Long-Term Care Insurance:

Proposals to Link Private Insurance and Medicaid Need Close Scrutiny

HRD-90-154: Published: Sep 10, 1990. Publicly Released: Sep 17, 1990.

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Pursuant to a congressional request, GAO provided information on eight proposed state demonstration projects, funded by a foundation's planning grants, using private insurance in conjunction with such public programs as Medicaid to finance long-term health care costs.

GAO found that: (1) the effect of the projects on Medicaid costs was uncertain and would depend on factors such as the participants' income and assets and their subsequent use of long-term care services; (2) whether the projects met their cost goals would depend on whether the states considered all factors that could increase Medicaid costs when making their cost estimates; (3) unanticipated Medicaid costs could occur if states operating the projects failed to adopt adequate regulations and oversight of long-term insurers; (4) to effectively regulate long-term care, states would need to collect and analyze sufficient data to monitor insurers' performance and practices; and (5) states involved in the project should provide adequate consumer education to ensure that consumers understand the risks associated with the policies offered under the projects.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Rep. Waxman added language to the House Reconciliation Bill that would have given HHS authority to grant Medicaid waivers to states participating in a Robert Wood Johnson Foundation demonstration project. That language, however, included requirements that would minimize financial risks to Medicaid and consumers. The states found the language too restrictive and asked that it be removed.

    Matter: If Congress wishes to give the Department of Health and Human Services (HHS) authority to approve demonstration projects such as those proposed by the Robert Wood Johnson Foundation grantee states, it should consider including in the legislation requirements to minimize the financial risks to the Medicaid program and to consumers.

  2. Status: Closed - Not Implemented

    Comments: Rep. Waxman added language to the House Reconciliation Bill that would have given HHS authority to grant Medicaid waivers to states participating in a Robert Wood Johnson Foundation demonstration project. That language, however, included requirements that would minimize financial risks to Medicaid and consumers. The states found the language too restrictive and asked that it be removed.

    Matter: If Congress wishes to give HHS authority to approve demonstration projects such as those proposed by the Robert Wood Johnson Foundation grantee states, it should consider including in the legislation requirements that the Secretary of Health and Human Services prepare interim reports to the authorizing committees on whether the statutory requirements are meeting their intended purposes.

 

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