By Steven Syre
Several states are exploring various types of public social insurance plans to assist families caring for people with a need for long-term services and supports (LTSS), and to support providers of such services. Marc Cohen, co-director of the LeadingAge LTSS Center @UMass Boston and an expert on long-term care financing, recently talked about those state initiatives.
WHY STATES ARE TAKING ACTION ON LTSS FINANCING
What’s happening on the state level to support long-term supports and services, and why is it happening now?
Marc Cohen: There’s a lot taking place at the state level. Recently, Maine became the first state in the country to vote on a Universal Home Care plan. That ballot question didn’t succeed, but the debate it created was important – getting nearly everyone to acknowledge a serious problem that needs attention. Washington State has done some pioneering work in this area and nearly passed legislation last year. Hawaii has put in place a more modest plan to support family caregivers. There is more preliminary work being done in states like California, Michigan, and Minnesota.
All these states see a big problem developing. Obviously, the country’s older population is growing quickly. These people and their families need help, and part of the solution comes down to money. But the current financing and caregiving system for long-term services and supports is already under pressure and some states are looking for new ways to deal with a serious fiscal and social problem.
What’s wrong with the current public finance system?
MC: The largest public payer for LTSS is Medicaid, a state-federal partnership. Medicaid is one of the fastest growing items in state budgets, and a number of states feel that other public policy priorities are being crowded out. So states are under real financial pressure, especially as the population ages and the need for services grows.
Usually you do not find a change in public policy unless there is a demand for it. Because of growing burdens on families, lack of financing alternatives, and no promise of action at the federal level, you’re starting to see demand at the grass roots for states to take action.
All of the various state-based ideas to support LTSS would require new taxes. Couldn’t states alleviate their Medicaid budget pressure by simply raising taxes?
MC: Perhaps, but that wouldn’t be a long-term solution. The need for long-term services and supports is substantial, it will grow a lot in the future, and it will be with us for many years to come. To address a problem like that, you need a response that moves from a welfare approach, which is what the current Medicaid system is, toward an insurance-based solution. Medicare is a public insurance program and obviously it’s very popular. We need to develop a program that has broad public support in order to address a big, long-term need. States know there is no federal solution in the foreseeable future so some are at least talking about taking action themselves.
Do state plans look more or less the same?
MC: Not at all. States are often called the laboratories of democracy and policy. The word is plural because states do things very differently, reflecting their financial capacity, cultural differences, geography, and population characteristics. States that are heavily rural face different issues than states that are heavily urbanized. So, one would not expect states to respond to this challenge the same way. Just look at Washington, Maine, and Hawaii. Their proposals have taken very different public financing approaches, both in terms of the scope of services they would support and how they would pay for it.
MAKING PROGRESS IN MAINE, WASHINGTON, AND HAWAII
Can you explain Maine’s proposal?
MC: Maine targeted employees whose earned income exceeded $128,400. That’s the income cap for paying Social Security taxes. The Maine proposal would have taxed those earners and their employers on income above that amount. There was also a 3.8% tax on investment income above the social security tax cap. We need to test a number of theories about how and why the first program put to a real vote did not succeed.
What has been happening in Washington?
MC: Washington’s approach is designed to be a social insurance program that pays for 2 years of care up-front for anyone who develops disabilities and needs services. Washington would finance its program through a payroll tax on employees. A coalition of groups called Washingtonians for a Responsible Future brought all the stakeholders to the table and put together a bill that provides people up to $100 a day if, for example, they have disabilities and LTSS needs. The initial bill did not pass but it was very close and they’re going to be reintroducing it. There’s a lot of support for it.
Hawaii has actually gotten a program up and running. How did that happen?
MC: Legislation that would have created a mandatory social insurance program in Hawaii did not pass. But in 2017, the state enacted a program that gives working people up to $70 a day if they are caring for someone age 60 or older who has LTSS needs that are not covered by Medicaid or long-term care insurance. That program is specifically targeting the middle class. The money can be used to buy transportation, meals, adult day services, and so on. The program was funded with $600,000, and Hawaii paid for it by putting a small general excise tax on businesses. There is legislation in place to expand the funding in subsequent years.
What states are in more preliminary stages of addressing this issue?
MC: Several states are in the feasibility testing phase. The California Aging and Disability Alliance is in the early stages of collecting information to explore a new financing program for that state. Michigan announced that its state budget includes money to conduct a needs assessment and an actuarial analysis to look at new funding. Michigan United, a group of stakeholders, is supporting these efforts. Minnesota is looking at options for private financing. It has convened an advisory panel and hired some experts to test new possible products.
BENEFITS OF STATE ACTION
Are states better suited than the federal government to create plans that work?
MC: Policy makers in states are much closer to the ground. They don’t have to take into account the high level of variability in long term-care service capacities or in views on the role of public programs versus private programs. The federal government would have to account for this kind of variability, which makes it much harder to design a solution across 50 states. For example, you wouldn’t have the same program in Louisiana and Massachusetts because those states have very different population characteristics, attitudes about public and private responsibilities, geographies, service systems, and infrastructures.
These financing programs cannot be divorced from the underlying service infrastructure. You would take a very different approach in a state that is characterized by shortages of home care workers, compared with a state that doesn’t have that problem but may have a different set of problems. So that’s one of the advantages of state action. The other advantage is that a smaller geography makes it easier to build coalitions within a state. It’s much harder to do that across all 50 states.
Does a state’s actions mean anything beyond its own borders?
MC: State action represents an opportunity for proof points. Think about Massachusetts. The Health Care for All coalition helped lay the groundwork for universal medical care coverage, demonstrating that you could insure an entire population and the system wouldn’t fall apart. Besides the critically important benefits for consumers, providers and insurers both seem to really benefit. That offered important lessons for the Affordable Care Act, which became a national program.
So, states can offer “proof of concept.” It doesn’t mean there won’t be challenges, but those challenges are easier to overcome with a smaller population base and presumably a more homogeneous population. States sitting back and waiting would then be able to say, “It’s working in Minnesota or Washington, so why don’t we also try and get something done that would be beneficial to families and help state finances?”