The Congressional Budget Office's Analysis of LTC Policy Options

By Richard Shank

With changing Presidential administrations, new health care policy initiatives will likely be considered that can impact the Long-Term Care (LTC) industry. In anticipation of these changes, the Congressional Budget Office (CBO) has mapped out health care policy options that might be considered over the course of the next few years and their impact on the Federal budget. This report may help LTC anticipate future changes in policy.

Every two years, the CBO issues similar options to help inform lawmakers about how various policy changes are forecasted to impact the budget. Because of the expected policy changes associated with health care, the CBO has decided to do an extended examination of proposed changes and their budgetary impact. This current report is the first in a two-part series; the second volume is expected to be released later this year.

For LTC, approximately 69% of all care is funded by the government programs. Medicaid (48%), Medicare (18%), and other public spending (3%) represent the bulk of LTC spending in the U.S. The remainder is made up of out-of-pocket expenses (20%), private insurance (9%), and other forms of private spending (2%). Given the proportionate size of government spending in LTC, future policy changes stand to have a significant impact on the industry.

The CBO report suggests that the options available to enhance LTC coverage institutionally and within the community, and those that can present opportunities to reduce federal spending, are not necessarily mutually exclusive. However, the bulk of them will place upward pressure on federal spending.

The first two proposals represent the biggest policy changes in the LTC section of the report. These proposals will increase states' abilities to offer home- and community-based services. These options are expected to increase mandatory spending on current programs. The secondary impact on related programs such as nursing home expenditures are not outlined in the report; so it is unknown what impact this shift to community based funding will have. However, the expectation is that home- and community-based care will receive a bigger share of the federal budget.

Other proposals considered include: increasing the "look back" period to 80 months to ensure that regulations were followed on asset transfers by Medicaid enrollees; encouraging the use of Advance Directives; and requiring deposits into individual accounts for purchasing LTC insurance.

For more information, see the report at http://www.cbo.gov.

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