Long-Term Care: A View from the States – Insurance News

Medicaid spending as a share of total government spending continues to rise, and much of it goes to long-term care.

In some states, Medicaid spending has already reached 40% of total state spending. A study commissioned by the Minnesota Department of Human Services predicted that Medicaid spending on long-term care would increase by 70% between 2023 and 2035.

As more Americans need care, states are examining how they can reduce these costs without significant federal action. Roger Moore, policy director at the National Association of Insurance and Financial Advisors, provided an overview of how states view long-term care financing during NAIFA’s Peak 65 Impact Day.

Washington State’s Long-Term Care Program

Washington state has launched the nation’s first statewide care benefit program, known as WA Cares. WA Cares offers a maximum lifetime benefit of $36,500, adjusted annually for inflation, which will be available from July 2026.

WA Cares is funded by a mandatory payroll tax of 0.58% of all workers in the state, which began in July 2023, with certain exemptions permitted. A worker in WA must pay into the fund for 10 years before accessing WA Cares benefits.

In 2024, the state legislature passed a bill that would allow those who contribute to WA Cares but leave the state to access benefits.

In November, voters were given the opportunity to vote on Ballot Initiative 2124, which would have given workers the option to opt out of the mandatory payroll tax used to fund WA Cares, which Washington Cares advocates say would have led to the program’s failure. The initiative was not accepted.

California is studying the feasibility

In 2023, the California Long-Term Care Insurance Task Force examined the feasibility of establishing a program similar to WA Cares. The task force offered benefit options ranging from $36,000 to $144,000 with contribution rates ranging from 0.6% to 3%.

The panel submitted its findings to the California Department of Insurance in December 2023, although lawmakers have not yet made a decision.

Minnesota Eyes Solutions

In 2023, the LTSS Funding and Services Initiative Study in Minnesota offered three possible solutions to address the state’s long-term care needs: care navigation and support services, a Medicare companion product, and a mandatory state insurance program. Minnesota has taken no action toward a statewide LTC program.

“Ultimately the problem is that funding long-term care is a huge challenge,” Moore said. “When you develop these large government programs, there are concerns about whether people want it, whether they will vote for it and how much it will cost.

“The states have thought about it, but other than Washington we haven’t seen anyone make this big leap.”

© All content Copyright 2024 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the express written permission of InsuranceNewsNet.com.

Susan Rupe is managing editor for InsuranceNewsNet. She previously served as communications director for an insurance agent association and was an award-winning newspaper reporter and editor. Contact them at (email protected).