CBO: private LTC insurance being 'crowded out' by Medicaid.Medicaid is "crowding out" private insurance from funding more LTC LTC abbr. lieutenant colonel expenditures, the Congressional Budget Office The Congressional Budget Office (CBO) is responsible for economic forecasting and fiscal policy analysis, scorekeeeping, cost projections, and an Annual Report on the Federal Budget. The office also underdakes special budget-related studies at the request of Congress. (CBO CBO See: Collateralized Bond Obligation. ) reported recently, stating that giving the private LTC insurance industry room to breathe might help the government better prepare for the baby boomers' senior care needs. The CBO estimates that LTC expenditures for the elderly in 2004 (excluding the value of donated care from family and friends) will total about $135 billion, but private LTC insurance will cover only 4% of that (with Medicare and Medicaid Medicare and Medicaid U.S. government programs in effect since 1966. Medicare covers most people 65 or older and those with long-term disabilities. Part A, a hospital insurance plan, also pays for home health visits and hospice care. shouldering nearly 60%). The CBO cites several factors that might be hindering hin·der 1 v. hin·dered, hin·der·ing, hin·ders v.tr. 1. To be or get in the way of. 2. To obstruct or delay the progress of. v.intr. private insurance's role in LTC financing, including many related to Medicaid: * Medicaid benefits are widely available and free for those eligible. * Purchasers of LTC insurance pay more than just premiums; they give up the value of future Medicaid benefits for which they might have been eligible. * Typical policies cannot guarantee that policy-holders' benefits will be sufficient to purchase desired future services, whereas Medicaid pays for a defined set of LTC services rather than providing a monetary benefit. * Consumers might be wondering about the possibility that insurance carriers will not be in business in the future, yet they seem to have more faith in the solvency of government benefits. The CBO says reducing Medicaid's impact on the sales of private LTC insurance might be possible if consumers were allowed to purchase policies that would supplement Medicaid coverage (which is discussed in detail in the April 2004 issue of Nursing Homes/Long Term Care Management, p. 18). Another solution highlighted in the report includes mandating the standardization standardization In industry, the development and application of standards that make it possible to manufacture a large volume of interchangeable parts. Standardization may focus on engineering standards, such as properties of materials, fits and tolerances, and drafting of LTC insurance policies to make them more attractive to consumers, allowing them to more easily compare policies and spurring price competition. However, the CBO cautions that imposing standard policy designs could also hinder hin·der 1 v. hin·dered, hin·der·ing, hin·ders v.tr. 1. To be or get in the way of. 2. To obstruct or delay the progress of. v.intr. the growth of the private LTC insurance industry. And shifting the financial burden to private payers likely won't reduce the total resources, both public and private, needed for LTC services, notes the CBO, although cutting Medicaid benefits or limiting eligibility might force more consumers to look at private insurance options. To read the complete report, Financing Long-Term Care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. for the Elderly, visit ftp://ftp.cbo.gov/54xx/doc5400/04-26-LongTermCare.pdf. BY DOUGLAS J. EDWARDS, ASSISTANT EDITOR |
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