Early insights from 2 states that tried to enact social insurance programs aimed at LTSS finance.
More states across the country are starting to grapple with an important challenge facing our aging population: How can we pay for the care and support older adults will need in the years ahead?
Demand for those long-term supports and services (LTSS) is growing now and will soar in the future. But most older adults can’t afford to pay for that care over time, and only a very small percentage have private insurance to cover the bills. At the moment, Medicaid—a jointly financed state and federal government program—is the only major public payer of LTSS expenses for qualified beneficiaries.
Thankfully, some states are beginning to see the trouble ahead and at least consider what they might do. But how can states move from conversation to meaningful action? Two very recent examples may offer some preliminary insight.
A TALE OF TWO STATES: WASHINGTON AND MAINE
Last month, the state of Washington passed a landmark law that will offer eligible residents a $100 daily benefit for a variety of long-term care services for up to a year. That benefit goes into effect in 2025 and will be funded by a payroll surtax of 0.58%, or $290 for every $50,000 in income. Residents who buy private long-term care insurance can opt out of the tax.
Six months earlier, a ballot question in Maine asked voters to approve universal no-cost home health care that would be available to qualifying individuals regardless of income. The benefit would have been financed with a 3.8% income tax on residents earning more than $128,400 a year. The proposal was soundly defeated at the polls.
It’s important not to draw firm conclusions about these events, which involved very different proposals presented in very different states. But there’s still a lot to learn about the outcomes and the lessons these events offer. The LeadingAge LTSS Center @UMass Boston is working on that now.
CHOOSING A POLITICAL PATH
The effectiveness of a legislative track—like the one taken by Washington—versus a ballot initiative, which was pursued in Maine, may be significant.
LTSS is the kind of complicated issue a legislative process is designed to address. Washington’s new law had been in the works for a long time and a similar proposal was withdrawn last year in the face of opposition from several key groups, including AARP. Still, it was possible to negotiate changes within the legislative setting and reach a final agreement.
Advocates of the Washington measure had also developed broad-based support and built a coalition to work with the legislature long before the bill was signed into law. Ahead of the Maine vote, the universal home health care initiative was opposed by several key groups—including providers that would seemingly benefit from the program, businesses, and many public officials. Clearly, the results in both states point to the importance of cultivating the support of a diverse group of key stakeholders.
There were also significant differences in the benefits offered by the 2 proposals, as well as the methods to fund them. Washington’s benefit is limited and clearly defined. In contrast, it was uncertain exactly how much beneficiaries in Maine would receive. The financing mechanism in Washington was modest and very broadly based. The Maine funding plan was very progressive, relying exclusively on taxing high-income residents.
We don’t know how these factors affected the ultimate outcomes in both states. The LTSS Center is digging deeper to find out.
ADDITIONAL STATES CONSIDER THEIR LTSS OPTIONS
Meanwhile, feasibility research on the LTSS financing question is taking place in other states. California, Michigan, and Minnesota are all performing the preliminary work of exploring their state’s needs and analyzing options that could work for them.
States are not examining this problem with purely altruistic intent. They see the possibility of rising Medicaid obligations, in light of growing LTSS needs, as a fiscal danger demanding attention. For this reason, more states will likely begin exploring their LTSS financing options in the future. A widespread belief that the federal government will not address this problem anytime soon only increases the pressure.
THE CRITICAL ROLE OF PUBLIC CONVERSATION
States should take a final lesson from the experiences in Washington and Maine. The establishment of state-based social insurance programs to support LTSS requires a broad recognition of the problem and a will to address it. That doesn’t happen without a lot of public discussion.
The Maine ballot question failed, but so did the original version of the Washington law. In Maine, the state with the nation’s oldest median age, opponents spoke out against the ballot question but most publicly acknowledged the seriousness of the problem it raised. That may have been the start of a productive conversation.
Marc A. Cohen, PhD, is co-director of the LeadingAge LTSS Center @UMass Boston, a professor of gerontology at the University of Massachusetts Boston, and research director at Community Catalyst. His research focuses primarily on issues affecting the financing and delivery of long-term services and supports.