Over the course of their lives, people of all ages are at risk of needing long-term services and supports (LTSS), but it is impossible to predict who will need assistance, when, or for how long. Many people will be able to get by with the help of families, but a significant minority will require expensive paid services over long periods of time. The uncertain risks and potentially catastrophic costs of LTSS lend themselves to insurance protection, which is based on the principle of shared risk. Spreading risk widely is the best way to expand coverage and lower per-person costs. If everyone contributes, then everyone gains. For these reasons, social insurance must play an important role in reform efforts and cover a comprehensive range of LTSS in home, community, and institutional settings. That way all participants would have protection from potentially devastating financial costs.
Since the establishment of the Social Security program in 1935, Americans have relied on a combination of social insurance and private insurance to pool risk and create financial security. The most important goal of social insurance is to provide universal coverage. The best examples of social insurance are Social Security’s Old Age, Survivors, and Disability Insurance and Part A of Medicare. Extending social insurance to LTSS could expand coverage and dramatically reduce per person insurance costs.
AARP’s goal is to enact policy that moves the nation toward a comprehensive LTSS system that provides coordinated, integrated, affordable, and high-quality services and supports. This system must include consumer choice and support for family caregivers.
Achieving Comprehensive Reform: Policy
Creating a comprehensive long-term services and supports (LTSS) program
A top priority for AARP is achieving comprehensive LTSS reform and supporting family caregivers.
An LTSS program should be part of a comprehensive system that provides universal access to a range of LTSS and health care services.
The public and private sectors should educate consumers and their families about the risks associated with needing LTSS and the range of financing methods. With better education consumers can understand their options and responsibilities and make informed choices that are best suited to their needs and circumstances.
The Social Security Administration and health insurance carriers should notify individuals early and often about the risks of needing LTSS, the costs associated with that care, and the fact that neither Medicare nor their health insurance policy provides coverage for LTSS.
New funding sources, including a new publicly financed social insurance program
New sources of both public and private financing are critically important to providing access to LTSS.
Consistent with AARP’s LTSS principles, the federal government should enact a comprehensive LTSS program that provides universal access to services through a seamless system that includes social insurance, private insurance and savings, and strong safety-net protections for those with low incomes.
A mix of financing sources (including social insurance, private insurance, and individual contributions), accompanied by adequate protections for low-income people, are necessary to finance LTSS comprehensively and adequately.
Consistent with AARP’s LTSS principles, government and individuals should share the responsibility of any additional financing required to implement LTSS reforms. The revenue sources for incremental or comprehensive reform should adhere to the AARP taxation principles (see Chapter 3, Taxation: Principles).
The criteria for evaluating efforts to reform LTSS financing should include the extent to which such sources are progressive, broad-based, stable, affordable, and capable of growing with enrollment.
Consistent with AARP’s LTSS principles, the federal government should finance LTSS through a universal, comprehensive, publicly administered program such as Medicare or a similar social insurance program of shared risk.
This program would form the base of LTSS financing. Individuals would pay into the program and receive benefits defined in law, including a cash payment option, when they need services and meet the program’s eligibility criteria.
Eligibility for this program should be based on functional criteria and social needs that take into account cognitive, physical, and social limitations, and the need for support, supervision, and training.
Such a program should be part of a comprehensive system that provides universal access to a range of health care services and LTSS. The program should emphasize the independence, dignity, autonomy, and privacy of individual consumers so that they can maximize their physical and psychosocial potential.
Services from all providers should be designed and delivered in a way that promotes independence. Consumer-directed LTSS should always be available, promoted, and supported, regardless of payer or provider.
The federal and state government should conduct regular, thorough, and consistent oversight to ensure consumers’ quality of care and quality of life, and protect their rights in all LTSS settings. Oversight should include evaluation of clients’ outcomes to the extent feasible.
Strong federal and state oversight is also needed to ensure the equitable treatment of all people eligible to receive services.
Consumers and their family caregivers, as appropriate, should be the focus of all LTSS programs and services.
LTSS consumers, including those from diverse communities, should participate in all aspects of program development, implementation, and oversight.
Consumers, to the extent they are capable, or their caregivers or legal representatives, should have the option to make decisions about the LTSS they receive and manage their own services and supports.
Benefits should be designed to enable consumers to choose services they deem most appropriate for their needs.
Improved coordination with other health program
Medicare coverage of health services for those with chronic illness and disabling conditions should be improved (see Chapter 7, Health: Health Care Coverage—Medicare; Reforming the Delivery of Health Care Services—Chronic Care Coordination, Accountable Care Organizations, and Medical Homes).
Care management should be used to coordinate health care and LTSS for people who need both types of services. Care management should be conflict-free, multidisciplinary, and available to all, regardless of payer.
Covered services should be fully portable so people can receive them in a wide range of settings.
The effects of integrating other public LTSS programs, such as state-funded and Department of Veterans Affairs programs, into a new system should be carefully considered to ensure that program changes enhance participant access. Existing programs should receive adequate federal funding to ensure veterans’ access to LTSS.
Flexible, innovative, and efficient administration
A reformed LTSS system must have an administrative structure capable of meeting the needs of diverse and growing numbers of beneficiaries.
The system should build on states’ experiences or require state and local agencies to have a major role in running any new program.
States should be required to implement a single point of entry for LTSS that can determine financial and program eligibility and authorize services in a prompt and timely fashion.
Expanded access to home- and community-based services
Eligibility for services should be based on how LTSS relate to an individual’s functional needs, chronic illness, and medical conditions.
Assessments of eligibility for services should measure needs for assistance due to impairments in activities of daily livingActivities of daily living (ADLs) include: bathing or showering, dressing, getting in and out of bed or a chair, walking, using the toilet, and eating. (ADLs), for supervision due to cognitive or mental impairment and behavioral problems, and for long-term nursing services and medical management.
Medicare’s potential role in meeting beneficiaries’ LTSS and medical needs should be reexamined and expanded to assist people who depend on family caregivers, by including improved home health care and skilled-nursing facility benefits, personal care designed to help people with ADLs, and adult day care and other services, such as respite care.
Improved Medicaid benefits should serve as an LTSS safety net for vulnerable populations with low incomes and few assets and for those who become impoverished because of medical or LTSS needs.
Services provided through the Older Americans Act and Social Services Block Grants should receive adequate funding because they are important to the home- and community-based LTSS system.
Conflict-free care management should be available through public agencies to help individuals and their families access the full range of LTSS.
Neutral financial incentives
Improved long-term care (LTC) insurance
Progressive financing and low-income protections
Cost-sharing in a new publicly financed social insurance program should be addressed through the program’s financing (i.e., taxes, copayments, and premiums paid by older Americans and working people).
A contribution equal to the full actuarial cost of the LTSS benefit is simply too expensive for many Americans, so the financing provisions must protect people based on ability to pay.
People must have equal access to services regardless of payer.
Beneficiary cost-sharing for either community or institutional services should be modest and not favor one type of service over another. To protect people with low incomes, public funds should support individuals who cannot afford to contribute to cost-sharing.
Adequate financing and reserves
Some tax revenues for a new LTSS program should be earmarked to an LTSS trust fund to build adequate reserves to cover later generations. To help defray the federal government’s costs, the new LTSS program should require some maintenance of states’ current spending on LTSS.
A financing package should adequately deal with transition costs as a new program is phased in, since many older adults and people with disabilities would be eligible for benefits before a large reserve fund could be built up.
Intermediate steps for achieving comprehensive reform
Reforms must advance and build toward the goal of a comprehensive LTSS program.
Until a national, comprehensive LTSS program is available, the federal government should create a public social insurance benefit, within either Medicare or a new public program that provides some level of coverage to protect consumers who need LTSS. In addition, access to affordable private sector options with strong consumer protection and incentives for private savings should be available to supplement coverage for those who need LTSS.
Coordination should be improved among LTSS programs and between the health and LTSS systems for people who need services from both.
Services in consumer-preferred settings—primarily in the home and community—should be expanded to improve access to services. Services that support family caregivers’ ability to continue providing care should be included.
In evaluating all the options available to people who need LTSS, federal and state governments could develop a cash payment or service benefit based on level of disability, which could be part of existing programs or could supplement services.
Consumer protection mechanisms need to be strong in any LTSS system.
Until a national, comprehensive LTSS program is available, states should implement comprehensive LTSS programs that are affordable for those who do not meet Medicaid’s eligibility requirements but who still cannot afford LTSS.
Avoiding unnecessary institutionalization by providing home- and community-based services (HCBS)—such as home care, conflict-free care management, personal care, respite care, adult day services, and supportive housing—is one of the most important and effective ways to control the costs associated with LTSS (see this chapter’s section Expanding Home- and Community-Based Services).
In order to help control LTSS costs, federal and state governments should use a standardized assessment in a consistent manner to determine the beneficiary’s needs. The assessment should inform the care plan in addressing the person’s goals and needs. Longitudinal information from this assessment should be used to evaluate client outcomes and monitor quality of care. A universal core of assessment items should be developed and implemented across health and LTSS so that consumer outcomes can be tracked.
If federal and state governments use capitated payment systems, they should require strong consumer protection standards and accurate inflation and trending factors.
Capitated rates must also reflect the needs of the served populations and be sufficient to meet those needs, allowing consumers adequate choices in service options.
Improved data collection
Federal and state governments should ensure that standardized systems collect data on service use, costs, and quality, particularly for the Medicaid and Medicare programs. Accurate and timely LTSS data are central to evaluating services and client outcomes and to making sound policy decisions regarding the cost-effective allocation of financial resources.
Curbing fraud and abuse
Conflict-free care management
Federal and state agencies should offer consumers the option of cash payments to manage their LTSS. There is evidence that many consumers who receive a cash benefit manage their LTSS more economically than those who receive benefits under an agency-administered model (see this chapter’s section Creating a Participant-Directed Long-Term Services and Supports System).
Organizations and governmental agencies that provide any care management, including health maintenance organizations and social health maintenance organizations, should share the financial risk of cost overruns and the financial rewards of effective cost containment. Effective governmental oversight (e.g., periodic audits and look-back surveys) must be in place to help prevent conflicts of interest within the care management system.