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Encouraging
Private Responsibility for the Public Good: Director: Mark R. Meiners,
Ph.D. It is unrealistic to expect an easy or “one-size-fits-all” solution to the problem of financing long-term care. The Partnership for Long-Term care program is an innovative collaboration between public and private sectors to operationalize an insurance based approach to financing long-term care that uses Medicaid as an incentive to encourage potential purchasers. It reflects compromises between competing points of view. The Partnership program officially began in 1987 in 8 states with development grant support from the Robert Wood Johnson Foundation. By the early 1990's four states went ahead and implemented their programs. Looking back and looking forward, I think we are on the right track. The Partnership has a number of special features that should be viewed as appealing when all sides of the argument are considered. The program is fiscally conservative, helps middle-income people avoid impoverishment, serves as an alternative to Medicaid estate planning, promotes better quality insurance products, supports consumer protection efforts, enhances public awareness regarding long-term care needs and options, and helps maintain public support for the Medicaid program. Significant AccomplishmentsSuccessfully moving the idea of a public/private long-term care insurance program like the Partnership from the idea stage to significant policy sales in several very different states is a heady accomplishment. The program is thriving today with much to show for the effort. By the end of 1999 a total of 86,589 applications have been taken and 71,300 policies issued in the four states. It has weathered changes in leadership, attracted political support from both parties, and remains ready to continue improving in order to meet its goals. The Partnership for Long-Term Care is funded in part by The Robert Wood Johnson Foundation In each of the four Robert Wood Johnson Foundation (RWJF)-supported states there have been efforts to keep the program current with non-Partnership product developments that are paying off with renewed interest. As the table below shows, program redesigns in Connecticut, Indiana, and California have produced increases in applications received ranging from 324 percent to 540 percent compared to similar time frames before those adjustments. The total number of policies sold in the four states reached an all time high in 1999. More than 25,000 new applications were received for Partnership policies in 1999. In the most recent quarter available more than 5,300 new Partnership policies were issued. The trend is clearly significantly upward. Yet even in New York, where total sales have been the largest in number, updates to its model are being explored to further program goals. In these four states the Partnership is and will continue to be an established work-in-progress. RECENT PARTNERSHIP POLICY SALES BY QUARTER
Footnotes: * Connecticut: redesigned policies began being marketed ** Indiana: redesigned policies using Total Asset Protection began being marketed *** California: redesigned policies began being marketed OBRA '93 Restrictions Loom LargeWhether the Partnership Program is allowed to grow beyond the four states and become more than just a good example of what is possible remains to be seen. Despite the significant accomplishments of the Partnership Program, the approach has not yet won the broad-based support necessary to go beyond the success achieved by four RWJF-supported states. The most immediate problem is the restrictions on the replication of the Partnership program put in place by the Omnibus Reconciliation Act of 1993 (OBRA '93). While the OBRA '93 restrictions were originally the brainchild of a few key democratic legislators who had reservations about private long-term care insurance, the reasons for not removing them today is much more difficult to understand. There has been bi-partisan support for supporting long-term care insurance as a piece of the financing puzzel that culminated in the tax clarifications of HIPAA and talk of new tax credits. One theory is that the political environment has changed so much since the Partnership program began that the insurance industry is reluctant to support a compromise idea with the features of the Partnership program. Tax credits are viewed as a much higher priority for supporting the market. Insurance industry hesitance about pushing for repeal of the OBRA '93 restrictions creates a classic “catch 22” situation. Without the repeal of the OBRA '93 restrictions, it may be difficult to stimulate the multi-state interest necessary to justify the commitment of resources by insurers to help the Partnership expand to meet its potential. The Partnership is clearly designed to balance the public interest with the need for a strong private market. One hopeful opening came when the National Governor's Association (NGA) recently called for elimination of federal barriers to public/private insurance partnerships like those in the RWJF states and for the expansion of authority to all states to implement such programs. The NGA understands that states need and want the opportunity to explore options like the Partnership because they are faced with significant budget concerns about their Medicaid long-term care responsibilities. It should also be noted that tax breaks are not incompatible with the asset protection incentive offered in the Partnership states. As the market matures and the effect of the these tax breaks becomes clear, there is likely to be renewed interest in finding ways to support the broader market. The strategy used in the Partnership program and the lessons learned will be valuable to that renewed interest. What About a National Partnership Program?Because state-by-state development is costly and dependence on Medicaid as the basis for the stop-loss protection does not easily allow for reciprocity agreements between states, the idea of uniform national partnership has prompted discussions among the states and insurers who have been most active in the current RWJF Partnership effort. However, consensus on how to implement a national partnership program that would simplify the implementation and operation for states and insurers has not been achieved. Given the challenges associated with national Partnership ideas, selectively removing the OBRA '93 restrictions may be a way to get new movement on replication of the Partnership strategy. The following three options are offered for consideration and discussion. Option 1 The OBRA language would be waived for states willing to develop a Partnership asset protection program comprised of high quality product features developed and endorsed specifically for that purpose by an appropriate consensus development group. That group would be given a limited amount of time (one year) to come up with the approach. This approach makes it possible to have one product design offered by participating insurers that is standardized nationwide, allowing for a simplified state approval process without requiring standardization on the full range of long-term care insurance products. Asset protection reciprocity across states could be a feature of the program. Option 2 The OBRA language limiting replication of the Partnership programs would be repealed, allowing states to choose to develop their own programs if they wanted one. This would allow for state specific efforts and a variety of approaches to supporting development of the long-term care insurance market. Option 3 A national program modeled on the RWJF Partnership for Long-Term Care Program would be developed under guidance of an appropriate array of governing interests. This group would establish the high quality features of the Partnership Insurance Plan that would qualify for special federally sponsored asset (and possibly income) protection. It would make a uniform national product available that meets high quality standards, which would entitle buyers to special resource protection if they exhaust the benefits of that policy. The product would be designed to be attractive to middle-income purchasers who might otherwise not purchase long-term care insurance protection. Participating insurers could continue to offer non-Partnership policies on a state-by-state basis; but if they chose to participate in the National Partnership Program, their Partnership product would have to meet the standardized approach agreed to by the governing commission. Summary Thoughts The original goals of the Partnership program center on giving consumers a viable way to pay for future long-term care costs by increasing the quality of long-term care insurance and making it affordable for middle-income individuals. The intervention needed to be at least budget neutral and work within existing state and federal financial and administrative structures so as to allow for incremental learning and acceptance. Furthermore, the program needed to be an effective vehicle for educating consumers about the risks of long-term care as well as the availability and benefits of quality long-term care insurance coverage for individuals with middle- and modest-income and assets. This is an ambitious set of goals, particularly since they do not completely coincide with the competing agendas of some of the key partners. The competing agendas faced by the Partnership remain today and are not likely to go away. Several scenarios seem likely. Support for Medicare will continue and there will be efforts to “modernize” it with new benefits and more flexibility. It is unlikely that this will involve expansion into long-term care. Medicaid, or some other means-tested program, will remain as a safety net for the poor and those impoverished by their health care needs. More uniformity across states in Medicaid long-term care coverage is worth pursuing. Private insurance will seek to enhance its role in long-term care financing and will resist regulatory efforts to set standards for the policies. Still there is a large untapped market of middle- and modest-income people who need and want long-term care insurance they can trust. Progress can be made if we can agree that when it comes to long-term care, the social vs. private insurance debate has been resolved. A public/private partnership will be needed and we must work to establish clear understanding of where the public role ends, where personal responsibility begins, and the role that private insurance can play. This is especially the case with long-term care, where individuals are expected to plan for both the blessings and the risks of a longer life span. The Partnership for Long-Term Care has taken on this challenge and offers a valuable model and useful insights for other states and the nation. Regarding
questions or people I should contact for you in other states, Rena
Adelson |
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