Long-term care is paid for by a combination of public and private payers, though these are by no means equal. The central idea to integrate these two payers and develop a three-tier system of long-term care funding is the focus of the research paper, “Funding Long Term Care: Applications of the Trade-Off Principle in Both Public and Private Sectors.” This three-tier system consists of social insurance which provides the floor for protection. Private insurance and personal savings supplement the social insurance and when these sources fail to provide coverage, public welfare in the form of Medicaid will act as a safety net. This short essay will examine the pros and cons of a three-tier system for long-term care.

The paper used to assess pros and cons is from the Journal of Health Care Finance titled, “Financing long-term care for elderly persons: What are the options?” This paper discusses the private funding, public funding, and public-private options. It is a helpful article to use in examining the previously mentioned one. The article points out that with public funding those families now providing care would be free to use paid caregivers. Since we know a large proportion of long-term caregiving is provided by unpaid family members, the system would become swamped with these additional elders needing care. Also, the article points out the inflexibility of the government to adjust to changes or to administer services efficiently. We know that technology and health care are rapidly changing and therefore the needs for recipients will also change. Increased usage would also result in increased costs to the government and since the entitlement programs are already in trouble financially, providing more services to more people may not be the best route.

This is relevant to the previously mentioned paper because the three-tier system incorporates a floor protection which would be available to all individuals and therefore would increase the number of people receiving care. Like previously mentioned, all those individuals obtaining care from unpaid caregivers are now going to utilize the system and require paid care. This financial change may be larger than expected, even though the private insurance and personal savings are supplementing this coverage.
With regard to the private aspect of the plan, the article warns that this private-public partnership would benefit the upper-income people most. Increasing coverage to include them will also increase the spending, since they most likely did not use much social insurance in the past. Also, since these individuals are more likely to be able to have a large amount in their private insurance and personal savings and they are essentially fine without the floor protection, is it fair to tax payers and the lower income persons that this public-private partnership serves to protect the assets of the wealthy. Also, will this supplemental coverage be affordable to the middle-income groups. If decent private insurance is costly and individuals are saving for a variety of things, not only long-term care coverage, will these supplements be adequate? A good question to ask in this time of economic crisis and reform would be, how much savings will this change in long-term care provide to Medicare and Medicaid? If saving is impossible, then will the change dramatically hurt the programs financial situation?

I think the most interesting and important aspect of the previously mentioned article is not the adjustment of currently used systems into a three-tier system, but instead the “trade-off” aspect. Most if not all of the above mentioned criticisms can perhaps be modified and corrected using some type of trade-off. For example, if the long-term care funding sources allow users to pay family members for their care, this could correct the large inflow of recipients should the three-tier system be implemented. Another example could apply to the private issues, where people buying private insurance would have some that is tied in with their annuity or life insurance policies. Therefore, individuals do not feel like they lose money if the never need long-term care because something is given to beneficiaries upon their death. If, however, long-term care is needed, this money can be used and their families do not have to assist with payments. Any future long-term care reform needs to consider this trade-off approach more seriously to encourage the usage of supplementary features and provide the aspect of choice for those utilizing these features.

Advertisements