for care of the elderly belongs with individuals and their families, and that government should act only as a payer of last resort for those unable to provide for themselves. The opposite view is that the government should take the lead in ensuring comprehensive care for all disabled older people, regardless of financial need, by providing comprehensive, compulsory social insurance. In this view, there is little or no role for the private sector. Between these polar positions, many combinations of public and private responsibility are possible.     

Financing reform for long-term care: strategies for public and private long-term care insurance

The way the nation provides for the financing and delivery of long-term care is badly in need of reform. The principal options for change are private insurance, altering Medicaid, and public long-term care insurance. This article uses the Brookings-ICF Long-Term Care Financing Model to evaluate each of these options in terms of affordability, distribution of benefits, and ability to reduce catastrophic out-of-pocket costs. So long as private insurance is aimed at the elderly, its market penetration and ability to finance long-term care will remain severely limited. Affordability is a major problem. Selling to younger persons could solve the affordability problem, but marketing is extremely difficult. Liberalizing Medicaid could help solve the problems of long-term care, but there is little public support for means-tested programs. Finally, universalistic public insurance programs do well in meeting the goals of long-term care reform, but all social insurance programs are expensive and seem politically infeasible in the current political environment.     

Sources of health insurance and characteristics of the uninsured: analysis of the March 1997 Current Population Survey

This Issue Brief provides summary data on the insured and uninsured populations in the nation and in each state. It discusses the characteristics most closely related to individuals' health insurance status. Based on EBRI analysis of the March 1997 Current Population Survey, it represents 1996 data--the most recent data available. In 1996, 82.3 percent of nonelderly (under age 65) Americans had private or public health insurance. Seventy-one percent had private insurance, 64 percent through an employment-based plan. Sixteen percent had public health insurance. The percentage of uninsured Americans has been increasing since at least 1987. In 1987, 14.8 percent of the nonelderly population was uninsured, compared with 17.7 percent in 1996. However, the erosion of employment-based health benefits cannot fully explain this increase since 1993. Instead, the decline in public sources of health insurance would partly explain it. It may be that, while the percentage of individuals with employment-based coverage is rising, individuals previously covered by Medicaid and CHAMPUS/CHAMPVA are not being fully absorbed into the employment-based health insurance market. Between 1995 and 1996, the percentage of nonelderly Americans without health insurance coverage increased from 17.4 percent to 17.7 percent. Further examination indicates that children completely accounted for this increase. In 1995, 13.8 percent of children and 19 percent of persons ages 18-64 were uninsured, compared with 14.8 percent of children and 18.9 percent of persons ages 18-64 in 1996. With the recent passage of legislation designed to reduce the number of uninsured children, the next focal point for health care reform could be early retirees and unemployed persons. President Clinton and some members of Congress have expressed an interest in improving access to and affordability of coverage for these groups. Currently, health care cost inflation is at its lowest point in years, but there are signals indicating that it is about to rise above current levels. The federal government's recent announcement that health insurance premiums will rise for federal employees an average of 8.5 percent in 1998 may portend higher future health care costs. Similarly, disappointing earnings announcements from several large insurers because of higher medical costs and lower-than-expected revenues may indicate that health insurance plans will increase premiums. Employment and income play a dominant role in determining an individual's likelihood of having health insurance. Age, gender, firm size, work hours, and industry are also important determinants; however, these variables are also closely linked to employment status and income. Some of the widest variations involve factors that are not always looked at in traditional demographic assessments, such as citizenship. However, variations by race, ethnicity, and citizenship are also closely linked to employment status and income.     

Partnership long-term care insurance: lessons for CLASS program development

The Community Living Assistance Services and Supports (CLASS) Act was a voluntary public insurance strategy intended to help people pay for long-term care. CLASS was passed as part of health reform to overcome aspects of private long-term care insurance market failure but came under close scrutiny from both its supporters and its detractors. Experience with the long-term care insurance market and State Partnership Programs provide insights about how to make CLASS fiscally viable. A CLASS program that offered one set of options to cover front-end risk (e.g., 1 to 3 years) and another set to cover catastrophic risk (after a high deductible) could have been offered as an alternative to the basic CLASS "long and lean" benefit model with all enrollees joined into a single risk pool. This would have broadened the risk pool and lowered premium costs under the program.     

Where are They from and How Far Must They Go? Examining Location and Travel Distance in U.S. Abortion Fund Patients

The current study examines a secondary data analysis of 3,452 administrative cases from a national abortion fund representing patients who received pledges for financial assistance to pay for an abortion from 2010 to 2015 in the United States, where abortion costs are not covered under federal public health programs. Case data were analyzed to assess patients' geographic origin, and whether or not cases were more likely to originate from states with Medicaid and private insurance restrictions. The anticipated travel distance to the provider and whether or not travel distances had been increasing over time were also examined. Results indicate that the majority of pledges are made to residents of the South, Midwest, states without expanded Medicaid access to abortion, and states that have private insurance restrictions on abortion coverage. Results further indicate that those who receive funding pledges anticipated traveling approximately 225 kilometers (140 miles) on average to access the abortion. This distance increased from 2010 to 2015, with patients seeking second trimester procedures expecting to travel nearly 3 times farther than patients in their first term. Abortion fund patients travel great distances to access an abortion and those distances are increasing over time. It is recommended that policy restricting public funding of abortion be repealed to improve access to abortion not only in the United States, but also in other countries where policy restrictions may impede access to abortion, even when it is legal.     

THE DEMISE OF HOSPITAL PHILANTHROPY

We develop a one-period model of hospital and donor behavior to analyze how insurance for hospital care, various public subsidies, and other factors affect donations to hospitals. Theoretically, increased insurance coverage has an ambiguous effect on private giving. Empirical tests using time series and cross-sectional data show that the growth of private insurance and especially the introduction of Medicare and Medicaid substantially reduces private giving to hospitals. Effects of public subsidies for construction depend on whether the subsidy more closely resembles a matching or lumpsum grant.     

The importance of employer sponsorship in the long-term care insurance market

Medicare and Medicaid are major sources of long-term care payments and thus will bear much of the burden from the growth in long-term care service use. The large future demand for long-term care services is of great concern among policymakers due to its expense and the use of public program dollars. It is argued that the individual purchase of long-term care insurance can help alleviate the increasing financial pressure on public programs responsible for the majority of longterm care financing. However, consumers have shown little interest in insuring against the high costs of long-term care. This analysis examines the effect of several factors on the decision to purchase a long-term care insurance policy: knowledge and attitudes of long-term care insurance and the long-term care financing system, the perceived risk for longterm care, financial planning behavior, and the availability of long-term care insurance. The interim results indicate the factor most likely to affect the decision to purchase long-term care insurance is access to employer-sponsored long-term care insurance. This suggests tht the availability of affordable and high quality coverage is more important than demand-side factors such as awareness of long-term care insurance and a perceived greater risk for long-term care.     

Domesticating insurance,financializing family lives: the case of private health insurance for children in Finland

This article explores the domestication of a financial instrument that is much used in contemporary Finland, but that most of its users do not primarily think about in terms of being a financial instrument: the private health insurance for children. In Finland, all children are covered by social insurance and are entitled to free public health service with very low costs, if any. Yet, some 40 percent of families want to supplement this service with private products. Many fear that the popularity of the private health insurance for children contributes to a vicious circle that ends up weakening the legitimacy of, and the service given by, the public health sector; inequality in the face of health risks threatens to be aggravated, as well. Therefore, this financial instrument has become an object of political controversy. The main question of the article is: how do economic, political and moral valuations become intertwined in the domestication of insurance? The concept of ‘domestication’ is found helpful for analysing the pragmatics of valuation and for appreciating the dynamics and the heterogeneity of forces at play when financialization influences everyday life. The study argues that when financial instruments are appropriated they are also transformed; thus, they should not be viewed as homogeneous tools that have similar effects in all contexts of use. The main empirical materials studied are interviews with families with and without private health insurance policies for their children.     

Financing long-term care with limited resources: combining the resources of the public and private sectors

Under Connecticut's recently implemented public/private partnership to finance long-term care, individuals will no longer need to impoverish themselves in order to receive Medicaid assistance. To encourage those people who can afford to buy a private long-term care insurance policy to do so, the state promises to shield one dollar in assets from Medicaid "spend-down" rules for every dollar a private policy pays out for Medicaid-covered services. This article describes the Partnership, shows how dwindling resources and budget constraints affected the development of this model, and then contrasts Connecticut's experience with that of other states and describes what can be learned from this demonstration.     

Future of Long-Term Care Financing for the Elderly in Korea

ABSTRACT

With rapid aging, change in family structure, and the increase in the labor participation of women, the demand for long-term care has been increasing in Korea. Inappropriate utilization of medical care by the elderly in health care institutions, such as social admissions, also puts a financial burden on the health insurance system. The widening gap between the need for long-term care and the capacity of welfare programs to fulfill that need, along with a rather new national pension scheme and the limited economic capacity of the elderly, calls for a new public financing mechanism to provide protection for a broader range of old people from the costs of long-term care. Many important decisions are yet to be made, although Korea is likely to introduce social insurance for long-term care rather than tax-based financing, following the tradition of social health insurance. Whether it should cover only the elderly long-term care or all types of long-term care including disability of all age groups will have a critical impact on social solidarity and the financial sustainability of the new long-term care insurance. Generosity of benefits or the level of out-of-pocket payment, the role of cash benefits, and the relation with health insurance scheme all should be taken into account in the design of a new financing scheme. Lack of care personnel and facilities is also a barrier to the implementation of public long-term care financing in Korea, and the implementation strategy needs to be carved out carefully.     

Future of long-term care financing for the elderly in Korea

With rapid aging, change in family structure, and the increase in the labor participation of women, the demand for long-term care has been increasing in Korea. Inappropriate utilization of medical care by the elderly in health care institutions, such as social admissions, also puts a financial burden on the health insurance system. The widening gap between the need for long-term care and the capacity of welfare programs to fulfill that need, along with a rather new national pension scheme and the limited economic capacity of the elderly, calls for a new public financing mechanism to provide protection for a broader range of old people from the costs of long-term care. Many important decisions are yet to be made, although Korea is likely to introduce social insurance for long-term care rather than tax-based financing, following the tradition of social health insurance. Whether it should cover only the elderly longterm care or all types of long-term care including disability of all age groups will have a critical impact on social solidarity and the financial sustainability of the new long-term care insurance. Generosity of benefits or the level of out-of-pocket payment, the role of cash benefits, and the relation with health insurance scheme all should be taken into account in the design of a new financing scheme. Lack of care personnel and facilities is also a barrier to the implementation of public long-term care financing in Korea, and the implementation strategy needs to be carved out carefully.     

Financing Long-Term Care with Limited Resources

Under Connecticut's recently implemented public/private partnership to finance long-term care, individuals will no longer need to impoverish themselves in order to receive Medicaid assistance. To encourage those people who can afford to buy a private long-term care insurance policy to do so, the state promises to shield one dollar in assets from Medicaid "spend-down" rules for every dollar a private policy pays out for Medicaid-covered services. This article describes the Partnership, shows how dwindling resources and budget constraints affected he development of this model, and then contrasts Connecticut's experience with that of other states and describes what can be learned from this demonstration.     

DOES THE PUBLIC SECTOR IMPLODE FROM BAUMOL'S COST DISEASE?

The root of the Baumol cost disease is higher productivity increases for manufactured goods than for services. The implied increase in relative costs of service production is widely claimed to have devastating implications for the public sector as a provider of tax‐financed services such as health, education, and care. To match the increasing costs it appears inevitable that tax rates would be ever increasing. It is shown that this inference does not follow under standard assumptions when accounting explicitly for service provision from both the private and public sectors. Strikingly under assumptions often made in the literature, the welfare maximizing tax rate for a utilitarian policy maker would remain constant despite the Baumol cost disease, and by implication the share of public employment in total employment will remain constant. (JEL H5, H11, O41)     

Sources of health insurance and characteristics of the uninsured: analysis of the March 2000 Current Population Survey

This Issue Brief provides summary data on the insured and uninsured populations in the nation and in each state. It discusses the characteristics most closely related to an individual's health insurance status. Based on EBRI estimates from the March 2000 Current Population Survey (CPS), it represents 1999 data--the most recent available. In 1999, for the first time since at least 1987, the percentage of Americans with health insurance increased: 82.5 percent of nonelderly Americans (under age 65) were covered by some form of health insurance, up from 81.6 percent in 1998. The percentage of nonelderly Americans without health insurance coverage declined from 18.4 percent in 1998 to 17.5 percent in 1999. The main reason for the decline in the number of uninsured Americans is the strong economy and low unemployment. Between 1998 and 1999, the percentage of nonelderly Americans covered by employment-based health insurance increased from 64.9 percent to 65.8 percent, continuing a longer-term trend that started between 1993 and 1994. In 1999, 34.1 million Americans received health insurance from public programs, and an additional 15.8 million purchased it directly from an insurer. Twenty-five million Americans participated in the Medicaid program, and 6.5 million received their health insurance through the Tricare and CHAMPVA programs and other government programs designed to provide coverage for retired military members and their families. Despite expansions in the State Children's Health Insurance Program (S-CHIP), public health insurance coverage did not increase overall between 1998 and 1999. The percentage of nonelderly Americans covered by Medicaid and other government-sponsored health insurance coverage did not change between 1998 and 1999, though some children benefited from expansions in government-funded programs. The percentage of children in families just above the poverty level without health insurance coverage declined dramatically, from 27.2 percent uninsured in 1998 to 19.7 percent uninsured in 1999. Some of the decline can be attributed to expansions in Medicaid and S-CHIP, but it appears that expansions in employment-based health insurance and individually purchased coverage had an even larger effect than expansion of S-CHIP. Even though the number and percentage of uninsured declined substantially between 1998 and 1999, more than 42 million Americans remain uninsured. As long as the economy is strong and unemployment is low, employment-based health insurance coverage will expand and the uninsured will decline gradually. If the economy continues to soften or comes close to a recession, the number of uninsured would easily and quickly start to increase again as unemployment rises. Should a severe downturn in the economy occur, causing the uninsured to represent 25 percent of the nonelderly population, 63 million Americans would be uninsured.     

Assisted living: will it reduce long-term care costs?

In their quest to reduce nursing home care expenditures, the various states in this country have looked to assisted living as a potentially preferred and lower-cost housing alternative for their Medicaid patients. For an assisted-living program to save costs, states must recognize that some assisted-living residents will not come from nursing homes, but rather from private residences, resulting in cost increases. This article argues that this "woodwork effect"--new clients appearing--is likely to be smaller than the level reported in the home and community care demonstrations, but that the numbers are difficult to predict with the possibility of divestiture. It also argues that the true savings from substitution, or of one form of care for another, depend on the nursing home reimbursement system in effect at the time.     

Assisted Living:

In their quest to reduce nursing home care expenditures, the various states in this country have looked to assisted living as a potentially preferred and lower-cost housing alternative for their Medicaid patients. For an assisted-living program to save costs, states must recognize that some assisted-living residents will not come from nursing homes, but rather from private residences, resulting in cost increases. This article argues that this "woodwork effect" - new clients appearing - is likely to be smaller than the level reported in the home and community care demonstrations, but that the numbers are difficult to predict with the possibility of divestiture. It also argues that the true savings from substitution, or of one form of care for another, depend on the nursing home reimbursement system in effect at the time.     

Systems Development and Difficulties in Implementing Procedures for Elder Abuse Prevention Among Private Community General Support Centers in Japan

The present study examines differences in systems development and difficulties in implementing procedures for elder abuse prevention in 1,119 private and 606 public community general support centers under the public long-term care insurance program in Japan. The private community general support centers showed more difficulty implementing procedures than the public community general support centers. Controlling for the type of municipality, progress in systems development did not differ between the private and public community general support centers. Further research should examine how the characteristics of municipal governments are related to systems development in community general support centers.     

Getting by in the community: lessons from frail elders

This study explores how functionally impaired, elderly persons are able to remain in the community without home- and community- based care (HCBC) under the Medicaid program. Using HCBC administrative data, Medicare data, and survey data, we find the nonparticipants in the community appear to get by through a combination of reliance on informal care, use of Medicare home care, and going without needed services. Despite their efforts to manage their care in the community, non-participants were significantly more likely than the participants to enter a nursing home during the six months following assessment. While our analysis does not allow us to attribute the higher nursing home entry to the absence of HCBC services with certainty, the finding does raise questions about whether the elements of the HCBC program that discourage participation may save Medicaid dollars in the short-run at the expense of future Medicaid costs from more rapid nursing home entry.