The reason people buy insurance is to make sure they can pay future expenses that are hard to anticipate by saving money. Even for those who know they have no safety net for the cost of care toward the end of life — and many people haven’t grasped that fact — few have made any allowance for it. With all the bills people pay each month, planning for long-term care usually falls off the list.
Regardless, the "silver tsunami" of aging baby boomers moving into the population needing care is going to hit, and Hawaii seems woefully unprepared. This was the driving force behind the assembly of the state’s Long-Term Care Commission which, among other recommendations, advocated a new mandatory insurance program in a report aired at a public hearing last week.
It’s a concept that’s worthy of discussion. Making long-term care allowances part of payroll deductions, like Social Security, is one reasonable way to ensure that a growing elderly population makes some provision for itself rather than tapping the public purse of Medicaid.
The details of how this new benefit would be structured are not spelled out, the commission observing that additional financial and actuarial analyses are needed, and lawmakers would need to make the final call.
But it seems self-evident, even without this further data, that the premiums should be small and paid by the employees rather than being subsidized by employers. Businesses are bearing up under increasing burdens for the existing health care system as it is, and this is a difficult economic climate for adding anything to that.
What needs underscoring is that the benefit itself would be limited — the panel recommends a daily benefit of $70 in cash, indexed to increase by 5 percent annually, and good for only a year’s daily payouts. This doesn’t sound like much, given the stratospheric charges for some care regimens, but it would help families with respite care or nursing assistance at home.
Some other elements of the proposal:
» Participants would need to pay premiums for 10 years before claiming any benefit.
» Eligibility would be limited to those with deficits in at least two activities of daily living or moderately severe dementia, as documented by professional staff.
» The program would tap premiums paid by employed individuals under 60, including the self-employed.
The Legislature needs to proceed carefully with this, considering that another, national approach to long-term care — the CLASS Act, part of the federal health care reform law — was rescinded by the Obama administration, citing concerns about making it pencil out.
But the commissioners correctly observe that with no taxes assessed, commissions paid or profits taken administrative costs of the publicly run program could be much lower than for private insurance.
Another important element of the plan is to explore ways of enabling life insurance benefits to be tapped for long-term care as another financing strategy. The state insurance commissioner has not yet taken a position on the proposal, and his comments will be an important part of the legislative review.
Finally, what seems crystal clear in all of this is that Hawaii must bolster an elder-care system that’s less reliant on costly skilled-nursing centers, one that supports services such as Kupuna Care that are available in many communities, delivered to a senior’s own residence. What’s called "aging in place" is the model of care that most people favor for themselves and their loved ones, and it’s the most economical.
There’s a long way to go before the components of a robust long-term care network are in place, but the state’s commission deserves thanks for getting this important conversation started.
