I participated in an interesting panel discussion on long-term care this afternoon at The Urban Institute . My fellow panelists were an impressive group of policy experts, all of whom have designed their own reform plans.
They included Bill Galston from the Brookings Institution, Rich Johnson from The Urban Institute, and Anne Tumlinson from the consulting firm Avalere Health. While each approaches the problem from a very different perspective, all felt that the most workable solution would have to include some form of mandatory insurance.
Rich prefers making long-term care a new Medicare benefit, financed with an income tax surcharge. Bill likes the idea of mandatory private insurance along with extra government coverage for those who face truly catastrophic costs. Anne, who has looked at models where individuals pay a big deductible (perhaps $100,000 or more) before government insurance kicks in, concluded that it is difficult to make such a plan work without mandatory insurance.
The problem is that if insurance is voluntary, too few people will buy it. If only those who need it buy, premiums will inevitably rise, making coverage even harder to afford.
Unfortunately, at the moment, no mandatory insurance plan is getting attention in Congress. The most dramartic reform, Senator Kennedy's CLASS Act, would create national long-term care insurance. But participation would be semi-voluntary. People would be automatically enrolled at age 18, but have the option to opt-out of coverage. Nobody knows how many would do so, but several insurance experts say they fear many young people would walk away from this insurance.
In the many interviews I did for my book, Caring for Our Parents, it seemed pretty clear that long-term care insurance, as currently designed, will never cover enough people to become a broad policy solution to the long-term care financing problem. But how far are we willing to go to change things?
This is an interesting example of politics trumping economics. Kennedy believes that his opt-out plan is as far as Congress is willing to go, even though his staff is well aware of the problems that come with voluntary insurance. Kennedy is probably right, but an opt-out may result in premiums that are much higher than the $65 per month that he is aiming for.