Initial Recommendations to Improve the Financing of Long-Term Care

Katherine Hayes
G. William Hoagland
Nancy Lopez
Lara Rosner
Brian Collins
Marisa Workman
Katherine Taylor
February 2016

This resource offers recommendations for federal policymakers to help finance LTSS, the clinical and social services that assist individuals with limited ability to care for themselves.

  • In 2013, national spending for formal LTSS was about $310 billion, with Medicaid spending accounting for about $123 billion (51 percent) of this amount.
  • Demand for LTSS is expected to double over the next 35 years.
  • There is no single solution; the most viable approach is a series of changes designed to target the needs of specific sub-populations.
  • Private long-term care insurance (LTCI) must become more available and affordable. Specific recommendations include providing incentives for employers to offer retirement LTCI on an opt-out basis through workplace retirement plans.
  • Options at home and in the community should be expanded for older Americans and individuals with disabilities under Medicaid. One possibility is to use federal matching funds to incentivize the states.
  • It’s important to avoid creating disincentives for individuals with disabilities to work. For example, for those whose employment income would result in the loss of Medicaid coverage, states should be able to offer an innovative LTSS-only “buy-in.”
  • Federal policy should protect Americans from catastrophic LTSS costs.
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