The Citizens League final report on long-term care financing reform was released at the 3rd annual Long-Term Care Financing Solutions forum at the Humphrey Institute of Public Affairs on December 14, 2010.  The report, “Moving Beyond Medicaid:  Long-Term Care for the Elderly as a Life Quality and Fiscal Imperative,” received some measure of media coverage before and after the event, as well as some interesting caveats expressed by one of the responding panelists, Michelle Kimball from AARP Minnesota.  The final report, executive summary to the report, and frequently-asked questions document are all available for download from our website HERE under the Issue Briefs tab.

As Warren Wolfe from the Star Tribune noted in his December 14th article about the report:  “Minnesota faces an "unsustainable burden" on taxpayers for nursing homes and other long-term care as the population ages, but it can significantly lower those costs by making it easier and more attractive for people to invest in their own care, a new report from the Citizens League says.  To do so, the report recommends revamping the federal-state Medicaid program—which it says now encourages people not to save for their care—and adding new products to help people use home equity or savings to pay for long-term care.”

One of the general recommendations from the report is to make available and promote financial products, especially those aimed at middle income households:  prize-rewarded savings; a new hybrid home equity/reverse mortgage product; and a broader mix of affordable insurance products.  Audience members questioned whether the prize-awarded savings is just another form of gambling; however, this model has successfully been implemented in Michigan, and proposed in several other states.  As noted in the frequently-asked questions document:

Isn’t the prize savings account recommended a form of gambling?
Prize-rewarded savings, which other states have successfully used, is not gambling—the depositor loses no money, and in fact earns interest (slightly below the going rate).  Nevertheless, legislation would be needed to enable prize-rewarded savings in Minnesota.  Banking laws also govern programs such as this.  For a variety of legal and mission-related reasons, it is most efficient to launch prize-rewarded savings through credit unions rather than banks.

At the December 14 Financing Forum, there was a responder panel after the report was presented, including Kathryn Roberts from Ecumen and Michelle Kimball from AARP Minnesota.  Ms. Kimball expressed concerns over several of the recommendations, while supporting the education/information value of the report.  Their concerns centered primarily around the redesign of Medicaid to provide a co-insurance option.  They believe that will only work if there is both insurance reform (development of affordable private long-term care insurance products with standardized benefits) and redesign of service delivery.  In spite of the research cited in the report, Ms. Kimball also stated that AARP wanted more documentation demonstrating that increased personal responsibility results in decreased Medicaid expenditures.

Next steps for the steering committee working on this report are widespread distribution of the recommendations, and a further discussion on legislative steps that could be taken to move toward implementation.  Association staff are participants on the steering committee.

Patti Cullen, CAE
952.851.2487
pcullen@careproviders.org

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