Almost half of all long term care services for the elderly in the United States is paid by Medicaid, considered to be the state federal health care program for those who are low income or disabled. The Affordable Care Act, also known as Obamacare, had originally included a provision for a voluntary national long term insurance care program. However, this year Congress repealed the act when it was determined that it would be too expensive to establish the system along with Obama’s health plan.
As a result, a congressional commission is charged with developing a plan for financing a more sustainable long term care system during a time when the industry is already struggling. Costs at nursing homes and assisted living facilities have grown at an annual rate of 4 percent over the last five years based on information from a Genworth study. Interest rates have been at lows during that period of time. Insurers have found it very challenging to be able to generate enough investment growth that would be able to cover future claims.
Metlife, Unum, and Prudential have stopped selling individual policies within the past three years. When firms first began selling plans in the 1990s, they made assumptions about how the policyholders were going to handle their coverage. They believed that policyholders would allow their coverage to lapse at around the same percentage that they do for life insurance products. The lapse rate for long term care has been much lower. Most policyholders who buy coverage during their senior years have held on to their coverage and have been able to collect on their claims.
A Scan Foundation study on long term care reform had a few considerations. The study suggests that long term care reform will require a combination of private and public sector initiatives. The government could provide some reinsurance as some assurance for long term care underwriters. More employers should also be able help workers access coverage and save for long term care, similar to what they do when handling retirement through 401k plans.
Another option that has been proposed is using an accountable care organization model. This would be a coordinated care program that provides a tie to reimbursement rates with health outcomes. This would be in contrast to basing it on a volume of services, which is what Medicare currently does. The Obamacare program still provides some controversy regarding insurance provisions and long term care however. As a result, there are a lot of industry officials which believe that the commission should focus on finding private market solutions for long term care needs instead. The thought is that most Americans won’t want to get involved in another new national program for insurance.
Ultimately, there are still many who have high hopes that there will be some upcoming long term insurance care programs that will become available over the course of the next two years, providing a higher quality of service and peace of mind to seniors who are in need of medical treatments and care.