Important work happening at Milliman
Medicaid is the largest payer of long-term care (LTC) claims in the United States.1 Medicaid coverage for long-term services and supports (LTSS) has evolved significantly in the past decade. Under Title XIX of the Social Security Act (the Act), state Medicaid programs are required to cover institutional LTC for qualifying children and adults. However, states have flexibility in covering home and community-based services (HCBS), designing the LTSS program, and determining whether to use Medicaid managed care organizations (MCOs) to administer the benefit. Thoughtful implementation of a state’s LTSS program is important and has implications for states, MCOs, providers, and beneficiaries, including significant state and federal budget implications.
There are two broad types of Medicaid LTSS delivery systems: fee-for-service (FFS) and managed long-term services and supports (MLTSS). In a FFS delivery system, the state contracts directly with providers to deliver care to individuals needing LTSS services. In an MLTSS delivery system, the state contracts with MCOs and pays them a set amount per beneficiary (generally on a monthly basis) to take on providing care to the beneficiaries and the risk the actual cost of care is higher or lower than the contracted amount paid by the state to the MCO. Both FFS and MLTSS programs provide institutional room and board, nursing care, personal care, and therapy services in an institution for low-income and/or low-asset individuals who need assistance with activities of daily living (ADLs). States may also choose a hybrid approach where some services and/or members remain the responsibility of the FFS system and others are the responsibility of MCOs. States may also choose whether to provide HCBS that allow a beneficiary to receive assistance with ADLs while continuing to reside at home or in the community.
The growth of HCBS originally stemmed from the U.S. Supreme Court decision in Olmstead v. L.C. in 1999, which ruled that states have an obligation to ensure that individuals with disabilities live in the least restrictive, most integrated settings possible. This meant that state Medicaid agencies were required to provide health services to beneficiaries who chose to live in the community or at home.
The growth of HCBS has been compounded by:
- Beneficiary preference to live at home or in the community
- The growing population of seniors needing assistance with ADLs
- The lower cost of HCBS compared to institutional care
- The Obama administration’s initiatives to facilitate and advance community integration, including the “Year of Community Living” and increased U.S. Department of Justice enforcement of the Olmstead decision2
- The additional flexibility provided under the Patient Protection and Affordable Care Act (ACA) for states to expand HCBS programs
For more information about MLTSS delivery systems please see Medicaid long-term services and supports.
As wellness and aging-in-place programs in the LTC industry gain traction, Milliman surveyed various market leaders on these trends. In general, LTC wellness aims to improve health outcomes and reduce the severity of future claims, thereby reducing overall LTC claim costs. Aging-in-place programs support adults living in their independent community homes, rather than moving to residential facilities.
The survey focused on the goals and strategies companies have for developing these programs, as well as the foreseeable obstacles and risks. Additionally, the survey touched on how companies will implement their first policyholder outreach, and what metrics will be used to measure program success. While the survey results are not public at this time, the insight from this survey will be a valuable resource for risk managers and other parties to understand emerging wellness practices. The results will be made public in Q3 2023.
Spousal contagion study
The influence of “contagion” among spouses has perhaps never been more pertinent than during the COVID-19 pandemic. The disproportionate disease and mortality burden of COVID-19 at advanced age has motivated continued research into what could prove to be significant questions for LTC insurers over the next few years, as post-pandemic experience continues to materialize: “How does spousal contagion influence LTC needs?”
Our LTC spousal contagion analysis recognizes that spouses often serve the role of informal caregiver to one another. “Wear-down” impacts can eventually lead to LTC claims for the spouse providing the care. Alternatively, when one spouse dies, the other may no longer be able to care for themselves and may require formal LTC services.
Our first article, Is Your Spouse Contagious?, published in late 2019 based on pre-pandemic experience, examined the influence on claim incidence for one spouse when the other spouse commences a claim or dies. The higher level of claim incidence in the presence of a contagion factor was significant.
Figure 1: Actual to expected spousal incidence, after LTC claim and after death
|Actual to Expected Incidence: Second Spouse
After LTC Claim for First Spouse
|Years Since First Spouse's Claim||A:E|
|Less Than 1 Year||453%|
|Greater Than 1 Year||166%|
Note: “First Spouse” = first spouse of couple to incur an LTC claim.
“Second Spouse” = remaining “healthy” spouse.
|Actual to Expected Incidence: Second Spouse
After Death for First Spouse
|Years Since First Spouse's Death||A:E|
|Less Than 1 Year||310%|
|Greater Than 1 Year||122%|
Note: “First Spouse” = first spouse of couple to die
“Second Spouse” = surviving “healthy” spouse.
Upcoming research will build upon our initial analysis, examining trends in the level of spousal contagion claim incidence using more recent experience spanning the COVID-19 pandemic. With many COVID-19 deaths occurring at ages where LTC claims are most prevalent, claim incidence for surviving spouses may have further exceeded expected levels in recent years (based on the patterns above).
We aim to inform other potential patterns in the years following the COVID-19 pandemic. We plan to further explore second-spouse incidence patterns based on claim characteristics of the first spouse (e.g., care setting, claim diagnosis) and expand this analysis to study spousal contagion influences on length of claim or claim termination (e.g., death or recovery).
ILTCI Conference reform session recap
In March 2022, around 30 Milliman employees attended the 2022 Intercompany Long-Term Care Insurance (ILTCI) Conference in person—“the largest multidisciplinary Long Term Care conference in the US dedicated to connecting industry decision makers while providing dozens of educational sessions.” This conference featured 50 educational sessions, including several sessions on public LTC financing solutions. The reform-focused sessions provided an update on LTC reform initiatives, as well as varied perspectives on the initiatives from different players in the LTC insurance space.
Most of the LTC reform conversation focused on two initiatives:
WA Cares Fund
In 2019, the Washington state governor signed the LTSS Trust Act into law, which established the WA Cares Fund. The WA Cares Fund will be financed through a 0.58% premium assessment applied to wages. Vested Washingtonians will be eligible to receive front-end reimbursement benefits from the fund to pay for LTSS costing up to $36,500 in the program’s first benefit year. The lifetime pool of $36,500 will inflate by the consumer price index (CPI) annually. The program is currently on an 18-month delay, and will start collecting premiums in July 2023, with the first benefits paid out in 2026.
While the program is largely mandatory, it does incorporate voluntary features where certain individuals can opt out of the program, including the (much discussed) one-time private market exemption. As of October 10, 2022, over 470,000 individuals (whose annual wages averaged approximately $180,000) had opted out via the private market exemption.
The proposed Well-Being Insurance for Seniors to Be at Home (WISH) Act legislation was introduced by Representative Tom Suozzi (NY-3) to create a federal social insurance program, financed through a 0.6% payroll tax. It would provide backend or “catastrophic” coverage in the form of a $3,600 monthly benefit (indexed to wages) for an unlimited amount of time after an elimination period of one to five years, depending on an individual’s lifetime income earned, where those with the lowest incomes would have the shortest elimination periods.
At the end of 2021, Rep. Suozzi announced that he would not be returning to Congress and would run for governor of New York. In one session at the LTC Conference, a panelist indicated that, without bipartisan support or Suozzi’s championing, it is likely that the WISH Act legislation may be shelved.
Milliman publications and news
This brief is the second in a series of articles exploring actuarial considerations related to public LTC programs using a social insurance framework.
The 2022 Milliman Long-Term Care Insurance Survey is the 24th consecutive annual review of stand-alone long-term care insurance (LTCI) published by Broker World magazine. It analyzes the marketplace, reports sales distributions, and describes available products.
A follow-up Broker World article discussed worksite sales, including a comparison of worksite sales distributions versus non-worksite sales distributions.
In this episode of Critical Point, Milliman actuaries Sheri Scott and Robert Eaton reflect on recent trends they have seen and opportunities ahead—everything from artificial intelligence (AI) and motion data to disease-detecting phone apps and coverage for space travel.
This issue brief examines the relationship of benefits to premiums for reduced benefit options (RBOs) in the context of ongoing premium rate increases for LTCI.
Innovation is driving LTCI through sales and marketing, underwriting, policy and claim administration, fraud prevention, pricing and reserving, and the customer experience. This article talks about how technology is enabling a future for LTC products.
This article, published in June on the Society of Actuaries (SOA) website, outlines industry practice and consideration for pricing of acceleration-only policies, a hybrid product where riders provide policyholders the opportunity to receive a portion of the policy’s death benefit in advance, under certain conditions.
Milliman in the community
As 2021 marked Milliman's third year as a signatory of the United Nations Global Compact, the company has continued its commitment to the compact's 10 leading principles. With a focus on upholding global human rights, sustainability, and anti-corruption, these principles shape Milliman's corporate strategy, policies, and procedures. Milliman practices address global challenges and strive to "create transformational change in communities worldwide.”
Work at Milliman driving change
Milliman provides leading analysis and transparency on the future of health costs and offers insights to address social inequalities. Milliman is actively participating in studies that help identify racial inequalities and hidden biases in global healthcare and insurance. This includes evaluating what it means for insurance rates to be unfairly discriminatory, and analyzing the disproportionate effects of heart disease on populations of different race. Additionally, Milliman is determined to show how microinsurance can be used to make insurance more available to low-income populations who are disproportionately affected by climate change. The MicroInsurance Centre at Milliman has participated in numerous case studies that take an in-depth look at how insurers and reinsurers can make climate investments in vulnerable populations.
Initiatives and global outreach
The Milliman Giving Fund continues to make an impact by fostering economic development, expanding access to education, and providing necessary healthcare opportunities. Since its start, the fund has donated over $3.6 million to global partners and has recently partnered with Opportunity International to improve access to education and lend resources to families in Uganda. Milliman is also the largest corporate donor to Project Water, Infrastructure, and Supply Efficiency (WISE), an organization that provides clean drinking water and other resources to over 1 million children attending government schools in Addis Ababa, Ethiopia, and Kolkata, India. Other Milliman efforts include sponsoring the Actuarial Foundation's math motivators program, working to strengthen the health system for the Navajo Nation, and providing emergency COVID-19 relief in India.
1 Chidambaram, P. & Burns, A. (September 15, 2022). 10 Things About Long-Term Services and Supports (LTSS), Figure 3. Kaiser Family Foundation. Retrieved February 2, 2023, from https://www.kff.org/medicaid/issue-brief/10-things-about-long-term-services-and-supports-ltss/.
2 Musumeci, MB. & Claypool, H. (June 18, 2014). Olmstead’s Role in Community Integration for People With Disabilities Under Medicaid: 15 Years After the Supreme Court’s Olmstead Decision. Kaiser Family Foundation. Retrieved February 2, 2023, from https://www.kff.org/medicaid/issue-brief/olmsteads-role-in-community-integration-for-people-with-disabilities-under-medicaid-15-years-after-the-supreme-courts-olmstead-decision/view/print/.