The Long-Term Care Partnership Program: Issues and Options

December 1, 2004


There is an ever-present tension in the financing of long-term care (LTC) in America
over what share of the burden private or public sources should bear. A significant
proportion of LTC is provided on an informal basis by family and friends, or paid for outof-
pocket. However, as family structures change, the Baby Boomer generation retires,
and the intensity and cost of care have increased, demand has grown for insurance
coverage of such services, especially for seniors. Medicare does not pay for most LTC
services and access to Medicaid is restricted to low-income individuals. Yet, because
the cost of LTC impoverishes many seniors, Medicaid pays for a majority of formal LTC
services. Budget constraints at the state and federal level, however, make it unlikely that
government will assume additional financing responsibility in the short run. Policy
makers are instead turning toward private-sector solutions, such as increasing the number
of people buying LTC insurance through incentives like tax-credits.

In this context, one idea being promoted is the expansion of the LTC Partnership
Program. Started as a demonstration and limited to four states, the Partnership combines
private LTC insurance with special access to Medicaid for those exhausting their
insurance benefits. The idea is to encourage citizens to purchase a limited, and therefore
more affordable, amount of LTC insurance coverage, with the assurance that they could
receive additional LTC services through the Medicaid program as needed after their
insurance coverage is exhausted. In addition, participants can access Medicaid without
having to spend down all of their assets (although income must be devoted to LTC) to
levels typically required in order to meet Medicaid eligibility requirements. Bipartisan
support in Congress and among governors has emerged to allow all states to create such
partnerships. Yet, concerns about the program’s effectiveness and implications remain.

This issue brief examines the LTC Partnership Program, reviewing its design,
implementation, and outcomes to date and identifying questions that should be
considered in expanding the Partnership.