Tradeoffs in the Design of Public Long-Term Care Benefits

Harvard Medical School, Boston MA

Investigators

Linked publications, trials & patents

Abstract

REVISED PROJECT SUMMARY/ABSTRACT Millions of Americans will require long-term care (LTC) in the coming decades. Yet, LTC represents the largest source of out-of-pocket spending risk for Medicare beneficiaries and their families. Current LTC financing relies on a patchwork of family, private LTC insurance, out-of-pocket spending, and Medicaid as a last resort. This system has led to access issues and poor health outcomes, especially for individuals with dementia. Given recent policy interest towards increasing public LTC coverage, we need to understand how coverage and benefit design changes impact LTC use and outcomes. The US could expand LTC coverage through relaxed Medicaid eligibility rules via less stringent income/asset criteria or via a new universal federal LTC benefit. We will use both rich survey data and administrative data to provide policymakers with greater insight into the efficiency and distributional tradeoffs associated with this potential expansion. Our first aim begins with novel descriptive analyses characterizing the population who currently pays for various LTC services out-of-pocket and stands to benefit financially from an expansion of public LTC benefits. One effect of public LTC insurance is a substantial financial transfer to those who currently use the most LTC or to their families. Any expansion of LTC coverage could also clearly induce increased use by those who currently cannot afford these services. Our second Aim examines this other effect of expanded LTC coverage – the behavioral response of beneficiaries. This could take the form of increases in the use of LTC or of shifting from one form of LTC to another (e.g., nursing home to home care). We will study these behavioral responses using quasi-experimental methods leveraging variation across states and over time in state Medicaid LTC eligibility rules. We will also leverage recent rule changes allowing Medicare Advantage plans to offer LTC benefits to estimate these behavioral responses. Recognizing that this behavioral response need not be restricted to the beneficiary themselves, we will also estimate effects of coverage on outcomes for other family members, especially family members of older adults with dementia. In our final Aim, we examine how a LTC insurance benefit could take many forms. Indeed, state Medicaid programs currently vary in meaningful ways, including restrictions on access to LTC benefits, the types of services covered, and the amount they pay for these benefits. In the last part of the project, we will study the extent to which benefit design influences the use and type of LTC consumed by the beneficiary. Our strategy for doing so will start with a “mover design,” leveraging dual-eligibles moving across states with different Medicaid LTC designs to identify the effects of each state’s bundle of LTC benefits and policies on use of LTC and other outcomes. Ultimately, our study will provide critical information on how public LTC expansion would impact older adults and their families.