Building a Roadmap for Financing Long-Term Services & Supports

Melding Private Insurance, a Contribution Program and Medicaid into a Cohesive Proposal – Part II

Long-Term Care Financing Advisory Committee
						
December 10, 2009

Note: Medicaid expansion cost estimates were developed specifically for this presentation, and should not be used for other purposes. 

Overview of presentation
•	Update on Public Awareness Campaign

•	Intersecting Activities

•	Review and Preview

•	The Analysis
•	Setting the Stage
•	Cost Avoidance to Medicaid from Private Financing Mechanisms
•	Cost of Medicaid Expansions

•	Preliminary View of the Roadmap

•	Committee Business

Appendix

Note: All numbers are rounded in this presentation.

Section 1
Update on Public Awareness Campaign

								
Section 2
Intersecting Activities

Background

•	As part of the Commonwealth’s Community First Olmstead Plan, the Advisory Committee is tasked with identifying strategic options for reforming the financing system for LTS in Massachusetts
•	The Advisory Committee has identified several issues that are integrally related to LTS financing, but are outside of the Advisory Committee’s scope of work:
•	Affordable and accessible housing
•	Employment
•	Workforce capacity and development
•	Transportation
•	Integrated financing and care delivery
•	Administrative activities
•	Public awareness and access to information
•	Consumer choice

Olmstead Plan and other initiatives

•	Other Olmstead Plan and state initiatives that address these “intersecting activities” are in process across the Commonwealth. Responsible parties include:
•	System Transformation Grant
•	Work Without Limits Initiative (formerly MI-CEO grant)
•	Cross-agency and cross-Secretariat workgroups
•	Community organizations
•	PCA Workforce Council

•	The Advisory Committee recognizes that the Commonwealth’s Community First goals cannot be met through improved financing alone:
•	Successful implementation of the Advisory Committee’s financing recommendations is contingent upon the success of these other initiatives (and vice versa)

Proposed endorsing statements	
•	The Advisory Committee endorses the following initiatives and activities that support its core principles:

•	Increase the availability of affordable and accessible housing;

•	Promote employment of people with disabilities; encouraging the state to lead this effort by becoming a model employer;

•	Promote a high-quality and stable direct care workforce;

•	Increase the availability and coordination of local transportation options for people with disabilities and elders;

Proposed endorsing statements (2)	
•	Support a care delivery system that coordinates all services and integrates financing for people with chronic care needs;

•	Enable more effective care coordination through infrastructure improvements that expand the use of health information technologies and build capacity for information exchange;

•	Promote public and provider awareness about LTS and planning for future LTS needs; ensuring that all information is available in accessible formats for people with disabilities and elders; and

•	Increase consumer choice in the LTS delivery system. 

Next steps on intersecting activities	

•	Other activities or initiatives to add?

•	Revise and finalize endorsing statements

•	In final report, we will characterize these issues specifically as they relate to LTS financing

Section 3
Review and Preview

Recap of last month

•	Developed more affordable private LTC insurance model (for Partnership) targeted at middle income
•	Based on Federal LTC Insurance Program
•	Group coverage with portability requirements may be important to increase take-up rates

•	Modeled mandatory contribution program and analyzed premiums necessary for solvency (tenuous)
•	Federal CLASS program uses auto-enrollment with voluntary opt out – estimated take-up rate of 5%

•	Discussed need to refine proposals based upon more realistic “take-up” rates

•	Began to assess impact on Medicaid (cost avoidance due to delaying or preventing Medicaid spend-down)

Today’s presentation
•	Presentation on Medicaid cost avoidance from:
•	Federal CLASS program
•	State contribution program
•	LTC Partnership program

•	Begin to present numbers on Medicaid expansion costs
•	Expand access to HCBS for people with disabilities and seniors
•	Expand Medicaid eligibility for seniors
•	New state Medicaid buy-in program

Take away points from today’s presentation
•	Federal CLASS program and LTC Partnership
•	Take-up rates from voluntary programs too low to make a meaningful impact on Medicaid
•	Programs do not address needs of people who spend-down
•	Small part of the solution; tinkering around the edges

•	Mandatory state contribution program breaks the cycle
•	A bigger splash, but is another mandate feasible?
•	Subsidies would increase take-up rates, but are they affordable?

•	Without Medicaid expansion, still have significant unmet need among lower middle class and likelihood of spend-down

Section 4a
The Analysis: Setting the Stage

Setting the stage for the numbers

•	Focus on the Medicaid budget for seniors & adults with disabilities
•	$4.6 billion on all services, including waiver services 
•	75% of the $4.6 billion – or $3.6 billion – spent on LTS
•	45% of the $4.6 billion – or $2.0 billion – spent on institutional care 
•	Note:  State share = $2.3 billion  / Federal share = $2.3 billion

•	Medicaid coverage levels today
•	Medicaid seniors & adults with disabilities:  8.5% of MA population
(25 years & older) 
•	Seniors = 126,000 or 14% of MA population age 65+, including those who are eligible for Medicaid by meeting the standards through spend-down
•	Adults with disabilities = 240,000 or about 80% of MA population of adults with disabilities

•	Potential risk pool = those seniors and adults with disabilities not on Medicaid (key to estimating take-up rates, woodwork effect, etc.)

Medicaid cost avoidance and Medicaid expansion costs depend on population distribution by income and need

[Graph entitled “Estimated LTS need by Medicaid Enrollment and Income as a Percent of FPL Individuals age 65+]

Section 4b
The Analysis: Medicaid Cost Avoidance

 Medicaid cost avoidance: minimal to substantial

•	Key question:  What is the net effect on the Medicaid budget?
•	Depends on:
•	How many persons who use Medicaid would be covered by federal CLASS, state contribution or private LTC insurance with Partnership? (depends on income and health, personal preferences, and program construct)
•	The value of the non-Medicaid coverage
•	People’s level of need (low, medium, high risk)

•	Parameters & data sources around the estimating process
•	“Base” case estimates = best estimates of cost avoidance to Medicaid based on best available data sources (ACS, CBO, Census, MassHealth, other states’ experiences, published literature)
•	“Low” and “High” case estimates reflect uncertainty around assumptions included in the base estimate

All of these financing mechanisms provide some Medicaid cost avoidance

 	Federal CLASS	State Contribution, Mandatory for Everyone; assumes subsidies for those above 2% income premium test	State Contribution, Mandatory who meet 2% income premium test	Partnership LTC Insurance	
 	 	 	 	 	
Eligible Persons a/	                                   4,377 	                                   4,377 	                                   4,377 	                                   4,077 	
Covered Persons b/	                                      219 	                                   4,377 	                                   2,659 	                                      283 	
Take-Up Rate c/	5.0%	100.0%	60.7%	6.9%	
 	 	 	 	 	
COST AVOIDANCE ($ millions) d/	 	 	 	 	
Low	$61 	($86)	$9 	$21 	
Base	$79 	$235 	$22 	$41 	
High	$96 	$555 	$37 	$62 	
Cost of Subsidy (state only?)	 	($1,200)	 	 	
 	 	 	 	 	
Current Medicaid Spending (in millions) e/	$4,670 	$4,670 	$4,670 	$4,670 	
 	 	 	 	 	
COST AVOIDANCE as a % of Medicaid Spending	 	 	 	 	
Low	1.3%	-1.8%	0.2%	0.4%	
Base	1.7%	5.0%	0.5%	0.9%	
High	2.1%	11.9%	0.8%	1.3%	
 	 	 	 	 	
State-Share of Medicaid Spending only ($ millions) f/	 	 	 	 	
Low	$31 	($43)	$5 	$10 	
Base	$39 	$117 	$11 	$21 	
High	$48 	$278 	$18 	$31 	
					
a. Eligible persons = total number of persons in Massachusetts age 25 and older.			
b. Covered persons = total estimated number of persons insured under each option.			
c. Take-up rate = calculated rate of insurance based upon num. of eligible persons and den. of covered persons.		
d. Cost avoidance = value of reductions in Medicaid spending per the design of the option, net of state cost for subsidies		
e. Medicaid spending =  FY 2008 spending on seniors and adults with disabilities.			
f. State share of spending = 50% of Medicaid spending to reflect state share of the Medicaid program costs.			

Key program features & assumptions

 	Federal CLASS Program	State Contribution Program	LTC Partnership Program	
Program Design &
Assumptions	 	 	 	
Participation	Voluntary opt-out	Mandatory for all with subsidies
&
Mandatory only for those meeting
2% affordability test	Voluntary	
Eligible population	All persons age 25+ (modeled here)	All persons age 25+ (modeled here)	All persons age 25+ (modeled here)	
Daily benefit amount	$50-$100 “cash daily”,
based upon level of need	$50-$100 “cash daily”,
based upon level of need	$100 per day	
Benefit	Lifetime, after 5 years of vesting	Lifetime, after 5 years of vesting	2-year policy	
Pays for?	Non-medical community LTS	All LTS	All LTS	
Annual premiums	$1,750	$1,200
Reduced by subsidies
if mandatory for all 	Depends on age	
Take-up rate	5%	100% with subsidies
60% without subsidies	Specific to each age group;
5% across all age groups	
Participant Base	Adverse selection	Broad base	Middle-income assumed to participate
Excludes people with disabilities	

Cost Avoidance:  Under the Federal CLASS Program

•	Cost-avoidance calculations
•	CBO analysis assumes 1.7% in Medicaid cost avoidance based upon take-up rates of 3-5%
•	Base case:  1.7% Medicaid Cost Avoidance applied against base of MA Medicaid LTS Spending
•	Low and High cases:  1.2% and 2.2% applied against base of LTS spending 

•	Subsidies – Not included.  May wish to consider subsidies for lower middle income individuals, if permissible under federal CLASS program

Cost Avoidance:  Under a State Contribution Program 

•	Cost-avoidance calculations
•	Modeled cost avoidance in 3 areas:
n	Contribution pays for some community LTS before Medicaid (small adjustment; assumes these are mostly new services)
n	Providing community LTS delays entry into nursing facility (assume 3 months)
n	Contribution is the primary payer for nursing facility costs, Medicaid wraps (after the 3 month delay)
•	Base case: Assumes that Medicaid payments for Community LTS decline 40% and that the Contribution $100 daily benefit meets 70% of nursing facility costs
•	Low case: Assumes Medicaid Community LTS decline 20% and Contribution benefit meets 60% of nursing facility costs
•	High case: Assumes Medicaid Community LTS decline 60% and Contribution meets 80% of nursing facility costs

•	Subsidies – estimated for individuals for whom the Contribution premium exceeds 2% of income.  Subsidies would be a new state cost.

Cost Avoidance:  Under the LTC Partnership Program 

•	Cost-avoidance calculations
•	Obtain savings if people are covered by private insurance who otherwise would have spent down to Medicaid.  Assume these are lower middle income individuals.
•	Calculations based on California’s experience and program structure
•	Base case: Assumes 1% of policyholders would have spent down to Medicaid
•	Low case: Assumes .5% would have spent down
•	High case: Assumes 1.5% would have spent down

•	Changes to the insurance market that increase take-up rates could also increase Medicaid cost avoidance (e.g. NAIC consumer protections, increase group coverage, make group coverage portable, etc.)

•	Subsidies – not estimated

Section 4c
The Analysis: Medicaid Expansions

Recap from May: MassHealth financial eligibility rules create significant access inequities 

Recap from May: Medicaid benefit coverage rules leave gaps in access to key LTS

•	Medicaid state plan covers various medically necessary services:
•	Institutional care (NF, ICF-MR, chronic/rehab hospital)
•	Community-based services: personal care services (special eligibility rules), home health, private duty nursing, adult foster care/group adult foster care, adult day health, day habilitation, hospice, therapies, prosthetics, orthotics, DME/oxygen

•	4 HCBS Waivers* cover a wide range of additional community-based supports only for targeted groups at an institutional level of care (frail elders, adults with MR, adults with traumatic brain injury, children with autism):
•	Examples: homemaker, respite, individual supports, companion, chore, home delivered meals, laundry, medication management, NF transition assistance, grocery shopping and delivery, transportation, residential habilitation, assistive technology, supported employment, home adaptation…

*Funded through state agencies, but  expenditures eligible for federal Medicaid
reimbursement.  

Medicaid expansions: Gaps in coverage

•	Key question:  What is the net effect on the Medicaid Budget?
•	New Services – Expand access to HCBS for adults with disabilities & seniors
•	More Users – Expand eligibility for seniors (0-200% & 200-299%)
•	New Medicaid Program Design – Buy in for Seniors

•	Parameters & data sources around the estimating process
•	“Base” estimates = best estimates of Medicaid expansion costs based on best available data sources (MassHealth, Census, ACS, SCO evaluation)
•	“Low” and “High” estimates reflect uncertainty around assumptions included in the base estimates
•	Conservative estimating process overall

Medicaid expansions - Gaps in coverage
•	Three ways to expand Medicaid:  	

# 1.  Expand access to HCBS
•	Non-medical LTS for adults with disabilities & seniors
•	Estimated increase based on number of new users.  No offsets were taken.

# 2. Expand eligibility for seniors
•	More seniors eligible due to increase in income eligibility test;
•	Estimate senior population not enrolled in Medicaid today
•	Numbers incomplete on increasing asset limit [more information at next meeting]

# 3. New program – Buy in to Medicaid using assets
•	Allow people to buy into Medicaid with their assets   
•	Numbers incomplete on this option [more information at next meeting]

Assumptions used to calculate the cost of the gaps in coverage
•	# 1.  Expand access to HCBS
•	Non-medical services for adults with disabilities & seniors
•	Estimated increase based on number of new users.  No offsets were taken.

•	Assumes that all adults with disabilities & seniors will use HCBS 
•	Assumes that the average cost for HCBS is $13,200 for eligible seniors and $35,000 for eligible adults with disabilities
•	Low, base, and high cases built around average cost estimates that are 25%, 50%, and 75% of the risk of the average for current users

•	#2. Expand eligibility for seniors 
•	0-200% FPL eligible 
•	200-299% FPL eligible
•	[Remove asset test as a barrier to eligibility for seniors] [next meeting]	

•	Assumes that a certain percentage of all seniors in both income groups are not eligible for Medicaid but will be under this expansion option
•	Base case applies MassHealth average cost per member per year by level of need:  
•	Nursing Facility resident: $55,600; 
•	Community state plan LTS user: $12,100;
•	Community Well (acute  care only): $2,000;
•	Low and high cases are 20% above and below base case because of uncertainty of the assumptions

Options for Medicaid expansions:  broad parameters to demonstrate order of magnitude ($ millions)

SENIORS ($ millions)	 	 	 	
Add HCBS Waiver services to MassHealth seniors, age 65+	$125 	$155 	$190 	
Increase income eligibility for seniors to 200% FPL	$800 	$1,000 	$1,200 	
Increase income eligibility for seniors to 200-300% FPL	$600 	$700 	$800 	
Increase asset limit for seniors to $xx	Estimate to be determined.  The asset test is key for eligibility for most seniors.  This could be a very large number, depending on the new asset limit.	
				
MASSHEALTH MEMBERS WITH DISABILITIES ($ millions)	 	 	 	
Provide HCBS Waiver services to select group of 10,000 members /a	$95 	$190 	$285 	
Add HCBS Waiver services to MassHealth Commonhealth for <65	$150 	$500 	$900 	
Add HCBS Waiver services to ALL MassHealth Disabled Members	$1,900 	$3,800 	$5,700 	
				
a    Cost would vary depending on population selected, level of need, and program structure	

#3.  New program - Buy-in to Medicaid using assets 

•	Why consider a new Medicaid program?
•	Medicaid expansion of spending gives you 50% FFP
•	Purchasing power of Medicaid
•	Typical expansions reduce any incentive that middle-income have to plan for future
•	A buy-in might give them a way to save and avoid the delay in receiving care as well

•	Target Population
•	Elderly persons living in the community
•	Persons who cannot easily afford private insurance
•	Assets would exceed community asset requirements

•	How would such a program work?
•	Put liquid assets to good use 

Section V
Preliminary View of the Roadmap

Preliminary roadmap: short-term activities

Short-term (Years 1-2):

1.	Support enactment and implementation of NAIC model act and regulations
2.	Develop comprehensive and large-scale LTS education and awareness campaign about all public and private LTS financing mechanisms
3.	Provide additional support for informal caregivers around training and support groups

Preliminary roadmap: short- to medium-term activities

Short- to Medium-term (Years 2 and 4)

1.	Pursue development of LTC Partnership program (state legislation with design specifications that meet our goals)
2.	Pursue other insurance reforms
1.	Promote group coverage of private LTC insurance with portability (Recommendation re: GIC?)
2.	Develop FDIC-like mechanism to insure policies against risk of insurer solvency
3.	Develop modest Medicaid HCBS and eligibility expansions
4.	Support activities to increase participation in federal CLASS program (assuming it passes)

Preliminary roadmap: long-term activities
Long-term (Years 4-8):
1.	Pursue broader Medicaid service and eligibility expansions
2.	Establish mandatory state contribution program (determine relationship to federal CLASS program if it passes)
3.	New Medicaid buy-in program (determine relationship to contribution program)
4.	Additional support for informal caregivers

Section VI
Committee Business

Committee Business
•	Public input process
•	Dates TBD (early February 2010?): 
•	Eastern MA
•	Western MA

•	Next meeting
•	Date:  Thursday, January 7th, 2010 from 9:00 -11:30am
•	Location:  One Ashburton Place, 21st Floor

•	Future meeting reminder
•	Additional meeting scheduled for Thursday, February 25th 

Appendix

LTS financing principles

The reformed LTS financing system will:
•	Ensure a strong public safety net for the poor and most vulnerable.
•	Limit financial pressure on the state financing system so that state funds are preserved for those most in need.
•	Encourage personal responsibility for financing LTS to the maximum extent possible.
•	Enable middle income people of all ages to access the LTS they need without becoming impoverished.
•	Ensure appropriate participation of and support for informal caregivers.

The big picture on cost avoidance

COST AVOIDANCE, ANNUAL COSTS IN STEADY STATE (2008 DOLLARS) - BASE CASE (MIDDLE) ASSUMPTIONS		

(dollars in millions) 	Federal CLASS	State Contribution:  Mandatory for Everyone - Premium Subsidies for Lower Income	State Contribution:  Mandatory for Persons who meet 2% Premium Test	LTC Partnership	
Cost Avoidance:  Total Federal & State (a)  (in millions) 	 $                                    59.3 	 $                               1,447.5 	 $                                    21.6 	 $                                    41.1 	
Cost Avoidance:  State-Share Only (b) 	 $                                    29.7 	 $                                  723.8 	 $                                    10.8 	 $                                    20.6 	
 	 	 	 	 	
Massachusetts Population (in thousands)	                                     6,470 	                                     6,470 	                                     6,470 	                                     6,470 	
Massachusetts Population - Target 25 years + 	                                     4,380 	                                     4,380 	                                     4,380 	                                     4,380 	
MassHealth Membership	                                        370 	                                        370 	                                        370 	                                        370 	
Projected Policyholders (not necessarily MassHealth Members)	                                        220 	                                     4,380 	                                     2,660 	                                        280 	
Policyholders as a % of Massachusetts Population - Target 25 years + 	5.0%	100.0%	60.7%	6.4%	
 	 	 	 	 	
Cost Avoidance per person in Massachusetts	 	 	 	 	
Cost Avoidance:  Total Federal & State (a) 	 $                                         9 	 $                                     224 	 $                                         3 	 $                                         6 	
Cost Avoidance:  State-Share Only (b) 	 $                                         5 	 $                                     112 	 $                                         2 	 $                                         3 	
Cost Avoidance per MassHealth member	 	 	 	 	
Cost Avoidance:  Total Federal & State (a) 	 $                                     160 	 $                                  3,912 	 $                                       58 	 $                                     111 	
Cost Avoidance:  State-Share Only (b) 	 $                                       80 	 $                                  1,956 	 $                                       29 	 $                                       56 	
Cost Avoidance per Policyholder 	 	 	 	 	
Cost Avoidance:  Total Federal & State (a) 	 $                                     270 	 $                                     330 	 $                                         8 	 $                                     147 	
Cost Avoidance:  State-Share Only (b) 	 $                                     135 	 $                                     165 	 $                                         4 	 $                                       73 	
 	 	 	 	 	
Total Medicaid Spending in FY 2008 (Federal & State) (a) 	 $                               4,670.0 	 $                               4,670.0 	 $                               4,670.0 	 $                               4,670.0 	
Total Medicaid Spending in FY 2008 State-Share Only (b) 	 $                               2,335.0 	 $                               2,335.0 	 $                               2,335.0 	 $                               2,335.0 	
Cost Avoidance as a percent of Total Medicaid Spending 	1.3%	31.0%	0.5%	0.9%	

State contribution with subsidies takes the lead in take-up rates

TAKE-UP RATES BY INCOME						
						
 	Medicaid Bound	Tweeners Low	Tweeners High	Financially Independent	Total	
 	$0- $24,999	$25,000 - $49,999	$50,000 - $99,999	$100,000 +	All Incomes	
FPL Range	Up to 230% FPL	230% - 460%	460% - 915%	Above 915% FPL	 	
 	 	 	 	 	 	
Massachusetts Population 25+	878,978	839,621	1,360,011	1,298,788	4,377,398	
Massachusetts Population 25+	20%	19%	31%	30%	100%	
Take-Up Rates (persons)	 	 	 	 	 	
Federal CLASS	0	109,435	109,435	0	218,870	
State Contribution, w/Subsidies	878,978	839,621	1,360,011	1,298,788	4,377,398	
State Contribution, w/o Subsidies	0	0	1,360,011	1,298,788	2,658,799	
LTC Partnership Insurance	0	93,315	93,315	93,315	282,774	
Take-Up Rates (percent)	 	 	 	 	 	
Federal CLASS	0%	13%	8%	0%	5%	
State Contribution, w/Subsidies	100%	100%	100%	100%	100%	
State Contribution, w/o Subsidies	0%	0%	100%	100%	61%	
LTC Partnership Insurance	0%	11%	7%	7%	6%	

Where there is a will, there is a way:  lower the subsidies

	State Contribution, Mandatory for Everyone; assumes Subsidies for those above 2% income premium test	Breakeven:    What if we only subsidized Medicaid Bound?   3% Target	State Contribution, Mandatory who meet 2% income premium test.  NO SUBSIDIES	
				
Eligible Persons 25 years of age +	4,377	4,377	4,377	
Covered Persons 	4,377	4,377	2,659	
Take-Up Rate	100%	100%	61%	
				
Cost Avoidance (in millions) State Share a/				
Low	$883.95	$883.95	$4.70	
Base	$723.75	$723.75	$10.80	
High	$563.55	$563.55	$18.25	
				
Cost of Subsidies (in millions) up to 2% b/	$1,213.00	$0.00	$0.00	
Cost of Subsidies (in millions) up to 3% b/	$0.00	$788.20	$0.00	
				
Cost Avoidance Net of Subsidies (in millions) 				
Low	($1,255.90)	($831.10)	$4.70 	
Base	($1,095.70)	($670.90)	$10.80 	
High	($935.50)	($510.70)	$18.25 	
				
a. Cost avoidance = Value of reductions in Medicaid spending to State as a result of the design of the option.		
b. Cost of subsidies to offset cost of premium to persons who are Medicaid Bound and Tweeners Low.		
Subsidies represent a cost to the state and are not estimated to receive federal financial participation.		

Loss of federal share (50%) challenge to state contribution

To subsidize or not to subsidize, that is the question

Major Group		 MEDICAID BOUND	TWEENERS - LOW	TWEENERS - HIGH	FINANCIALLY INDEPENDENT	TOTAL	
Income Range		$0- $24,999	$25,000 - $49,999	$50,000 - $99,999	$100,000 +		

Federal CLASS:  Subsidize Low Tweeners						
Subsidies 		$0	$109	$0	$0	$109	
Total Premiums		$0	$192	$192	$0	$383	
Percent of Premiums		0%	57%	0%		28%	
							
State Contribution Program:  Subsidize Medicaid Bound & Tweeners Low				
Subsidies - 2% income test		$835	$378	$0	$0	$1,213	
Total Premiums		$1,055	$1,008	$1,632	$1,559	$5,253	
Percent of Premiums		79%	38%	0%	0%	23%	
							
State Contribution Program:  Subsidize Medicaid Bound ONLY				
Subsidies - Pay noo more than 3% income test	$725	$63	$0	$0	$788	
Total Premiums		$1,055	$1,008	$1,632	$1,559	$5,253	
Percent of Premiums		69%	6%	0%	0%	15%	
							
State Contribution Program:  No Subsidies						
Subsidies 		$0	$0	$0	$0	$0	
Total Premiums		$0	$0	$1,632	$1,559	$3,191	
Percent of Premiums		0%	0%	0%	0%	0%	
							
Private Insurance - No Subsidies							
Subsidies 		$0	$0	$0	$0	$0	
Total Premiums		$0	$85	$85	$85	$258	
Percent of Premiums		0%	0%	0%	0%	0%	
							
Note:  Dollars expressed in millions.							

2% premium income standard used

Tax-i:  Will tax incentives take us for a ride?
•	Tax Incentives
•	Encourage very little participation in private insurance
•	Who benefits from this approach?

•	Two types considered 

•	#1.  Tax deduction.  
•	Above-the-line tax deduction for long-term, deducted directly from a taxpayer’s adjusted gross income (the “line”)
•	Tax deductions based on 5.3% income tax

•	#2 Tax credit.  
•	Tax credit of some specified amount for those with long-term care needs or their caregivers
•	Assumptions
•	Credit = $500 that reduces price of insurance to the buyer

Tax incentives to encourage take-up rates

Illustrates costs based on specific assumptions about “take-up” rates for each program.  

TABLE X.  TAX CREDITS & TAX DEDUCTIONS		

 	 Tax Credit:  $500 	Tax Deduction	
 	 	 	
Federal Class	 $        109,434,951 	 $          17,400,157 	
State Contribution Program 	 $     2,188,699,013 	 $        278,402,514 	
Partnership LTC Insurance, example	 $        109,434,951 	 $            7,669,989 	

#1.  Expand access to HCBS

 	Seniors	Adults with disabilities excludes CommonHealth	CommonHealth
 only	
Average cost HCBS PMPY	$13,200 	$35,000 	 	
Waiver service users	                             10,000 	                             10,000 	 	
Total Spending  ($ in millions)	$132 	$350 	 	
 	 	 	 	
Low - Risk 	25%	25%	25%	
Base - Risk	50%	50%	50%	
High - Risk 	75%	75%	75%	
 	 	 	 	
Low - Risk  PMPY	$3,300 	$8,800 	$8,800 	
Base - Risk  PMPY	$6,600 	$17,500 	$17,500 	
High - Risk  PMPY	$13,200 	$35,000 	$35,000 	
 	 	 	 	
New users a/	                             12,000 	                           207,000 	                  15,000 	
 	 	 	 	
Low ($ in millions)	$40 	$1,810 	$130 	
Base ($ in millions)	$80 	$3,630 	$260 	
High ($ in millions)	$160 	$7,260 	$530 	
				
a/ Excludes Medicaid recipients who are in institutions and current waiver users.		
Senior expansion includes individuals with self-care needs (2 or more ADLs).		

#2.  Expand Medicaid eligibility for seniors