Overview of the Long-Term Care Partnership Program

In 2003, the most recent year for which data are available, national spending on long-term care totaled $183 billion, and nearly half of that was paid for by the Medicaid program, the joint federal-state health care financing program that covers basic health and long-term care services for certain low-income individuals. Private insurance paid a small portion of long-term care expenditures--about $16 billion or 9 percent in 2003. With the aging of the baby boom generation, long-term care expenditures are anticipated to increase sharply in coming decades. The projected spending on long-term care presents a looming fiscal challenge for federal and state governments. As a result, some policymakers are looking for ways to reduce the proportion of long-term care spending financed by Medicaid and promote private insurance as a larger funding source. The Long-Term Care Partnership Program is a public-private partnership between states and private insurance companies, designed to reduce Medicaid expenditures by delaying or eliminating the need for some people to rely on Medicaid to pay for long-term care services. Individuals, who buy select private long-term care insurance policies that are designated by a state as partnership policies and eventually need long-term care services, first rely on benefits from their private long-term care insurance policy to cover long-term care costs before they access Medicaid. To qualify for Medicaid, applicants must meet certain eligibility requirements, including income and asset requirements. Traditionally, applicants cannot have assets that exceed certain thresholds and must "spend down" or deplete as much of their assets as is required to meet financial eligibility thresholds. To encourage the purchase of private partnership policies, long-term care insurance policyholders are allowed to protect some or all of their assets from Medicaid spend-down requirements during the eligibility determination process, but they still must meet income requirements. Congress asked that we provide summary information about the Long-Term Care Partnership Program. We examined the demographics of program participants, the types of policies purchased, and the benefits accessed by policyholders. This letter formally conveys our findings.