Bill would create new Federal long-term care insurance program

  • By Maya Goldman,
  • Inside Health
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Rep. Thomas Suozzi (D-NY) introduced a bill earlier this month that would create a long-term care insurance model using a public-private partnership, and he hopes to get the bill included in the upcoming reconciliation package, according to a spokesperson. Unlike previous long-term care insurance legislation, the bill includes a way to finance the insurance and outlines plans for an education campaign.

Suozzi’s bill would establish a Federal Long-Term Care Trust Fund to pay for catastrophic long-term care for those needing many years of services. The bill seeks to amend the Social Security Act to provide long-term care insurance benefits to people who have reached retirement age and have a chronic illness for at least one year or until death, so long as they’ve applied for long-term care insurance benefits and have contributed to the Federal Long-Term Care Trust Fund for at least six quarters.

The trust fund would be made possible by worker and employer contributions of 0.3% of wages, paid through a social insurance tax. Self-employed people would be taxed at 0.6% of income.

The bill would direct Congress to appropriate $12 million in fiscal years 2022, 2023 and 2024 to initially set up the fund and pay out first benefits. The bill also requests Congress appropriate $50 million for public education related to long-term care. These initial appropriations would be paid back within 10 years after the first appropriations are made.

The full benefit paid out to consumers would be around $3,600 a month to start and would be adjusted for inflation, should the bill be enacted. Consumers would receive benefits in cash to use for paying home aides, nursing facility fees or other services.

There would be a waiting period between the onset of a disability and long-term care benefits setting in. Those with lower incomes, up to the 40th percentile, would be eligible for benefits after a one-year waiting period, while those with higher incomes would have longer waiting periods adjusted for their income percentile.

This waiting period should allow private long-term care insurance to become more affordable and comprehensive, said Joanne Lynn, a health and aging policy fellow who authored the bill with Suozzi’s office. Instead of needing to insure people for the duration of their time in long-term care, private companies could offer customizable plans that insure for just a few years, allowing prices to come down, she said.

Lynn said wraparound policies from private insurers likely would also be available to people who want more than $3,600 worth of care afforded through the public program.

“I think it will really regenerate quite a market in long term care insurance,” Lynn said, adding that she has been in contact with insurance companies while drafting the bill.

Long-term care in the United States is currently primarily funded through Medicaid, which requires people to spend down their assets in order to be eligible. Private plans tend to suffer from adverse selection and a general lack of understanding about how long-term care is financed. Lawmakers have proposed plans to fund long-term care insurance outside of Medicaid in the past, including in the Affordable Care Act’s Community Living Assistance Services and Support (CLASS) Act, but no proposals have advanced.

The CLASS Act would have provided cash benefits to people who became disabled and voluntarily applied for insurance. But lawmakers began to pull back the provision in 2011 after they were unable to finance it and the costs to consumers seemed high enough to discourage people from enrolling.

Lynn said this bill is different because of its explicitly outlined pay-fors and its reach to all wage-earners, as well as its focus on education.

The bill would require HHS, in coordination with the Social Security Commissioner, to publish a 10-year plan on how they’ll educate the public on the chances of needing long-term care; the differences between long-term care in different care settings; the cost of long-term care and availability of benefits; and the need to plan and consider private coverage, even with family support and savings. The Social Security Commissioner would have to send mail and provide online information about waiting periods and eligibility for long-term care insurance benefits.

Bill Dombi, president of the National Association for Home Care & Hospice, said he’s cautiously optimistic about the proposal’s chances of making it through Congress. The fact that this provides opportunities for individuals of many income levels to get long-term care is likely to be well-received by policymakers, Dombi said.

But even in this moment of enthusiasm over long-term care reform, there are no guarantees, he said.

The bill “does not have a slam dunk chance of success, but has better than no chance on it,” Dombi added.

The WISH Act emerged just over a week after Sen. Bob Casey (D-PA) and other Senate leaders introduced the Better Care Better Jobs Act, which operationalizes President Joe Biden’s proposal for a massive investment in Medicaid home- and community-based care.

Because Suozzi’s proposal would keep people from having to spend down their assets to be eligible for Medicaid home care, it would take pressure off the Medicaid program.

“The WISH Act’s new spending is paid for with a payroll tax, and may even reduce deficits by lifting some of the burdens of long-term care costs currently imposed on the Medicaid program. We commend Rep. Suozzi for not passing costs on to the next generation,” said Committee for a Responsible Federal Budget President Maya MacGuineas in a statement.

Home health industry associations are also seeking to introduce legislation to create a Medicare benefit to cover skilled nursing facility-levels of care in the home. Suozzi’s bill focuses more on support for activities of daily living than therapies and other skilled care, but the two policies would provide a more comprehensive long-term care framework in concert, Dombi said.

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