As the baby boomer generation ages, a vast number of middle-income older adults will be entering the market for senior housing and care — and they will find few affordable options, unless the current status quo changes.
“The challenges that face our current care system are quite varied and vexing, and the public and private sectors must do more if they hope to ensure that people have access to the affordable and quality care they need,” states a new report from Santa Monica, California-based think tank the Milken Institute.
Milken partnered with insurance company Genworth to convene experts from varied fields, including senior housing, technology, insurance, government, academia and finance. In several “Financial Innovations Lab” sessions, the experts contemplated the challenges facing middle-income older adults in the United States, and put forward their ideas for improving the current system.
The report, released Thursday, distills their ideas into three general solutions: a large-scale Medicare Advantage demonstration project; scaling up existing integrated care programs; and developing complementary public-private insurance solutions.
Medicare Advantage changes
Noting that Medicare Advantage enrollment has “skyrocketed” in recent years, the Milken report zeroes in on this public-private insurance program as one promising area for innovation.
One key proposal is the creation of a demonstration project focused on technology such as remote monitoring and telehealth, to determine how the tech can flag health issues earlier and prevent costly interventions, particularly among beneficiaries with complex conditions such as late-stage dementia and congestive heart failure.
Such a demonstration could demonstrate how more care and services can be delivered earlier and in people’s homes, which would bolster the case for a home care benefit.
Another MA-related proposal involved expanding special needs plans, specifically by creating something such as a community-based institutional special needs plan (CBI-SNP). This would target Medicare beneficiaries living in a community (not institutional) setting, who are too wealthy to qualify for Medicaid.
The benefit structure might involve $1,000 to $1,200 per month to provide long-term care services to assist with their activities of daily living.
The report does not specify whether an assisted living community would be considered a community-based setting under such a plan, although reduced nursing home admissions would be a goal.
Medicare Advantage expansions such as those floated in the report could be a route for senior living residents to obtain funding for care and services, enabling them to more easily afford rental rates. In recent years, more senior living providers have started their own MA special needs plans or partnered with insurers to make SNPs available to their resident populations. Earlier this week, a SNP in the Twin Cities of Minnesota, designed specifically for senior living residents, announced that 10 more providers have joined.
Similar to the idea of expanding MA special needs plans, the report floats expanding the Program of All-Inclusive Care for the Elderly (PACE).
In its nearly 50 year-history, PACE has served participants via interdisciplinary teams that provide services in people’s homes, through technology, and in PACE centers. Through PACE, older adults avoid hospitalizations and nursing homes.
But, PACE providers currently serve a small subset of the older adult population, with about 54,000 total enrollees. Most participants are dually eligible for Medicare and Medicaid.
Making it easier for Medicare-only enrollees to participate in PACE would be one way to enable more middle-income older adults to receive more coordinated care, the report argues. A tiered model could be one route toward this goal; this framework would be similar to a “flexible subscription model,” in which participants could enter the program at Tier 1 and then move up to higher tiers as their needs increase.
Such an approach could broaden the PACE risk pool, making it easier for providers to remain financially strong by reducing average per-participant costs.
PACE providers also could broaden their reach by partnering up with institutions like the YMCA. By putting PACE centers in Ys, PACE providers could avoid the costs associated with creating standalone centers. Senior living partnerships could serve a similar purpose.
“PACE could be offered in assisting living facilities, continuing care retirement communities, or other senior living environments for those who need more complex care,” the report states.
The Milken report comes just a few weeks after InnovAge, the largest PACE provider in the United States, raised $350 million in an initial public offering (IPO); InnovAge is partnered up with senior living provider Eskaton in a JV project in California. The company’s CEO, Maureen Hewitt, is one of the experts who participated in the creation of the Milken report.
One major reason why middle-income older adults have few long-term care options is the lack of long-term care benefits under Medicare. Private insurers have also struggled to create sustainable LTC products.
A mixed public-private approach could be one path toward an insurance program to cover more long-term care needs for the middle market, the Milken report proposes.
One idea is for a public insurance program that would cover the “front end,” or the first two years of LTC for older adults in need. Eligibility would be limited to vested adults — for example, those who paid into the benefit through a payroll tax. Participation in the program would likely have to be mandatory, which could create political challenges but would be necessary for financial viability.
The private sector would then create a benefit to extend long-term care services beyond the two years covered by the public program. This private sector product could be tiered to accommodate different consumer budgets.
Finally, if older adults’ needs extend even further, Medicaid could act as the backstop.
The place of assisted living in such a public-private insurance system is an open question.
“[Policymakers] can choose to limit allowable expenditures to a small list of approved services and care settings or take a broader approach that covers a greater variety of services,
including home health aides, home modifications, family caregivers, meal delivery,
assisted living facilities, and so on,” the report states. “This depends in large part on whether a program is designed to reimburse the cost of allowable services or provide a cash benefit that
the individual can use to purchase whatever services he/she chooses.”
Not only with regard to the insurance issue, but across the board, providing long-term care for middle-income older adults will require government and private enterprise to work together, the report emphasizes.
“Urgent action is needed, and effective solutions to these challenges will require public-private cooperation and collaboration,” the report authors wrote in their conclusion.