On California's Future Long-Term Care Insurance Program

Updated: Oct 24

This post will continue to be updated with each new California Long-Term Care Taskforce Meeting facilitated by the CA Department of Insurance.

Program Structure

In this meeting, the committee discussed program structure and benefit design, looked at framing it as a social insurance vs. public assistance, and considered long-term care services and supports programs in other countries.

Summary of Key Recommendations:

  • A social insurance program is preferred to public assistance

  • Private LTC coverage should be complementary to the program

  • Consideration of the LTSS programs in Germany and Washington state

  • Committee would like to see a front-end coverage plan

Coordination with Existing Resources & Programs

The committee discussed how the new program will interact and coordinate with other public and private programs that concern long-term care.

Summary of Key Recommendations (from questionnaire results):

  • “Views are mixed on an opt-out option for individuals with private LTC insurance (LTCi)

  • Private LTCi pays first then statewide LTC insurance then Medi-Cal, with concurrent but non-duplicative payments

  • Statewide LTC insurance should not factor into Medi-Cal eligibility

  • Statewide LTC insurance program should integrate existing outreach, care coordination, and access to care programs”

Administration of Program

Oliver Wyman presented on the administration of a California long-term care insurance program, which considers everything from oversight and management to support and customer service.


A separate presentation on eligibility and enrollment compared relevant data points of Medi-Cal, private insurance, and the LTSS programs of Washington State, Germany, and France. Key points covered here were:

  • Benefit eligibility criteria

  • Age requirements

  • Vesting criteria

  • Portability and divesting criteria

  • Family or spousal coverage

  • Enrollment type (including opt-out provisions)

  • Opt-in/buy-in provisions

  • Exclusions


Program Benefits & Services

Jamala Arland, Senate Rules Committee Appointee and Actuary at Genworth, presented ways a public program can partner with the private long-term care insurance industry. She specifically covered the key principles of a public LTC program, what we’ve learned from the Washington Cares Fund, and key design elements such as whether exemptions are permitted. Jamala closed the presentation with a chart that shows how the coordination of a public program with private LTC coverage can lessen the financial burden of the state program by picking up on the backend where the state program maxes out.

The next presentation explored benefits and services by comparing Medi-Cal, private insurance, and the public programs in Washington state, France, and Germany. Key points covered:

  • Benefit type

  • Benefit maximum amounts

  • Benefit inflation

  • Elimination period

  • Approved care settings

  • Covered services

  • Prevention measures and benefits


Financing

It's no secret that financing will be one of the largest hurdles for California's public long-term care program. In this meeting, the task force and listeners heard from various representatives on the topics of:

Here are some key takeaways on what the task force would like to see in terms of program financing, according to Oliver Wyman's report:

  • Program affordability: Mandatory contributions should vary by income level (higher for higher earners, etc.)

  • Taxation structure: Should be a progressive tax (higher for higher earners)

  • Revenue option: Employee/Employer split payroll costs being considered

  • Contribution ages: Should be funded by people 18+

  • Mutual exclusivity with Medi-Cal: Should not be mutually exclusive with Medi-Cal

  • Funding approach: Pre-funding and pre-funding with transfer to "PAYGO" over time are popular

  • Contribution rate structure: Varied

  • Investment strategy: Contributions should be invested

  • Private LTC opt-out alternative: Either an opt-out provision or reduced mandatory contributions for those with private LTCi


Workforce

The LTSS Workforce is under strain, which makes planning for a future public program challenging. "The CA Department of Aging estimates that by 2030 there will be a shortage of between 600,000 and 3.2 million direct care workers across HCBS and institutional LTSS," SEIU California notes.


In these meetings, The California Department of Aging presented on 1) the landscape of the current LTSS workforce, 2) the challenge of the LTSS workforce crisis, and 3) the opportunity of building a better LTSS workforce in the state.


Oliver Wyman presented on the supply, demand, and costs while the SEIU California presented on specific problems and solutions related to LTSS workforce considerations; for example, suggesting a minimum of $16/hr, paid leave, and paid training.


Here are some key takeaways from Taskforce recommendations:

  • Benefits should cover PACE services and pay informal caregivers

  • Program should have upper contribution limits, and should be level without consideration for individual's age

  • For those with private insurance, allow opt-out before program begins and reduced contributions after program begins

  • Benefits should be extended to spouse/domestic partner ("shared benefit pool")

  • Those unable to contribute should have option to pay premiums to opt in

  • For those not fully vested, offer pro-rated benefits

  • There were many LTSS workforce recommendations including improved wages, training, oversight, career advancement, support, and more for caregivers


Access & Regulation

This meeting covered: design considerations from an insurance actuary, the program’s potential integration with Medicare Advantage, community outreach and education, and access to the program. (As always, the preliminary recommendations so far were summarized and reviewed here.)


An Actuarial Perspective – Parag Shah, an Insurance actuary appointed by the Governor illustrated a few options by running through the actual numbers (these are rough cost, NOT final numbers). This was very interesting and highly recommended for review!





Starting with the Washington Cares Act as a base example ($15B program with a payroll tax of 0.58%) that costs a person making $60,000 annually $348 per year:

  • Washington Base | 0.58% | $348

  • + 2 of 6 ADLs or severe cognitive impairment | 0.37% tax | $223

  • + 2 year benefit period | 0.67% | $402 [Very high impact]

  • + Reimbursement with reduced cash benefits |0.70% | $420 [Moderate impact]

  • + 0-day elimination period|0.73% | $438

  • + Inflation at 3% | 0.89% | $535 [High impact]

  • + Waive contributions for those @ poverty level | 1.07% | $642 [High impact]

  • + Partial portability | 1.41% | $845 [High impact]

  • + Allow partial vesting | 1.43% | $857 [Low impact]

  • + Monthly benefit of $6,100 | 2.86% | $1,713 [Very high impact]

So, do we want a super targeted program that costs less, a wide net at a higher cost, or a moderate program that covers most people? Also – will benefits be taxable? Some things to think about.


Next, the CA DOI proposed that the statewide program potentially integrate with Medicare Advantage and an AARP representative discussed the importance of community education and outreach:

  • In this proposal, the state benefit would be used to pay a portion of the premium for a MA plan that includes a wider range of long-term care services and support, from medical care to homecare to nursing home care

  • This would be all-in-one, rather than a fee-for-service model -- Medical, LTSS, and social services.

Then, the discussion turned to the accessibility of long-term care services and support throughout California counties by illustrating what each county currently has to offer.


And finally, the discussion turned to three potential recommendations for the program:

  1. The establishment of a work group to coordinate eligibility with other state programs

  2. Allowing the state LTSS benefit to be used to pay a portion of the PACE premium

  3. Allowing insurers to sell supplemental "wrap-around" LTCi plans to supplement state benefits


Program Interdependencies

SVP and Actuary at Genworth, Jamala Arland, presented on Benefit Age Eligibility and Benefit Care Setting Eligibility. This presentation suggested that the LTC program should target the aging population, and that another working group should focus on those who need long-term care at earlier stages in life. It was also suggested that the setting eligibility be a tiered approach based on ADL triggers (activities of daily living).


Next, Oliver Wymann presented on International Portability and Family Caregiver Considerations. In this presentation, Oliver Wymann presented case studies of other programs such as the Federal Long-Term Care Insurance Program (for "federal" families), the WA Cares Act, and private long-term care insurance to demonstrate how features like international portability and family caregiver benefits are incorporated into those coverages.


Then came the moment we've all been waiting for: potential plan designs.


The taskforce was asked to comment on all six of these "straw man" plan designs -- read the commentary here. See a glimpse of some features below in plans 3-6.



Here is a more detailed and visual breakdown of each option, in which a section shows common elements of all plan options (below).



No hard decisions have been made yet -- and the final program could end up looking like a combination of one or more of the above potential plan designs. However, the taskforce only has a few meetings left!


The next meeting will be the presentation of the draft feasibility report, followed by the final feasibility report (and final taskforce meeting!).


Stay tuned.



Feasibility Report Draft

In October's meeting, Oliver Wymann presented a draft report of the program's feasibility. This report draft first provided an overview of key program design features, program design recommendations, and design benefits and tradeoffs.


There are currently five recommended program designs (outlined below).



Of the five recommended program designs, there are several common design elements, all of which are illustrated in the next table.





After this summary, the report dives into a feasibility analysis for each of the eight above topics: structure, coordination, eligibility, benefits/services, administration, financing, LTSS workforce, and administration. One important note is that the Taskforce has yet to define what constitutes "eligible" private LTC coverage for the potential opt-out provision.


The Taskforce's next steps are completing the feasibility report for a final draft and beginning the actuarial report draft.