• LTC replace plan?

    Sarah Kliff (@sarahkliff) tweeted out a link to a story in the Hill Blog about a potential bipartisan bill (at least 1 Democratic and 1 Republican co-sponsor) to replace the suspended but not repealed CLASS provisions with a new proposal.

    A quick look shows that the draft bill most fundamentally would allow long term care insurance premiums to enjoy the tax preferred status that major medical plans enjoy (appears to me full value of premium). There are also some consumer protections, in addition to an information strategy designed to educate people about the risk of LTC and the fact that Medicare doesn’t cover much of it. I will save detailed comments on the policy essence when a fuller picture emerges, though my gut is not that what we really need is more tax preferenced health care spending. The key problem in LTC is lack of risk pooling.

    I had been working on a post that basically said if the Republican House couldn’t even muster a replace bill they could get to the floor of the House in the area of LTC, where Medicaid has such a large role that they would like to see decreased, then there was no reason to ever expect a comprehensive health reform replace bill of any type. I will be surprised if House Republicans (and maybe some Democrats)  actually pass something like this out of committee and get it to the floor of the House in 2012, but I would also be glad to see them committing to some details of what they would actually do. And if a bipartisan consensus that can improve policy bubbles up, all the better.


    • I don’t want to give insurance companies a free pass, and I’m not an insurance regulator by trade, but my impression is that consumer protections are usually adequate. The majority of states have already joined an interstate insurance compact that is (iirc) under the aegis of the National Association of Insurance Commissioners. Most insurance commissioners have the necessary authority, thanks to state law and regs, to protect consumers. I don’t think that additional consumer protections are going to make a huge number of additional people buy these policies (although if sensibly designed, they’re certainly not going to hurt).

      Re tax preferences, the way this bill is structured, it will give the largest tax break to people with the highest incomes. People with the highest incomes are already the most likely to buy LTCI. I fully concur that we already don’t need more tax preferenced health spending, and in any case this tax preference would be poorly targeted.

      • @Weiwen Ng
        I think I agree with you on both accounts. The bill as written might be most likely to reduce people abandoning policies that they began earlier. Need a way to pool risk.

    • PS – an ASPE study on appropriateness of LTCI claim adjudication. The author has done work for the LTCI industry, but he’s also done a fair bit of work for ASPE and he’s well respected (i.e. he is NOT an industry shill).