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ABSTRACT About half of older Americans will need a high level of assistance with routine activities for a prolonged period of time. This help is commonly referred to as long-term services and supports (LTSS). Under current policies, these individuals will fund roughly half of their paid care out of pocket. Partly as a result of high costs and uncertainty, relatively few people purchase private long-term care insurance or save sufficiently to fully finance LTSS; many will eventually turn to Medicaid for help. To show how policy changes could expand insurance's role in financing these needs, we modeled several new insurance options. Specifically, we looked at a front-end-only benefit that provides coverage relatively early in the period of disability but caps benefits, a back-end benefit with no lifetime limit, and a combined comprehensive benefit. We modeled mandatory and voluntary versions of each option, and subsidized and unsubsidized versions of each voluntary option. We identified important differences among the alternatives, highlighting relevant trade-offs that policy makers can consider in evaluating proposals. If the primary goal is to significantly increase insurance coverage, the mandatory options would be more successful than the voluntary versions. If the major aim is to reduce Medicaid costs, the comprehensive and back-end mandatory options would be most beneficial.
Many older Americans need long-term services and supports (LTSS) to help them with basic activities that they cannot complete on their own because of chronic illness or disability. In 2011, 7.7 million adults ages sixty-five and older received help with activities of daily living (ADLs),1 which include such tasks as bathing, dressing, eating, using the toilet, and getting out of bed. About 6 million adults in the same age group- nearly one-sixth of that population-have severe LTSS needs, requiring help with at least two ADLs for ninety or more days or having severe cognitive impairment.2,3
LTSS needs will grow over time as the population ages. Urban Institute projections indicate that the number of older Americans with severe LTSS needs will increase 140 percent between 2015 and 2055, reaching 15.1 million.4 Over the same period, there will be an 80 percent increase in the US population ages sixty-five and older and a 190 percent increase in the population ages eighty-five and older.5
The average American turning...