LTC Bullet: The Minnesota Twins: Medicaid and Long-Term Care
Wednesday, February 16, 2005
LTC Comment: States and committees have studied Medicaid and long-term care up one side and down the other for decades rarely to any useful effect. Minnesota is a hopeful exception. More after the ***news.***
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The LTC Data Update #5-005--2004 AARP LTC State Profiles Published (Here's an excellent resource for state-level data on LTC utilization and financing.)
The LTC Data Update #5-006--Seniors' Income Sources (More data from AARP with our comments on what it means for Medicaid and the marketability of LTCi.)
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LTC BULLET: THE MINNESOTA TWINS: MEDICAID AND LONG-TERM CARE
LTC Comment: In "The Realist's Guide to Medicaid and Long-Term Care" http://www.centerltc.org/realistsguide.pdf the Center for Long-Term Care Financing profiled 10 states' Medicaid long-term care programs.* We identified five states that are doing almost everything wrong and five that are moving, relatively, in the right direction. The best of the good states was Minnesota.
Our judgment about Minnesota has been borne out by a new report published January 15, 2005 by the Minnesota Department of Human Services Continuing Care Administration. It's title is "Public and Private Financing of Long-Term Care: Options for Minnesota, A Report to the Minnesota Legislature." Read it at http://www.dhs.state.mn.us/main/groups/aging/documents/pub/dhs_id_048914.pdf .
Below are excerpts (footnotes omitted) from the executive summary of Minnesota's study to give you an idea of what to look for in the report itself.
* "The Realist's Guide to Medicaid and Long-Term Care" was also published in abridged form as "The Long-Term Care Dilemma: What States Are Doing Right - And Wrong" by the American Legislative Exchange Council (www.alec.org) and the Council for Affordable Health Insurance (www.cahi.org).
Excerpts from "Public and Private Financing of Long-Term Care: Options for Minnesota, A Report to the Minnesota Legislature," Minnesota Department of Human Services Continuing Care Administration, January 15, 2005, http://www.dhs.state.mn.us/main/groups/aging/documents/pub/dhs_id_048914.pdf
The department has been working on this study since it was commissioned in 2003. The decision was made early on to identify and analyze a broad array of potential public and private financing options in order to 'leave no stone unturned' in the quest for practical and perhaps overlooked options for paying for long-term care. Because of that strategy, this report includes nine different financing options that were analyzed for their potential to maximize private dollars and minimize Medicaid liabilities. These include:
1. Long-term care insurance (LTCI) options, including the use of medical
assistance funds to subsidize the purchase of private LTCI by individuals who
would be unlikely to purchase it without a subsidy (specifically mentioned in
2. The Partnership for Long-Term Care program (specifically mentioned in the legislation).
3. Adding a nursing facility benefit to Medicare-related coverage (specifically mentioned in the legislation).
4. Health insurance options that combine health and long-term care coverage.
5. Life insurance options that include long-term care coverage.
6. Reverse mortgages.
7. Family loan and line of credit program (specifically mentioned in 2003 legislation).
8. Universal long-term care savings plans, called CarePlus, passed by the Hawaii Legislature in 2003 and subsequently vetoed by the governor.
9. Long-term care annuities. (p. iv)
At the heart of the issue of long-term care financing is the concern that, by 2030, more people than ever before will turn to Medicaid as the way to finance their long-term care. This could include those who are already "Medicaid-bound" as well as those who have been called the "tweeners," that is, a group with lifetime income and assets adequate for retirement but inadequate for long-term care costs. Even the "financially independent" boomers, those who could self-fund their long-term care, may feel a sense of entitlement to a public program like Medicaid, because it pays for an expensive product that most people do not like and do not want to pay for with their own money. (p. vii)
While there are great differences and opposing points of view on these issues, this study found strong consensus in discussions with many stakeholders that, in the case of Medicaid, we need to eliminate the mixed messages that the general public receives about its personal responsibility for long-term care on the one hand, and perceptions of easy access to publicly funded long-term care on the other. (p. vii)
The 2003 Legislature required that the Department of Human Services apply to the federal government for an asset transfer waiver, which would limit the methods available to individuals to transfer their assets, presumably to voluntarily impoverish themselves in order to become eligible for Medicaid. The department submitted this request in March 2003 and it is still waiting for approval. Negotiations on the terms of the waiver are underway with CMS officials regarding specific issues in the waiver request. Implementing this plus other measures to tighten estate recovery would create disincentives for voluntary impoverishment. (p. viii)
Minnesota needs to create incentives for individuals to take personal responsibility for their long-term care. (p. viii)
During this study, there has been broad consensus among many stakeholders that the best long-term solution to this financing issue is to rethink and restructure the public and private roles in long-term care financing. This rethinking should include articulating a clear specific message about the level of personal responsibility that individuals have for their own long-term care, while articulating the level and type of assistance that the public sector will provide, similar to how the Partnership for Long-Term Care program now works. (p. ix)
Even though families are stretched, they continue to have a deep sense of obligation to care for their spouses/parents in old age. For most elderly, family care is their preferred option. For many low-income elderly, family care is the only affordable option available. The dollar value of the enormous amount of care families provide is estimated at $4.58 billion in Minnesota alone, and represents the largest funding source for long-term care support. If we assume that a loss of informal care will primarily affect those in greatest need and that the public sector supports about two-thirds of the cost of such care, each percentage point drop in family caregiving means an additional $30 million that the public sector must bear. Thus, support of family caregivers is not just "nice;" it has enormous economic ramifications, and it is in the economic interest of the state to prevent future declines in the portion of care provided by families. (p. ix)
There is no "silver bullet" or one option that is the answer to the private financing of long-term care. Nearly all the options reviewed in this study have some potential to address the issue. Therefore, to maximize the utilization of private dollars, there needs to be a variety of options available to individuals, which utilize different combinations of insurance, borrowing, savings and informal care and other affordable options.
This report includes 16 recommendations on the specific financing options reviewed in this study, actions that can be taken to expand awareness and utilization of the options, develop additional products, improve consumer protection, and evaluate and monitor progress on the uptake of some of the newer options.
The University of Minnesota will be completing more detailed fiscal analyses of the impact of the various options on Medicaid savings and making recommendations to the state on which financial incentives have the greatest potential for achieving the state's policy goals of increasing uptake, maximizing private dollars and minimizing Medicaid liability. (p. x)