Institute Forum

Summary: "New York’s Partnership Offers One Model for Reining in Taxpayers’ Long-Term Care Costs December 1, 2010

N.Y. Program Aimed at Cutting Taxpayers’ Long-Term Care Costs

As states continue to struggle with budget gaps, many are looking to rein in the spiraling costs of Medicaid, the government health insurance program for people with low incomes. A key expenditure within Medicaid is long-term care. Nursing homes, home care and other costs of care for the elderly represent one of the largest and fastest-growing costs in Medicaid, at more than $100 billion annually across the country.

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Audio (Full)

Video: Introduction by Courtney Burke
Courtney Burke’s slide presentation

Video: Mark Kissinger
Mark Kissinger's slide presentation

Video: Sam Morgante
Sam Morgante’s slide presentation

Video: Question-and-Answer session

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Speakers at a December 6 Institute forum discussed one public-private effort to encourage individuals to plan and pay for their own long-term care, rather than rely on taxpayer-funded assistance. “Paying for Long-Term Care: Families or Taxpayers?” focused on the New York State Partnership for Long-Term Care, and featured program participants from the public and private sector.

Much of Medicaid’s long-term care expenditures serve people for whom the public health insurance program was never intended — middle class and more affluent people who transfer assets to heirs before their death. This reduces their personal net worth, qualifies them for Medicaid and requires the public program to cover their nursing home or home-care expenses.

Mark Kissinger, deputy commissioner of the New York State Health Department’s Office of Long Term Care, explained at the forum that people take this action because they see long-term care costs as an expense that would wipe out the value of their homes and other assets, eliminating their ability to pass down wealth to future generations.

Another policy intended to help people retain assets is the right to refuse to pay for a spouse’s long-term care costs, Kissinger said. Several governors have tried to eliminate this rule, which is costly for the state, but legislators have largely favored it as way to help people retain some income.

The partnership was designed to eliminate that choice of either paying for one’s long-term care or retaining assets to pass on, Kissinger said. The program is designed to protect all or some of individuals’ assets, while allowing them to access Medicaid benefits if their insurance benefits run out. At the same time, the initiative shifts some costs from taxpayers to such individuals, through the long-term care insurance they purchase.

The results have been positive for New York State, the deputy health commissioner said. Only a small percentage of policyholders have so far required Medicaid assistance, according to state data. Of more than 90,000 policies sold through the partnership, just 3,465 have received insurance benefits to date. Only 240 have needed to access Medicaid coverage. The average age of purchase is 62 years old, with the average age at the date of first claim being almost 81, Kissinger said. Beneficiaries typically live about two years after beginning to receive benefits.

Yet the partnership has reached only a small share of its potential. New York’s nursing homes cared for more than 100,000 individuals in 2008, according to the Kaiser Family Foundation, with most of those funded entirely or partly by Medicaid. Thousands of others receive Medicaid benefits for long-term care in the home.

The public-private partnership has made selling long-term care insurance more viable for companies, said Sam Morgante, vice president for governmental relations at Genworth Financial Inc., one of the companies that participates with the state in the long-term care program. That’s because the government takes on some of the risks that a private insurer might be unwilling to take.

More work is needed to encourage more individuals to participate in the program, Morgante said. Public education is one component, he added, citing data that more than 60 percent of Americans think Medicare, the government program for all elderly people regardless of income, automatically pays for long-term care. That assumption causes them to ignore the risk of having to sell off or shed assets if they haven’t planned for their long-term care.

Both experts stressed that the issue is a critical one for policymakers and citizens to address, as baby boomers age and swell the ranks of those needing long-term care services. Americans seem to be in denial about their need for long-term care, they said.

“This country has not had an adult discussion about long-term care since the late 1980s, early 1990s,” Morgante said.

Kissinger said he’d like to see the issue debated publicly and even taken up by candidates for national office.

“This issue is so big … and really, dealing with the denial is so big,” Kissinger said, “that a long-term care solution really needs to be part of the next presidential campaign.”


ABOUT THE ROCKEFELLER INSTITUTE OF GOVERNMENT

The Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York, conducts fiscal and programmatic research on American state and local governments. It works closely with federal, state, and local government agencies nationally and in New York, and draws on the State University’s rich intellectual resources and on networks of public policy academic experts throughout the country.