Addressing the Challenge: Public and Private Solutions for Long-Term Services & Supports

1. Addressing the Challenge: Public and Private Solutions for Long-Term Services & Supports Long-Term Care Financing Advisory Committee Meeting October 15, 2009 For Advisory Committee Policy Discussion Purposes

2. Outline of the Presentation • Public Awareness Campaign • Informal Caregiver Supports • Setting the Stage for Comprehensive Reform • Goals and Principles • Review of the Challenge • Solutions that hold Promise for Massachusetts • The Long-Term Care Partnership Program (LTCP) • The Contribution Program • Cost & Impact Analysis • MassHealth Data & Analysis • Committee Business University of Massachusetts Medical School EBD Consulting Services, LLC For Advisory Committee Policy Discussion Purposes

3. Public Awareness CampaignA public awareness campaign to increaseunderstanding of LTS options & financing For Advisory Committee Policy Discussion Purposes

4. Why Encourage Adults to Plan for LTS? • Complement other statewide I&R activities • Address public concern that the demand for LTS will exceed available resources • Educate about shared public/private responsibility • Improve quality of life in later years • Support individual preferences, choice and dignity • Enable families to support aging relatives • Encourage proactive LTS planning • Help future generations to maintain financial security • Avoid/reduce Medicaid costs For Advisory Committee Policy Discussion Purposes

5. State role Solicit Governor’s buy-in Pay for initial mailing of letter/brochure Issue press release/ hold press conference Other activities as desired TV, radio ads Educational sessions Website-800AGEINFO CMS role Print Governor’s letter/ brochure Arrange initial mailing Produce toolkit (booklet/CD) Staff call center Distribute toolkit to callers (including mailing charges) Provide technical assistance & other materials Elements of CMS Campaign For Advisory Committee Policy Discussion Purposes

6. Campaign Materials • Governor’s Letter • Brochure • Booklet and CD For Advisory Committee Policy Discussion Purposes

7. Chapters of Campaign Booklet • Introduction • Embrace the future! • Where should I start? • Lifestyle planning • Legal and estate issues • Staying at home • Financial Planning for LTS • LTC Insurance • Reverse Mortgages • Additional options available in Mass • Planning for your Care • For more information For Advisory Committee Policy Discussion Purposes

8. Planned activities • Initial Mailing • Approximately 450,000 households • Other components • TV/radio ads • Educational sessions • Website For Advisory Committee Policy Discussion Purposes

9. Next Steps & Timetable • Finalize campaign materials 10/23/09 • Solicit Governor’s Buy-in 11/01/09 • Print materials 12/15/09 • Update 800AGEINFO Website 12/30/09 • Launch campaign 1/15/10 • Governor’s press conference • Public service ads • Initial mailing & responses • Regional educational sessions 4/10-6/10 • Campaign funding ends 9/30/10 For Advisory Committee Policy Discussion Purposes

10. Informal Caregiver Support For Advisory Committee Policy Discussion Purposes

11. Informal Caregivers provide an immense amount of LTS in Massachusetts • Informal Caregivers provide about 36% of the LTS received by elders nationally1 • In Massachusetts, there are about 690,000 informal caregivers of people of all ages at any given time, and about 1,040,000 at any time during the year2 • These caregivers provide the equivalent of $8.9 billion worth of care • Nationally, 17% of informal caregivers provide 40+ hours per week of care, 8% provide 21-39 hours, 23% provide 9-20 hours, and 48% provide 8 hours or less3 1 Hagen, S. Financing Long-Term Care for the Elderly, Congressional Budget Office, April 2004. 2 National Family Caregivers Association & Family Caregiver Alliance. (2006). Prevalence, Hours and Economic Value of Family Caregiving: Updated State-by-State Analysis of 2004 National Estimated by Peter Arno, PhD. Kensington, MD & San Francisco, CA: FCA. 3 National Alliance for Caregiving and AARP. Caregiving in the U.S. Bethesda: National Alliance for Caregiving, and Washington, DC: AARP, 2004. For Advisory Committee Policy Discussion Purposes

12. The majority of Informal Caregiver supports are currently offered through Elder Affairs For Advisory Committee Policy Discussion Purposes * Respite is also disparately available through MRC and its SHIP program, MCB, and DDS

13. Given the number of Informal Caregivers in the state, very few are receiving publicly-funded services Additionally, DDS provided 515 “respite opportunities” in 2009. Sources: Executive Office of Elder Affairs and MassHealth. 1 Family Caregiver Support program expenditures include federal Title III-E, state and local funds. 2 FCSP utilization numbers are the only ones that are unduplicated. 3 Does not include DDS Expenditures For Advisory Committee Policy Discussion Purposes

14. There are other services that support Informal Caregivers Adult Day Health: provides daily respite for caregivers. No data collected by MassHealth on how many participants have caregivers. • FY08: $62,700,000 • 6,998 MassHealth clients in FY’09 - 923 in Complex level of care, which means they meet NF LOC, and are therefore likely to have caregivers at home Adult Foster Care: allows family members to be providers, paying them for providing care for individuals who live in their home. No data collected on how many providers are family members. Personal Care Attendants (PCA): Allows clients to hire family members as PCA. • In the past year, 5,005 PCAs were hired family members, which is 19% of all PCAs hired. For Advisory Committee Policy Discussion Purposes

15. Training Informal Caregivers reduces other LTS costs In one key study, training and support programs created a median delay in nursing facility placement of 577 days, or 1.5 years* • A randomized 17-year-long study of 406 spouse caregivers of individuals with Alzheimer’s Disease • Intervention was two individual and four family counseling sessions tailored to specific situation, encouragement of support group participation, and the availability of ad hoc telephone consultation. * Mittelman, M.; Haley, W.; Clay, O.; Roth, D. Improving caregiver well-being delays nursing home placement of patients with Alzheimer disease. Neurology 2006;67(9):1592-9. For Advisory Committee Policy Discussion Purposes

16. Paying Informal Caregivers could address a number of issues related to LTS financing • Decrease other LTS costs1 • Increase pool of possible workers • Expand access to LTS for rural areas • Raise questions about familial responsibility and substitution of care 1 Dale, S., and Brown, R. Reducing Nursing Home Use Through Consumer-Directed Personal Care Services. Medical Care. 44(8):760-767, August 2006. Brown, R., Carlson, B., Dale, S., Foster, L., Phillips, B., and Schore, J. “Cash & Counseling: Improving the Lives of Medicaid Beneficiaries Who Need Personal Care or Home and Community-Based Services.” Princeton, NJ: Mathematica Policy Research, Inc., August, 2007 For Advisory Committee Policy Discussion Purposes

17. Possible Short-Term Actions to improve Informal Caregiver Supports • Increase awareness, and therefore utilization, of existing supports through increased outreach and education • Understand whether and why many caregivers do not get information they need and can use about available supports • Encourage implementation of evidence-based programs for caregivers of people with disabilities across the lifespan • Press for full funding of the National Lifespan Respite Care Act • Press for increased funding for National Family Caregiver Support Act For Advisory Committee Policy Discussion Purposes

18. Setting the Stagefor Comprehensive Reform For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

19. CF Olmstead Plan goals For Advisory Committee Policy Discussion Purposes Help individuals transition from institutional care. Expand access to community-based long-term supports. Improve the capacity and quality of community-based long-term supports. Expand access to affordable and accessible housing with supports. Promote employment of people with disabilities and elders. Promote awareness of long-term supports. University of Massachusetts Medical School EBD Consulting Services, LLC

20. LTC FAC Advisory Committee goal For Advisory Committee Policy Discussion Purposes To identify and prioritize short-term and long-term strategic options for reforming the financing system for LTS for elders and individuals with disabilities in Massachusetts to support a range of LTS and a sustainable mix of personal and familial responsibility, private financing mechanisms and public assistance in a manner that: • maximizes independence; and • assures access to the necessary continuum of LTS. University of Massachusetts Medical School EBD Consulting Services, LLC

21. CF Olmstead Plan principles For Advisory Committee Policy Discussion Purposes People with disabilities and elders should have access to community living opportunities and supports. The principle of “community first” should shape policy development and funding decisions. A full range of long-term supports, including HCBS, housing, employment opportunities and nursing facility services, are needed. Choice, accessibility, quality, and person-centered planning should be the goals in developing LTS. Systems of community-based care and support must be strengthened, expanded and integrated to ensure access/efficiency. Public and private mechanisms of financing LTS must be expanded. LTS must address the diversity of individuals with disabilities and elders in terms of race, ethnicity, language, ability to communicate, sexual orientation, and geography. University of Massachusetts Medical School EBD Consulting Services, LLC

22. LTS Financing Principles (Draft 2) The reformed LTS financing system will: • Ensure a strong public safety net for the poor and most vulnerable. • Limit financial pressure on the state financing system so that state funds are preserved for those most in need. • Encourage personal responsibility for financing LTS to the maximum extent possible. • Enable middle income people of all ages to access the LTS they need without becoming impoverished. • Ensure appropriate participation of and support for informal caregivers. For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

23. Other Olmstead Plan and Community First Activities For Advisory Committee Policy Discussion Purposes • Olmstead Plan objectives available online at www.mass.gov/hhs/communityfirst • December meeting will include discussion of related activities around the following topics: • Transportation • Employment • Housing • Workforce Development • Care Integration • Information and Awareness • Consumer Choice / Self-Direction University of Massachusetts Medical School EBD Consulting Services, LLC

24. People with LTS Disabilities who need assistance with Self-Care or Every Day Tasks For Advisory Committee Policy Discussion Purposes *Does not include persons who were: institutionalized, in military group quarters or college dormitories, or unrelated individuals < age 15. Source: 2007 American Community Survey (ACS), US Census Bureau, tabulations by authors.

25. Need for LTS Resources (Informal and Financial) Depends on Time in Need AND Type of Services UsedSimulated Distribution of Years of LTSS Need at 65 For Advisory Committee Policy Discussion Purposes Kemper (2005) University of Massachusetts Medical School EBD Consulting Services, LLC

26. Distribution of LTSS SpendingSimulated for 65-year-old (2004) For Advisory Committee Policy Discussion Purposes Kemper (2005) University of Massachusetts Medical School EBD Consulting Services, LLC

27. Current LTS Financing System State Programs High LTS NEED Low Medicaid Spend-down Medicaid & Other State Programs PersonalResources (includes Informal Caregivers) LTC Insurance Low High FINANCIAL RESOURCES For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

28. Zero in on the Challenges • The Elderly • Substantial Need: 68% of the Elderly Need Care • Medicaid is the Only Option for Many • Private LTC Insurance is Unaffordable for Low/Middle Incomes • Middle Income Spend Down to Medicaid • Upper Income fare best today • Limited community-based care • The Under 65 Disabled • Private LTC Insurance is an option only before become disabled • Limited community-based care • MassHealth CommonHealth is only option for many For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

29. Solutions That Hold Promise For Massachusetts For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

30. Today’s Presentation for the LTC FAC • Responds to the Goals of the Advisory Committee • Responds to the LTS Financing Principles of the Committee • Introduces Public & Private Models to Finance LTS • Recommends a Model for Massachusetts For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

31. How to Evaluate Each Model • Target Population • How many people will benefit from the model? • Who will not benefit? • Benefit Coverage • What benefit does the model offer? Does it meet the need? • How much long-term services & support coverage does it provide? • Costs (Costs and Savings Impact Analysis) • Who bears the costs? • Is it cost effective? • Is this a solution for today or tomorrow? For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

32. Cut to the Chase: There is No Silver Bullet! • Each existing model leaves someone out • Existing models offer partial solutions • Our Challenges: • How can we design our model to achieve our goals? • Can we combine models to improve coverage? • How can we improve upon existing models? For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

33. Preview: Where we might end up • A Complementary approach • Private Insurance: • Expand to Middle Income people • Public Insurance: • Meet the Challenge of Covering Disabled & Middle Income people • Medicaid: Adjust to fill gaps • Massachusetts as a State Laboratory • Massachusetts embraces its role as a State Laboratory for Change • Take what exists and improve upon it • Start small For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

34. Two Models that Hold Promise for Expanding Coverage • Two Models to Insure the Elderly & Disabled • Privately sponsored: The LTC Partnership Program • Publicly sponsored: The Contribution Program • “Walk-Through” of Each Model • Background • Key Bullets • The Pros & Cons of Each Model • Changes for Massachusetts • Where does it leave us? For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

35. Privately Sponsored: The LTC Partnership • Private Insurance for Long-Term Care (or LTS) • Focused on currently healthy people planning for future LTS need • Represents an alliance between State Government & Private Industry • RWJF 1988 grants to states • Goals of the LTC Partnership Program • Reduce Medicaid LTC Costs • Protect Consumers from Impoverishment & Protect some/all assets • Offer Consumers “back-end” protection: “Asset Disregard Incentive” • Connecticut Case Study: An Early Pioneer in the LTC Partnership Handout: “Connecticut Case Study: 101,”Prepared for Committee Meeting, 10/15/09 For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

36. The Connecticut Case Study: Key Bullets • Who wins? • Upper Income Persons • Lower out of pocket costs for those who use care • Who loses? • Middle Income and Disabled Persons Left Out • What about the costs and savings? • The Verdict is Out on Medicaid Savings • Program is solvent, so far For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

37. Long Term Care Insurance Participation • More people in Connecticut have LTC Insurance than in Massachusetts (includes group policies) For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

38. The Connecticut Case Study: Pros & Cons The Pros of the Model Long-running program, 17 years & an experienced Director Great Consumer Protections Great Insurance for Upper Income Comprehensive Care Policies (high premium cost) “Dollar for Dollar” Coverage/Asset Protection Lower out-of-pocket costs The Cons of the Model Low rate of participation (unaffordable to many) Benefits accrue to Upper Income Elderly Persons Middle Income & Disabled left out of the program Consumers find the purchase decision to be a complex one Limited Portability For Advisory Committee Policy Discussion Purposes 38 University of Massachusetts Medical School EBD Consulting Services, LLC University of Massachusetts Medical School EBD Consulting Services, LLC

39. Premiums Must be More Affordable for Middle Income Higher income people buy LTC insurance (green) We need to make LTC insurance affordable for middle income (yellow) For Advisory Committee Policy Discussion Purposes 39 University of Massachusetts Medical School EBD Consulting Services, LLC University of Massachusetts Medical School EBD Consulting Services, LLC

40. LTS Financing System With LTC Partnership Program State Programs High LTS NEED Low Medicaid Spend-down Medicaid & Other State Programs PersonalResources Consumer Protections Informal Caregiver Support LTC Insurance LTC Partnership Low High FINANCIAL RESOURCES For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

41. Where does the LTC Partnership Program Leave Us? • It will not meet everyone’s needs • Those with current LTS needs or current chronic conditions • Low income people who cannot afford to pay premiums • But with changes, it can be effective: • Middle to Upper Income • Individuals who can afford to pay premiums over a long period of time • Healthy individuals who may need LTS in the future For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

42. The Connecticut Case Study: Changes for Massachusetts Prerequisite: Must enact NAIC Model Act Implement consumer protections What would we want to do differently? Target middle income persons who are at risk to spend down Question to FAC: Are these the design features we want to work on? Target middle income population Encourage more people to buy, and at a younger age Create an affordable benefit package Make purchase decision easy for consumers Consider incentives? For Advisory Committee Policy Discussion Purposes 42 University of Massachusetts Medical School EBD Consulting Services, LLC University of Massachusetts Medical School EBD Consulting Services, LLC

43. Publicly Sponsored: The Contribution Program • Public Model for LTS • A contributory program for paying for the cost of LTS • Everyone included (large risk pool) • Federal Plan Supported by Senator Kennedy, AAHSA • Federal plan included in 2 out of 3 National Health Care Reform bills (House & HELP; CBO scores as a savings) • Goals • Provide some coverage in affordable way • Offer consumers a life-time benefit for some of their future LTS needs • Meets some – not all – of a person’s needs • Spread the risk broadly across all persons, no health screen • Example: The CLASS Act For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

44. The CLASS Act: Key Bullets • Cash benefit • Everyone is included, with voluntary opt out • Vested in 5 years: People with current needs can begin drawing benefit in 5 years. • Portability from state to state • Big commitment on the part of the government to provide LTS financing over the long-term For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

45. The CLASS Act: “Skinny” might be OK for some Age 55 in 2009 Premiums = $65/Month = $780/Year Premiums are very likely to be raised over time Benefit = $50/day or $100/day (used $75, here) Age 75 in 2029 Benefit = Assumes $75 cash daily/benefit in 2009 at 5% compounded inflation For Advisory Committee Policy Discussion Purposes 45 University of Massachusetts Medical School EBD Consulting Services, LLC University of Massachusetts Medical School EBD Consulting Services, LLC

46. The CLASS Act: Solvency of a Contribution Program • Premiums must be sufficient to fund the program • Questions about the Solvency of the Program • $65 may not be sufficient in the long run • AAHSA: Yes, program is solvent • CBO: Maybe, in the middle • American Academy of Actuaries: No For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

47. The CLASS Act: Pros & Cons The Pros of the Model Everyone gets something Cash benefit based on need Complements other plans for LTC Benefits do not count against Medicaid eligibility Great way to provide some coverage for middle income individuals Great way to provide some coverage for disabled individuals The Cons of the Model Concerns about sustainability over long-term Younger persons and/or upper income persons may opt out Lower rates of participation lead to adverse selection Program is viewed as serving “all” the needs Benefit too “skinny” For Advisory Committee Policy Discussion Purposes 47 University of Massachusetts Medical School EBD Consulting Services, LLC University of Massachusetts Medical School EBD Consulting Services, LLC

48. LTS Financing System with Contribution Program Only State Programs High LTS NEED Low Medicaid Spend-down Medicaid (Enhanced) & Other State Programs PersonalResources (includes Informal Caregivers) LTC Insurance Contribution Program Low High FINANCIAL RESOURCES For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

49. Where does the Contribution Program Leave Us? • It will not meet everyone’s needs • Those with current LTS needs or current chronic conditions • Low income people who cannot afford to pay premiums • But with changes, a Limited Cash Benefit can: • Address the need for home- and community-based care • Individually-tailored needs that are not presently covered by insurance or Medicaid • Support the informal care network For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC

50. The CLASS Act: Changes for Massachusetts What would we want to do differently? • Ensure solvency over many years • Ensure high participation levels • Question to FAC: Are these the design features we want to work on? • Lower premium contribution for low income individuals • Portability for individuals who move to another state • Pair benefit with Medicaid Asset Protection? • Consider other incentives? • Consider a mandatory program? For Advisory Committee Policy Discussion Purposes University of Massachusetts Medical School EBD Consulting Services, LLC