Innovative Strategies to Finance and Deliver Long-Term Care

Policymakers have long tried and failed to solve the vexing problem of long-term care insurance. The federal Community Living Assistance Services and Supports (CLASS) Act, a voluntary, publicly administered long-term care (LTC) insurance program, was repealed in 2013, and the problem has gone from bad to worse. The number of private insurers offering LTC insurance has plummeted from over 100 in 2002, to about a dozen today. While some of this is due to consolidation, the larger force driving the exit is lack of profitability. This paper explores issues surrounding the LTC market including pricing, modeling, and alternative payment models, to better understand the reasons for market failure. We provide a review of innovative approaches used successfully in other industries, which may serve as a model for new ways to finance and deliver long-term care. Based on interviews with thought leaders across multiple disciplines and industries, we identify three of the most promising solutions: public and private long-term care insurance solutions, Medicare expansion solutions, and technology solutions.