April 2010 Archives

By now, long-term care providers and consumers may know something about MRSA, the antibiotic-resistant infection. But chances are they don't know nearly enough. If you want to learn more--and believe me, you need to learn more--pick up a copy of Maryn McKenna's new book Superbug. (Free Press 2010).

Part detective story, part expose, part careful explanation of the science of bacteria, Superbug is a frightening account of how this highly aggressive form of staph has spread from being a largely hospital-acquired infection to a widespread commmunity epidemic. It is now everywhere from high school gyms to nursing homes, and is carried by pets and even through the food chain. And it mutates so fast that ordinary antibiotics can't keep up, at least not for long.

If you operate a nursing home, assisted living facility, or home health agency, or are a family member whose loved ones need care, read this book. It will terrify you, but it will also give you some important hints about how to reduce your chances of infection. Maryn's most important advice: Wash your hands with soap and water. It is advice we can't get often enough. And after reading this book, you will understand what happens when you don't. Be afraid. Be very afraid.

Private long-term care insurance got a nice boost from a new study by the federal Department of Health and Human Services. The report, by the consulting firm LifePlans Inc, concluded that nearly 98 percent of those filing claims against their LTC policies received benefits, despite articles by The New York Times and others suggesting that claims denials are widespread. The study also showed the insurance helped many frail elderly receive the care services they needed.  

The researchers observed nearly 1500 long-term care policyholders over a period of 2 1/2 years, all of whom had either made claims or said they were about to. One important caveat: the report studied seniors claims history only from 2003 to 2007.

About two-thirds of those studied were receiving care at home-- 37 percent used paid assistance, while 26 percent did not, even though insurance may have funded outside help. This may have been because these seniors had limited insurance coverage and wanted to preserve benefits until they needed more help.

About 23 percent of this insured population resided in assisted living facilities, and only about 14 percent in nursing homes. The share of those in assisted living was noticeably higher than among the frail elderly as a whole, often estimated at less than 10 percent.One possible reason is that Medicaid, which pays for more than 40 percent of long-term care, rarely pays for assisted living and, when it does, only finances care and not room and board. Thus those using insurance to "private pay" seem more likely to be residing in assisted living facilities.  

While some researchers have concluded that the frail elderly often move from home to assisted living to skilled nursing facilities as their care needs grow, this study found relatively little movement. For the most part, those who started the 2 1/2 year period living at home stayed there, and so did those in assisted living facilities. By contrast, a large percentage of those who were in nursing homes at the beginning of the study either died or moved to a lower level of care.

A new model from the SCAN Foundation and the consulting firm Avalere Health concludes that premiums for a national voluntary long-term care insurance program similar to the newly-enacted CLASS Act would average about $115-a-month. The study concludes that a mandatory long-term care insurance program could provide identical benefits for one-third the cost, or about $40. Premiums would vary by the buyer's age and increase by inflation over time.

The CLASS Act, which was included in the just-passed health law, will allow all workers to enroll in government long-term care insurance. If their employers participate in the program, these workers would be automatically enrolled in the coverage, but could choose to opt-out. Benefits, which must still be set by the Adminstration, are likely to average roughly $50 to $75 per day for life and will be paid in cash.  

The model does not price the CLASS Act itself, but includes a policy option that incorporates many elements of that new program. The new premium projection of CLASS insurance is similar to an estimate by the Congressional Budget Office but significantly less costly than projections by the Society of Actuaries or the Medicare actuary.  

Voluntary CLASS-type policies would eventually provide benefits to about one-quarter of disabled people, while mandatory insurance would cover three times as many.

As a result, the study projects a big difference in the amount each option would reduce Medicaid costs. The voluntary program would trim Medicaid expenses by about $40 billion over 25 years, while the mandatory version would slash costs by $300 billion.  

The new model is the basis for an interactive tool that allows users to compare CLASS with other policy options. Users can make multiple adjustments in coverage, benefit design, and government subsidy levels and learn how those changes effect premiums, participation rates, and government costs.       

The new health law creates, for the first time, a national, voluntary long-term care insurance system called the Community Living Assistance Services and Supports (CLASS) Act. Participation will be optional, but if you enroll, you'll get a basic cash benefit for life to help pay for personal assistance if you are disabled or very frail and unable to care for yourself. Here is how CLASS will work:

How Will I enroll?

The insurance probably won't be available until at least 2012. Once policies are on the market, you may be able to sign up through your work. If your employer agrees to offer CLASS, you'll be automatically enrolled starting at age 18 unless you choose to decline coverage. If you do opt-out, you'll still be able to buy in later, although your premiums will be higher.

How much will those premiums cost?
That's a really important question, but we don't know yet. The government will have to work with insurance experts to design a benefit plan people will want to buy at a premium they can afford. Supporters of the bill hope to be able to keep the premium below an average of $100 per month, although a new report suggests they'll cost an average of about $115. If you are poor, or a student, your premiums will be as low as $5 per month. And, as with private insurance, the younger you are, the lower your premium.

Can I be denied coverage?
No. As long as you are working at least part-time you'll be able to enroll. And you'll have to pay premiums for five years before you can collect benefits. But you can't be rejected or required to pay higher rates because you have pre-existing health problems. 

What will the benefits be like?
Like the premiums, the exact benefit amount is uncertain, but it will probably be between $50 and $75 per day for most people. It is very important to know that the benefit will be paid in cash, so you'll have lots of flexibility to use the money however you want. For instance, you could pay a friend or family member to stay with you, hire an aide from an agency, put in a wheelchair ramp or grab bars to make your home safer, or spend a few days a week in an adult day center. Benefits will be available to people living at home, in assisted living, or in a nursing home.

$75-a-day doesn't sound like much if I have to go to a nursing home.
You're right. It isn't. But 85 percent of people get care at home and this will make it a lot easier for them and their families. Combined with Social Security and a pension, it may even make it possible for some people to move to an assisted living facility.

What if I already own long-term care insurance?
You won't have to enroll in CLASS, so you can simply keep the coverage you have. Some insurance companies may redesign their policies so they work with CLASS insurance, much like private Medigap insurance supplements Medicare. For now, if you own a private policy and like it, keep paying premiums. If you think you need insurance now, don't wait, go ahead and buy it. But ask your agent how your new policy will work once CLASS policies become available.

Are insurance companies really going to sell policies that will work with CLASS?
Some will. Others think they can sell similar coverage at a lower cost than the government and may try to sell policies that compete against CLASS insurance. But we won't know for another couple of years. 

I've heard CLASS is going to be another budget-buster. Is that true?
CLASS is designed to be self-funding for the next 75 years. But until we know how many people will buy the insurance, there is no way to predict how the law will work. No other country has ever tried a voluntary national long-term care insurance system like this, and many experts worry that too many healthy people will decline coverage, driving rates up even higher for those who do want to enroll. If that happens, the program might shut down without some government funding. 

Will CLASS make it harder for me to qualify for Medicaid?
No, although you'll first have to spend your CLASS benefit before Medicaid pays its share of your care. But because CLASS benefits are far more flexible than Medicaid's, that may be an advantage to you. 
 

Earlier this week, I participated in a panel with Connie Garner, the Senate staffer who was a key architect of the CLASS Act, the national long-term care insurance program that is included in the new health reform law. Garner challenged the audience, which included several private long-term care insurance company execs, to work with her to help turn CLASS into workable insurance.

Garner knows that the law, as passed, includes several flaws that may restrict the government's ability to offer a successful insurance program. Many of these problems are caused by Congress' effort to balance its desire to cover as many people as possible with a probable consequence of that effort: Wide-open enrollment may drive many already-disabled buyers into the program and force up premium prices, thus discouraging young and healthy buyers from participating. 

Garner and the Obama Administration are working to try to repair these problems and she says she'd like the help of insurance companies,  long-term care providers, and advocacy groups.

Private insurers were divided over CLASS during the congressional debate over the idea. Most large carriers, led by Genworth, opposed it. A few smaller companies backed it. Now, if the new insurance is going to succeed, private companies will have to cooperate in two ways.

First, they need to work in good faith with the White House to help it design a marketable product. Second, they have to be willing to sell private insurance that can supplement the government policies.

Why would private insurers help the government sell a product that competes with their own? Many won't. But there are two reasons why some may. First, a broad government marketing campaign could increase public awareness of the need to plan for long-term care. Such a public campaign would generate interest in private as well as public insurance, while saving carriers millions of dollars in advertising costs. Second, a successful government program could jumpstart what has been a moribund private insurance market by creating demand for policies that wrap around CLASS insurance, much like Medigap health insurance supplements Medicare.

That will take cooperation between private carriers and government. I hope both parties can find a way to work together.