Financing Long-Term Services And Supports: Options Reflect Trade-Offs For Older Americans And Federal Spending

Area of Science:

• Health Economics
• Public Policy
• Gerontology

Background:

• Approximately 50% of older adults require extensive long-term services and supports (LTSS) for extended periods.
• Current policies result in individuals self-funding about half of their paid care, with many eventually needing Medicaid assistance.
• Low uptake of private long-term care insurance is attributed to high costs and financial uncertainty.

Purpose of the Study:

• To model policy changes aimed at increasing the role of private insurance in financing long-term services and supports.
• To evaluate the potential impact of various insurance benefit designs and enrollment mechanisms.

Main Methods:

• Simulation modeling of several new long-term care insurance options.
• Analysis of mandatory vs. voluntary enrollment and subsidized vs. unsubsidized voluntary plans.
• Evaluation of front-end, back-end, and comprehensive benefit structures.

Main Results:

• Mandatory insurance options demonstrated greater success in increasing overall insurance coverage compared to voluntary options.
• Comprehensive and back-end mandatory insurance models showed the most significant potential for reducing Medicaid expenditures.
• Different policy designs present distinct trade-offs regarding coverage expansion and cost containment.

Conclusions:

• Policy modifications can significantly enhance the role of insurance in financing long-term care needs.
• Mandatory insurance programs, particularly those with comprehensive or back-end benefits, offer a promising strategy for both increasing coverage and mitigating public spending on long-term services and supports.