All eyes are on the Affordable Care Act’s launch, extending health insurance to tens of millions of people without it. Despite the continued political battle, even the ACA’s critics seem to get that insurance is essential to assure access to care and protection against financial catastrophe.
But there’s much less acceptance of the need for insurance when it comes to another health-related risk, one for which virtually all Americans are uninsured: The risk of needing expensive, extensive help with basic daily tasks—like dressing, bathing, or eating—generally referred to as Long-Term Services and Supports (LTSS). The just-ended Long-term Care Commission stopped short of recommendations for financing an effective long-term care system. But five of us commissioners felt compelled to step up with an alternative report explaining why and how Congress should accomplish this goal.
About 12 million people have LTSS needs today, roughly 5 million of whom are under the age of 65. The vast majority of these individuals count on their families for help, but families can only do so much, and when people need paid care—whether at home, or in an assisted living facility or nursing home—costs soon exceed most families’ resources.
That’s where insurance ought to kick in—but it doesn’t. Private health insurance doesn’t cover LTSS, and few Americans have private LTSS insurance, which typically costs a lot, offers limited value, and is subject to premium increases that can cause purchasers to lose coverage they’ve paid into for years.
On the public side, Medicare—which older people and some younger people with disabilities rely on for health insurance—does not cover LTSS. The federal-state Medicaid program does serve as a valuable last resort for people who need LTSS, but its protections (especially home care) vary considerably from state to state and become available only when people are or have become impoverished taking care of themselves.
The absence of private or public LTSS insurance is a market and a policy failure. The need for extensive, expensive LTSS is precisely the kind of catastrophic, unpredictable risk for which we typically rely on on insurance to spread costs.
These costs are obviously unpredictable for people under the age of 65, only two percent of whom need LTSS. But they’re also unpredictable after age 65. An estimated three in ten people aged 65 today are likely to die without needing any LTSS, while two in ten will likely need care for five or more years. Half the people turning age 65 will have no private out-of-pocket spending for LTSS, while a small percentage are projected to spend hundreds of thousands of dollars.
If, as is often claimed, we want people to be financially “prepared” to manage this risk, we need to establish a reliable insurance mechanism, whether public or private, to which they can contribute. It’s easy for experts to agree on the need for a public-private partnership in establishing this mechanism.What’s hard is agreeing on precisely what role each sector should play.
To effectively spread risk and reach the broadest possible population, public social insurance must be at the core of future policy. Private insurance can play a complementary role, but even its proponents recognize that building future policy around a private market will, at best, leave eight in ten Americans uninsured.
Public insurance can offer relatively comprehensive and defined benefits, like, or even through, Medicare; or it can offer basic or cash benefits in a new program. It can be funded in different ways—in part through taxes, like a surcharge on the income tax, and in part through savings from what Medicaid would otherwise have to spend. Regardless of its specifics, a public or social insurance program will protect all of us and require all of us to contribute.
Public insurance will not eliminate personal or family responsibility; rather, it will make shouldering that responsibility manageable and affordable—through private insurance, private resources, and family care. And no social insurance mechanism is likely to eliminate the need for an adequate public safety net — whether within it or through a continued (albeit much smaller) Medicaid program.
The enactment and implementation of the ACA demonstrates that it will not be easy to enact public LTSS insurance. But let’s not kid ourselves: Without it, our policies will continue to fail people, young and old, now and in the future, who need care. An effective LTSS insurance system with public protection at its core is the only way to enable Americans to prepare for the risks we all face. Building it is our responsibility.