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Detailed Assumptions For February 25, 2010 Long-term Care Financing Advisory Committee

Detailed Assumptions For February 25, 2010 Long-term Care Financing Advisory Committee. Medicaid expansion cost estimates were developed specifically for this presentation, and should not be used for other purposes. Baseline assumptions for cost growth (with no changes).

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Detailed Assumptions For February 25, 2010 Long-term Care Financing Advisory Committee

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  1. Detailed Assumptions For February 25, 2010 Long-term Care Financing Advisory Committee Medicaid expansion cost estimates were developed specifically for this presentation, and should not be used for other purposes.

  2. Baseline assumptions for cost growth (with no changes) • The number of MA residents utilizing LTS will increase 1% annually (based on CBO projections) • Average per person spending for LTS by Medicare, Medicaid and other public payments will increase by 2.8% annually (consistent with CBO estimate) • LTS insurance benefit payments will increase at 5% annually (consistent with CBO estimate) • Informal care and unmet need will remain flat • Out-of-pocket expenditures will increase by 1% per person annually (consistent with CBO estimate) • Other private spending (e.g., union programs) will increase by 6% annually • Medicaid spending was $3.6B in 2008 (provided by Office of Medicaid) • Informal caregivers provided $8.9B worth of care in 2004 • The distribution of LTS spending by payer in 2010 is consistent with national averages provided by the Kaiser Family Foundation • After applying the distribution of LTS spending by payer, we added an additional $700M to “Other Public” based on guidance provided by the Office of Medicaid

  3. Foundation for further reforms • All models include these building blocks: • Comprehensive public and employer education/awareness campaign (state spending: $1M) • Implement national consumer protection and insurance standards (NAIC model act and regulations) • Provide training, support and respite for informal caregivers (state spending $25M, some may be eligible for FFP) • Support other private mechanisms for financing LTS • We assume that these mechanisms together will provide cost avoidance of approximately 3% to Medicaid due to longer durations for informal caregivers

  4. Future Scenario #1 • Improve/expand private insurance for LTS • Explore developing a LTC Partnership that “grandfathers” consumers with asset protection under current MA law (“quasi-Partnership”) • Promote life insurance policies with accelerated death benefits or LTC riders • Encourage employers - including GIC - to offer group coverage for LTS (through LTC insurance or life insurance) • Promote “like plan” portability of group LTC and life insurance • Creating a LTS Partnership will increase private insurance spending from 7.2% to 12.0% of total LTS spending • 10% of new LTS insurance spending will offset Medicaid [may need to be refined] • 45% of new LTS insurance spending will offset out-of-pocket spending • 45% of new LTS insurance spending will offset informal care • Contribution/Social Insurance - NONE • Assumes CLASS does not pass at federal or state level

  5. Future Scenario #1 • MassHealth improvements - small targeted service and eligibility expansions (increased Medicaid spending of $280M in 2010, $590M in 2030) • Increase income eligibility for elders (age 65+) with self-care needs from 100% to 200% FPL; asset limit increased from $2,000 to $10,000 (increased Medicaid spending of $130M in 2010) • Provide limited HCBS package to targeted group of 10,000 members with disabilities and self-care needs (increased Medicaid spending of $150M in 2010) • Medicaid spending estimates from staff analyses presented in December 2009 and January 2010 Medicaid expansion cost estimates were developed specifically for this presentation, and should not be used for other purposes.

  6. Future Scenario #2 • Improve/expand private insurance for LTS • Explore developing a LTC Partnership that “grandfathers” consumers with asset protection under current MA law (“quasi-Partnership”) • Promote life insurance policies with accelerated death benefits or LTC riders • Encourage employers - including GIC - to offer group coverage for LTS (through LTC insurance or life insurance) • Promote “like plan” portability of group LTC and life insurance • Creating a LTS Partnership will increase private insurance spending from 7.2% to 12.0% of total LTS spending • 10% of new LTS insurance spending will offset Medicaid [may need to be refined] • 45% of new LTS insurance spending will offset out-of-pocket spending • 45% of new LTS insurance spending will offset informal care

  7. Future Scenario #2 • Contribution/Social Insurance • Promote enrollment in CLASS assuming it passes at federal level • CLASS will account for 5% of total LTS spending • 10% of new CLASS spending will offset Medicaid, based on CBO estimate that 1.7% of CLASS spending will result in cost avoidance for Medicaid ($135M in 2030) • 45% of new CLASS spending will offset out-of-pocket spending ($617M in 2030) • 45% of new CLASS spending will offset informal care ($617M in 2030)

  8. Future Scenario #2 (continued) • MassHealth improvements - movement toward full equity in LTS access (increased Medicaid spending of $400M in 2010, $843M in 2030) • Increase income eligibility for elders (age 65+) with self-care needs from 100% to 200% FPL; asset limit increased from $2,000 to $10,000 (increased Medicaid spending of $130M in 2010) • Provide comprehensiveHCBS package to targeted group of 10,000 members with disabilities and self-care needs (increased Medicaid spending of $270M in 2010) • Enable individuals age 65+ to buy into Medicaid • Individuals age 65+ up to 300% FPL and $50,000 assets pay a sliding scale premium and/or deductible (partial subsidy); individuals with higher income or assets pay full cost • Medicaid buy-in cost sharing • Federal government pays 40% cost share • MA pays 40% cost share • Consumer pays remaining 20% of cost • Projected Medicaid buy-in participation: • 50% of eligible retirees with incomes over 200% FPL (approximately 10,000 new enrollees) Medicaid expansion cost estimates were developed specifically for this presentation, and should not be used for other purposes.

  9. Future Scenario #3: Conceptual Assumptions • Built on a mandatory state contribution program • State would subsidize premiums for low-income individuals to ensure that everyone is enrolled • Assumes that everyone is enrolled, and the Contribution program pays first • Contribution program would pay the full LTS costs for approximately 80% of the population (including those who need no paid LTS care); will also pay for a significant share of LTS for the 20% who require more care • As a result, private supplementary insurance for LTS will be inexpensive and widely available in many forms, including individual LTS insurance, group LTS insurance, LTS rider to life insurance. • Will also pay for a significant share of LTS for Medicaid beneficiaries • Medicaid will function as a wrap around the Contribution program. This shift will result in significant savings for the Medicaid program, and will enable Medicaid to provide wrap services to a broader group of individuals at relatively low cost Medicaid expansion cost estimates were developed specifically for this presentation, and should not be used for other purposes.

  10. Future Scenario #3 • Improve/expand private insurance for LTS as “wrap” to contribution program • Note: if Contribution pays first, private insurance will be low-cost • Explore developing a LTC Partnership that “grandfathers” consumers with asset protection under current MA law (“quasi-Partnership”) • Promote life insurance policies with accelerated death benefits or LTC riders • Encourage employers - including GIC - to offer group coverage for LTS (through LTC insurance or life insurance) • Require “like plan” portability of group LTC and life insurance • Require LTC & life insurance plans to re-insure or develop FDIC-like protection • Explore providing financial incentives to purchase private insurance for LTS • Creating an LTS Partnership will provide access to a variety of supplemental coverages that increase LTS spending • Cost of private LTS coverage declines significantly • 40% of individuals age 25+ will have supplementary private insurance for LTS • 20% of new LTS insurance spending will act as an offset to out-of-pocket spending • 80% of new LTS insurance spending will act as an offset to informal care

  11. Future Scenario #3 • Contribution/Social Insurance • State-level mandatory contribution program with subsidies for low-income people (below 300% FPL) • Pursue federal match for state share of subsidies or spending for low-income • All adults in MA over age 25 are required to contribute • Monthly premiums are projected to be $92 PMPM (provided previously) in 2010 and $200 PMPM in 2030. • MA residents will contribute up to 2% of their income based on their income (individuals <200% FPL pay 0.5% of income, 201-299% FPL pay 1.0% of income, all other residents pay 2% of income) • State spending for premium subsidy is $1.1B in 2030; the state would pursue FFP on this expenditure • The State Contribution program represents a $1.6B cost avoidance to Medicaid • All MA residents are vested in the plan after 5 years of contributing • The State Contribution program would pay prior to Medicaid • Benefit would pay an average of $75 per day indefinitely • Informal care would still be provided and enrollees in the State Contribution program could use their benefit to pay for informal caregivers to stay home • CLASS will account for 3% of total LTS spending (because might move in from out of state, or plan to move out of state at some point) • 1% Cost avoidance to Medicaid • 100% of new CLASS spending will act as an offset to out-of-pocket spending Medicaid expansion cost estimates were developed specifically for this presentation, and should not be used for other purposes.

  12. Future Scenario #3 (continued) • MassHealth improvements – full equity in LTS access (through “wrap” to contribution program) • Note: if Contribution pays first, Medicaid costs are offset • Expand Medicaid for individuals 65+ with self-care needs to 300% FPL and up to $50,000 in assets, with cost-sharing above 150% FPL (increased Medicaid spending of $290M in 2010, $504M in 2030) • The state contribution program provides $1.6B cost avoidance to Medicaid Medicaid expansion cost estimates were developed specifically for this presentation, and should not be used for other purposes.

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