July 17, 2017
Traci Howard-Richards, Analyst
Care Management Provider Agency Liaison
California Partnership for Long-Term Care
In response to your question: What do you feel would be the single most impactful thing that the Task Force can tackle to revitalize the California Partnership for Long-Term Care and to help Californians prepare for the likelihood of needing long-term care in their future?
There is probably not one single thing that can accomplish the revitalization of the Partnership, and the Partnership alone will not prepare Californians for the likelihood of needing long term care. However, here are my thoughts on these two important topics.
Revitalizing the Partnership
The Partnership should do one simple emergency regulation immediately to reduce the required 5% compounded inflation protection to 3%, and reduce the required daily benefit to 50% of the cost of nursing home care, then allow companies already participating in the Partnership, or that have approved Partnership policies, to market those policies immediately with these two revisions.
If this does not immediately bring insurers back into the Partnership program, as some industry representatives have argued, then we should acknowledge that the Partnership program must be put on hold and undergo a complete revision from top to bottom; or we should acknowledge it as a failed experiment, close it down and do a complete revision.
If emergency regulations take longer than a couple of months, this will be a futile effort to revive the program.
If this is successful, emergency regulations pass and companies return with policies, then longer term changes can be discussed and implemented.
Policy Changes to Prepare Californians for Long Term Care
Review the concept of the Partnership program for potential changes to benefit Californian’s and the state’s Medicaid program.
It is clear that consumers benefit from asset protection. It is not clear that the state Medicaid program benefits from the Partnership. My view is that the state only saves money when people buy and use benefits that are greater than the assets they would have had to spend to become eligible for Medi-Cal.
In other words, the state only saves money when people are over insured and collect benefits greater than their protected assets, with the result that Medi-Cal is not paying benefits during the period of over insurance. And this does not take into account how much money an insured person paid in cumulative premiums for their insurance benefits and to protect their assets from the cost of care.
There may be other strategies that can be combined with asset protection, or that can replace it, that would encourage people to plan for their long term care expenses in partnership with Medi-Cal. Such as:
Are there situations in which it might make sense for Medi-Cal to subsidize premiums?
At the time of a rate increase
Following an insolvency
Following the death of a spouse with a subsequent reduction of income
Are there situations where it might be useful to trade asset protection for some assistance from Medi-Cal in keeping a person at home using a sliding scale of eligibility?
Would a very long deductible period for in a Partnership nursing home only policy make sense for wealthy people who might develop dementia and face a long nursing home stay after home care is no longer feasible?
Would it make sense for Medi-Cal to pay some benefits for home care to ensure that a person could remain in their own home at a greater cost than their insurance benefits will support using a sliding scale eligibility standard?
Would it make sense for IHSS to pay a family member to provide care and stretch a small home care benefit in a non-Partnership policy using a sliding scale eligibility standard?
Would a marketing campaign illustrating various ways that public and private benefits could be combined encourage more people to buy coverage, even limited amounts of coverage?
For example: Care management and coordination that brings together public and privately available services like Meals on Wheels if eligible, or home delivered meals from the local supermarket chain.
Are there ways to combine the proceeds of a reverse mortgage with IHSS or MSSP benefits, or other Medi-Cal benefits at the time a person needs home care but doesn’t have any insurance benefits?
The state will pay for the care of people who are already poor, or near poor. Wealthier people are unlikely to exhaust their assets and qualify for Medi-Cal unless they experience a very long nursing home stay. While wealthy people can use estate planning strategies to become eligible for public benefits, estate planning for Medi-Cal in advance is overblown as a planning tool and does not displace private insurance. What happens more frequently is that estate planning is implemented when care is needed and assets would otherwise be used to pay for that care. Becoming eligible for Medi-Cal in advance is rarely the goal of people planning for the expense of long term care.
Being in a “Medi-Cal facility” is not an attractive goal for most people, and even less so for people of means. In fact, approximately 80% of people who exhausted their Partnership policy benefits didn’t apply for Medi-Cal even though they might have been eligible.
The Partnership program was designed for people who are the most likely to spend down. This is the population we should be concentrating on in thinking about how to redesign the Partnership program to benefit both these Californian’s and the state’s Medicaid program, and in making future recommendations to the legislature.
State endorsement of a commercial long term care insurance product should be combined with assurances that policyholders will have a backstop of public benefits to rely on, based on a sliding scale of eligibility, in the event that their commercial benefits do not fully cover the cost or the scope of the benefits and services they need when care becomes necessary.
Thank you for the opportunity to comment on this very important topic. Let’s not spend months rehashing everything everyone on the task force already knows! Thirty years is far too long to keep kicking this can down the road. It’s time to make changes.
Bonnie Burns, Policy Specialist
California Health Advocates